Cross border gross merchandise value in Brazil is estimated at R$22.7 billion or about 21% of total e-commerce in the country. The data comes from Ebit|Nielsen and appear in a study published by Bank of America (BofA).
According to the report, international e-commerces have seen their shipping times sharply reduced thanks to the partnership between Correios and international third parties that enabled these companies to service long-haul cargo into Brazil. In this format, foreign services take part of the delivery, while Correios complete the service as soon as the product arrives in the country.
In addition, the value proposition also benefits from limited tariff and tax enforcement. In 2020, federal officials audited just 2.6% of all cross-border postal shipments, and over 90% of audited shipments were subsequently required to pay tax. In 2020, cross border e-commerce grew 76%, according to Ebit|Nielsen.
Bank of America points out Shopee as a success case in the Brazilian market. The study highlights that the Singapore based e-commerce hit 42.5 million monthly active user in September, surpassing all rival platforms. The growth of fast fashion platform Shein is also commented on by analysts.
Regulation and taxes
BofA recalls that, historically, efforts to automate purchase rates at international stores have fallen short of expectations in the country. However, with the growth in the volume of orders, the technology must be used to solve the problem of scale in tax charging and packages handling.
On the other hand, the growth of international e-commerce must face opposition: all international purchases are subject to a 60% tariff and can also be charged 17-25% of ICMS (a state tax). However, not all packages are taxed. Due to the smaller audit in this type of transaction, there are concerns about the potential harmful to the local market and also about counterfeit and potentially illicit products.
“As cross-border trade grows, we anticipate greater and more organized opposition from trade groups and government agencies”, notes the Bank of America report.
The study also note consumer protection agencies, such as Procon-SP, that play an important role not only in collecting fines for possible counterfeit products or contraband sold on cross-border platforms, but also have a potential authority over public opinion — which can be harmful for these cross-border companies.