Business

Amazon bets on Prime Day in Latin America to battle local rivals

During the Tuesday and Wednesday annual shopping event Amazon will again showcase the discounts and free shipping that come along with a paid Prime membership

The logo of Amazon is seen at their new warehouse during its opening announcement on the outskirts of Mexico City, Mexico July 30, 2019. Picture taken July 30, 2019. REUTERS/Carlos Jasso/File Photo
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  • Analysts say Amazon faces an uphill battle in Latin America’s top two economies: Brazil and Mexico;
  • Amazon recently opened its first so-called fulfillment centers outside the Mexico City area.

Amazon total sales have soared during the coronavirus pandemic, yet in Latin America, the world’s biggest online retailer is locked in a dogfight with local rivals as it rolls out its Prime Day event in Mexico and, for the first time, Brazil. Prime Day started today and The New York TimesWirecutter selected the best Amazon Prime Day deals here.

During the Tuesday and Wednesday annual shopping event that spans 19 countries, the company will again showcase the discounts and free shipping that come along with a paid Prime membership – a strategy that has helped Amazon reel in repeat shoppers around the world.

READ ALSO: Amazon launches a new contactless payment system: Amazon One

Even so, analysts say Amazon faces an uphill battle in Latin America’s top two economies, where success or failure will set the bar for whether it can take on the rest of the region.

“Amazon in Latin America is not the monster that it is in the United States,” said Marcos Pueyrredon, president of Buenos Aires-based eCommerce Institute.

Amazon does not release country-specific sales data, yet website traffic statistics suggest Amazon is struggling to keep up with Argentina’s MercadoLibre.

In Mexico, where Amazon launched its marketplace in 2015, it trailed second behind MercadoLibre for most unique visitors in August, according to the media analytics firm ComScore.

In Brazil, a more fragmented market that Amazon joined in 2017, it sat in fifth place after MercadoLibre and local e-commerce powerhouses like B2W, Via Varejo and Magazine Luiza.

READ ALSO: Amazon now allows OXXO’s payments in Mexico

Gloria Canales, head of marketing for Amazon in Mexico, said the company has been pleased with growth there, and will keep investing.

“We strive everyday to add selection, to improve shipping rates, to improve our payment methods. We’re confident that that’s what makes us successful.”

It is not like Amazon, which in July posted the biggest profit in its 26-year history, cannot afford to play the long game.

Prime, which in Mexico charges users MXN 99 ($4.67) a month or MXN 899 ($42.38) a year and offers a slew of music, games and original television along with free shipping, “has been one of the biggest engines of growth that we’ve had in the country,” she said.

READ ALSO: AliExpress and Mercado Libre generated $6.1 billion in e-commerce sales in Chile last year

Just in time for Prime Day, Amazon recently opened its first so-called fulfillment centers outside the Mexico City area, one in Guadalajara and another in Monterrey.

These massive warehouses boasting inventories of key products will help to speed up shipping to more regions.

In Brazil, where Prime costs BRL 9.90 ($1.79) a month or BRL 89 ($16.09) a year, Amazon began offering memberships just a year ago. Since then, it has seen the fastest subscription growth of any Prime market, with members now in 95% of municipalities, Amazon said in a statement.

READ ALSO: Chile: Mercado Libre to invest $100 million in logistics for two years

Yet, Prime alone may not be enough to boost Amazon’s fortunes, said Gene Munster, managing partner of Loup Ventures, pointing out inventory and distribution as two key areas where Amazon needs to improve.

“Undoubtedly it’s growing,” he said of the Prime program. “But it’s not a question about growing, it’s about trying to keep pace with MercadoLibre.”

That can be a challenge despite the fact that the local champion lacks a membership perks program on par with Prime. Adding to MercadoLibre’s headstart since its 1999 founding, the company has a broad base of sellers and understands the local terrain.

READ ALSO: Brazilian retail registers record sales in August due to emergency aid boost

Lyana Kahn, founder of Mexican jewelry company LuckyLy, said her sales on Amazon have benefited from Prime’s shipping and discount perks for customers.

“It’s a great platform that gives you the push to reach more customers without a huge investment,” Kahn said. Even so, LuckyLy also sells its sparkly earrings and gold-plated necklaces on several other sites, including MercadoLibre.

“Every platform has something different to offer,” Kahn said. “There’s space for everything.”

co-writen by LABS