Latin America’s largest country (195 million people) and economy ($2.5 trillion GDP) is getting noticed for the best possible reason: success.
With a high proportion of affluent, Internet-savvy consumers and a strong and stable economy, e-commerce in Brazil is flourishing. Upcoming 2014 FIFA World Cup and the 2016 Olympics boosted consumer confidence as well as investments from domestic and international investors to exploit the huge potential of Brazil’s market.
Digital travel and e-tailing sales driven Brazilian e-commerce market
E-commerce market in Brazil has been increasing steadily, powered by growing Internet penetration and rising household income. According to eMarketer’s recent report, even as Brazil’s economy slows, the country’s B2C ecommerce sales should see double-digit expansion this year and again in 2014.
Breaking down the secret of the stable growth of Brazil’s e-commerce market, eMarketer finds that digital travel sales have played a major role. Travel represented close to a third of the country’s total e-commerce sales in 2012. Following the travel ecommerce sales, e-tailing sales in Brazil are likely to grow at a healthy double-digit pace through 2014, estimates eMarketer. By 2016, eMarketer expects retail ecommerce sales in Brazil to reach $17.3 billion. Retail sales will rise in part on the heels of a greater number of Internet users buying via digital channels. In Brazil, where even small percentage changes equate to tens of millions of consumers, the size of the middle class is key to e-commerce growth. eMarketer estimates that Brazil will have 26.7 million digital buyers in 2013, equal to 36% of Internet users. That penetration level is far behind the U.S., where the figure is 73%, but Brazil outpaces Latin America as a whole, for which the average is 33.2%.
Growing popularity of e-tailing market in Brazil
The growing popularity of retail sites in Brazil is evidenced by the fact that visits to these virtual stores are on the rise; according to Morgan Stanley’s research, from 2010 to 2011 the number of visitors rose by 20%, and the momentum is showing no signs of easing. The growing Brazilian e-tailing market attracted potential investors from all over the globe. In 2011, around 5% of all retail transactions in Brazil took place on the Internet, and the figure is expected to be doubled by 2014.
Brazil’s e-tailing market in 2011 revealed the following highlights:
• A 24% increase in the volume of goods purchased online.
• E-tailing businesses earnings showed a 26% increase.
• 4 million people bought for the first time online.
• A staggering 81% of total population accessed the internet with intention to make purchases.
Samba with Brazilian online shoppers
As a very lucrative e-tailing market, Brazil attracted many of the major Internet-based conglomerates to seize the opportunity to establish themselves there at this relatively early stage, allowing them to become influential market leaders at a crucial period of the country’s growing economy. However, attracting Brazilian online shoppers probably will be not that easy as inviting an outgoing Brazilian to dance samba.
Brazilian online shoppers’ behavior patterns
According to comScore (2013), consumers in Brazil spend more than 27 hours per month online (global average: 24.7 per month), which is ahead of all the 8 LATAM markets. The majority of an average Brazilian’s time online is spent on social, e-commerce (especially gaming and video streaming), and accessing price comparison sites.
In the recent market survey conducted by Mckinsey & Company, although e-commerce has been growing at a compound annual growth rate (GAGR) of 34% over the last five years, it accounts for only about 3% of the retail sales.
The potential for growth is clear and impressive; however, why don’t Brazilians shop on the Internet? There are two kinds of barriers accordingly. The first one related to the culture of unwillingness to wait for items to be delivered and desire to touch and feel the items before make purchases. The second kind of barrier is related to purchase experiences. Up to 20% of the Internet users who participated Mckinsey and company’s survey cited that they had previous bad experience with online shopping, the result is in consistence with surveys from other sources, which rank e-commerce at the top when it comes to consumer complaints.
One clear message to international e-tailors is to improve the online experience that is something within Payment21®’s capabilities.
Payment21®’s Brazil Payments is designed for merchants to solve issues, such as processing payments in Brazilian Real (BRL) and deal with refunds, and we will help you build up a bespoke Brazilian-shopper-friendly payment front desk.
Our solution for Brazil offers a customized option with Boleto Bancário for international merchants on receiving payments from Brazilian online shoppers. The process is rather simple, (a) by integrating our API to your websites, you will be able to issue a Boleto (Ticket) to your customers; (b) the customer will process the Boleto in any Brazilian bank online or offline. (c) After the payments detected, you will be immediately notified that payments from customers are confirmed. (d) By the end of every week, we carry a FX operation, transferring funds to your accounts in your home country. There is no chargeback risk involved and the entire process is regulated by Central Bank of Brazil.
Boleto Bancário provided by Payment21®
Boleto Bancário is the most popular payment option (represents 35% of all online purchase in Brazil) regulated by the Brazilian Central Bank and has been favored by Brazilian customers since its inception 20 years ago. In a nutshell, it is an online pay slip allowing customers to process payments by either print & pay to any Brazilian bank branches or by online bank transfer/Credit card.
Ease of Use with Low cost
Payment21® understands that merchants want clear and effective simple management tools to control costs with no hidden fees and easy yet quick access to revenue from anywhere and at any time. With our unique solution, once a merchant opened an account with Payment21®, we are able to connect you with 26.7 million Brazilian online shoppers immediately. Additionally, our solution also has following advantages:
• Receive payments instantly and managing your account in real time.
• No requirement to open an entity in Brazil.
• Enable merchants to process Brazilian Real (BRL) payments, settlements in USD, Euro (EUR), Swiss Francs (CHF) and British Pounds (GBP).
• No currency conversion issues, shoppers and your business interact seamlessly.
• No third parties involved in the transaction, significantly lowered fees.
• Anti-fraud system protects you from fraudulent transactions.
Payment21® welcomes all types of merchants, no matter you are an independent designer or a giant corporate.
Request for more information about Brazil Payments here.
Source: A.T. Kearney (Global Retail Development Index),comScore (2013 Brazil Digital Future in Focus), eMarketer (More Buyers Join Brazil’s Robust Ecommerce Market), Mckinsey & Company (Consumer and Shopper Insights March 2012)