There are many advantages in expanding your business to other countries. It aids growth, helps to increase your margins by selling to different markets, creates demand from foreign customers, just to name a few. In this article we are going to give you reasons to invest in Brazil and explain why the country is a good place to start if you are ready to take the leap and go cross-border.
Besides being the world’s fifth largest country by area and the fifth most populous, Brazil is also the fifth largest internet and mobile economy in the world. It is one of the top 10 ecommerce markets, too.
Despite recent political turbulences, the online shopping sector keeps making its mark in the country’s economy. During the first semester of 2018 alone, ecommerce in Brazil saw a 12.1% nominal growth, reaching a billing of BRL 23,6 billion (USD 6,2 billion).
Unlike some neighbouring countries, Brazil has reached a high level of maturity regarding ecommerce. Online shopping is becoming increasingly common across different genders, age groups and economic class.
6 reasons to invest in Brazil
1- Brazilians are among the most engaged social media consumers in the world
This simple fact is charged with a lot of meaning, especially for those looking to invest in Brazilian ecommerce. It is estimated that 74% of the population is accessing the Internet. The country has the third largest Facebook user base in the world, after India and the US. Around 18 million people use Twitter, making Brazil the sixth highest user base for Twitter. 91% of Brazilian internet users rely heavily on Whatsapp for their daily communications, and 55% of them say that they use the app to communicate with brands and companies.
The average Brazilian spends 3 hours and 43 minutes on social media daily, consuming contents a high potential for conversion in sales.
2- Nearly 50% of online consumers purchase cross-border
In 2017, 22.4 million Brazilians made purchases from international websites. They spent, on average, 36.8 USD. Brazilians choose to buy from foreign websites because of cheaper prices, even if it means they will have to wait longer for their products to arrive.
Single Day, or Double 11, China’s largest ecommerce event that is now 5 times bigger than Black Friday worldwide, has become a phenomenon in the country, where locals have a habit of buying from Chinese giants like Wish and AliExpress – the hub of Single Day in Brazil. Major local retailers went as far as adopting the shopping holiday in order to compete.
There are other optimal shopping periods merchants should look into when they choose to invest in Brazil, they can drive surprising peaks in sales.
3- E-shopper penetration keeps on growing
The number of e-shoppers in Brazil grew from under 40 million to 60 million in a span of four years. In 2018, m-commerce accounted for 25% of the ecommerce transaction volume and this is credited to the expansion of mobile penetration in the country.
4- Import tariff reductions
The Chamber of Commerce (Camex) has unanimously decided to launch a process of market opening by reducing tariffs from 14% to 4% over the course of the next fours years for certain imported products. Computer goods are among them, which is great news for tech merchants looking to invest in Brazil. However, the decision still needs to be ratified by the current government.
5- GDP in Brazilian Real expected to increase in 2019
Brazil’s central bank forecasts the growth of its gross domestic product (GDP) at 2.5 percent for 2019. Inflation is also expected to drop. This is supposed to boost the Brazilian economy as a whole, making money circulate, generating higher incomes and increasing consumption.
6- The unemployment rate is dropping
In December of 2017 the rate of unemployed Brazilians was 12%. A year later that number fell to 11.7%. According to a report released by IBGE (the Brazilian Institute of Geography and Statistics) in November of 2018, the country saw its unemployment rate drop eight months in a row. While unemployment still affects 12.2 million Brazilians, a decrease of 3.9% was seen compared to the previous trimester. Brazilians are hopeful towards the signs of economic recovery and you should be too.
The e-commerce scenario in Brazil
Many factors contribute to Brazil’s evolving ecommerce market, some historical and cultural ones make Brazilian shoppers more inclined to buy products from international online retailers. A habit to buy at competitive prices (known locally as “pechincha”), a desire for variety that is not always met by domestic ecommerces, and a constant online presence are strong ones that should be taken into account.
Most popular categories in volume of orders
15% – Health / Cosmetics / Perfumery
14.5% – Fashion and accessories
10.9% – Home / Decoration
9.8% – Household appliances
7.7% – Telephony / Mobiles
7.7% – Sports and leisure
7.6% – Books / subscriptions / handouts
5.1% – Informatics
3.8% – Electronics
2.2% – Food and drinks
From the first semester of 2017 to the same period of 2018, three categories have increased in both number of orders and in financial volume. They were health, cosmetics and perfumery; home and decoration; and electronics, in respective order of growth. In order to properly invest in Brazil, be aware of these trends.
Online customers in Brazil
Brazilian men and women shop roughly the same amount. The population between 35 and 49 years old is the most expressive in terms of spending, comprising 37.8% of the current online shoppers. People over 50 years old are the second largest group (30.4%), followed by those aged between 25 and 34, (23.4%) and people younger than 24, (8.4%). These two later groups will most likely mature in terms of power of purchase, guaranteeing that ecommerce will continue its double digit growth in the following years.
In the first semester of 2018, classes C, D and E together represented a total of 82% of online consumers.
Among the different concepts of social classes in Brazil, the one that is most widely adopted by the market classifies society in letters from A to E. This definition is based on a household’s gross monthly income, as you can see below:
- Class A: above BRL 15.760
- Class B: above BRL 7.880
- Class C: above BRL 3.152
- Class D: above BRL 1.576
- Class E: below BRL 1.576
The average ticket spent by consumers in the first semester of 2018 was BRL 433.00 (approximately USD 114), showing an increase of 3.8% in relation to the same period of the previous year. According to E-bit, the value reflected “the low variation of inflation and the increase of free freight”, meaning that Brazilian merchants are using free shipping to attract and retain customers – and they love it. It is also worth noting that the average ticket value has been growing since 2013.
The most popular payment methods were cash (52.1% of purchases were paid for with boletos) and credit card installments. 19.5% of customers chose 2 or 3 installments, while 28.5% opted for 4 to 12. This method, which consists of splitting the total value of the purchase into smaller amounts throughout the months throughout the year is very common in Latin America (and merchants should not worry, they get paid upfront!).
Going cross-border is a big step and your destination should be chosen wisely. Brazil, even with its recent shortcomings, has proven to be a strong stage for ecommerce. The country has reached a stage of continuous growth to accommodate online shopping and customers already count on it.