What Danes should know about the Ecommerce and Digital sector in Brazil

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“The Ontario Professors Pension Fund injected roughly 60 million USD in the online retailer Dafiti. Dafiti, accumulates a total of roughly 230 million USD of  private funds invested. Some of Dafiti’s share holders are Rocket, J.P.Morgan Asset Management and Quadrant Capital Advisors.”

Source: Adapted from Valor Economico

An overview on the E-commerce sector in Brazil

The headlines just illustrates the E-Commerce force in Brazil.The online market in Brazil has been growing at a ferocious pace over the last decade.With a population of nearly 200 million people, the E-commerce is everyday getting a larger share in the traditional consumption. The E-commerce is the one segment in Brazil that year after year breaks record of growth, and has been showing double digit growth since it´s inception in Brazil. Increasing broadband, and internet penetration are just some of the reasons for these results.

For this year, according to Ebit,the Brazilian E-commerce thinktank it is forecasted a growth of 24% over the 11 Billion USD results registered in 2012, excluding services and offers from collective buying websites. Additionally the number of E-consumers will increase in 2013. Ebit estimates that nearly 50 million people yet this year, will buy some good online, a number 12% higher than in 2012.

First semester 2013 ecommerce brazil

The main categories sold in sales volume during the first semester of 2013 were:

  • Clothing & Appareal and Acessories accounting for 13,7% of the total volume of sales
  • Household Electrical Appliances accounting for 12,3% of the total volume of sales
  • Beauty and personal care accounting for 12,2% of the total volume of sales
  • Informatics accounting for 9%
  • Books, Memberships and magazines accounting for 8,9%

most sold categories

Another relevant information is that in the first semester of 2013 around 3,98 ( Nearly 80% of the total population of Denmark) million people did their very first online purchase of their lives,this way the number of people who bought something online for at least 1 time has reached 46,16 million people.

Regarding the profile of the E-consumers, E-Bit has noted that the majority of the new online consumers are women ( 55%), and in the 25-49 age group account for 67%.Also, the new middle class had a remarkble presence ( Class “C”) being that 58,62% have monthly income of something around 9.000 DKK and 46% have basic and high school education.

Why should Danish enterprises and decision makers look at all this ammount of data carefully?

Denmark is known for provinding excelent, high quality technological solutions in many fields, and it couldn´t be very for E-commerce solutions. As the market goes global it is important for Danish brands thinking and acting. In Brazil, despite the local technology companies, there is a strong presence of North american companies,perhaps an influence coming from he silicon valley. But the market is bigger than that, and it would be extremely positive for Brazilian companies to either count on danish partners or competitors within the digital field.

Opportunities for Danish companies within the digital market in Brazil

As Brazil goes digital and a lot of people starts to have internet access or the ooportunity to be first time online buyers, opportunities, arises nearly everyday. In Brazil, the main online consumer market is located in the Southeast ( São Paulo, Rio de Janeiro and Minas Gerais).

where e consumers are

Source:E-bit Information

A few factors can be underlined to explain why regions as Northeast,South, Midwest and North still do not have so many online buyers as the Southeast

  • Internet Penetration:  In the North and Northeast isn´t as high as internet penetration in the Southeast, but the government is making strides in the pursue of bringin more internet access for the Brazilian population. Along with internet penetration there is another interesting factor. Several of the internet users are still students, therefore they have no income nor a credit card to use to buy online;

 

  • Habit of buying in Physical ShopsThere is a share of internet users in Brazil that are not used or fear, or even feel it is too complicated buying online. They prefer to feel the product, rather than just choosing online without touching it. ( Opportunity for developers in artificial intelligence),

 

  • Cost of transportation, freight:  The majority of the online shops are located in the southeast. Brazil is a country of large dimmensions, like the US or India,China or Canada,therefore it is quite costly for companies to offer Free Freight on every purchase, for all customers. Logistics in Brazil is a serious bottleneck, and most of the goods are transported via roads. 

Why Danes should open their eyes for the Mobile sector and the M-commerce in Brazil

The Brazilian government has ambitious plans to make sure that by the end of 2014 all families subscribed in the Single Registry of Social Programmes of the Federal Government have broadband and internet access. This plan, in my opinion seems a bit unrealistic for the time being,but all indications are that, despite being behind the schedule,the plan for broadband and internet inclusion are coming to Brazil, and as you can see on the data above, it is already a reality.

This means that other regions than the Southeast of the country will have more internet access, and over time more people will be buying goods and services online as well.Moreover companies like TIM, OI,VIVO and Claro, mobile operators have signed a compromise with the government where they have commited themselves to provide mobile networks, mobiles and special membership plans (low cost for end-users) living in impoverished communities.

With the growing use of mobile E-commerce retailers and digital companies are turning their eyes for this segment as well. According to Rebecca Morison from Mobile Commerce Daily, Nova Ponto Com, one of the largest Brazilian E-commerce conglomerate and owner of three major brands in Brazil ( Ponto frio, Casas Bahia and Extra) is partnering Taqtile, a company focused in providing mobile user experience. Taqtile will support Nova Ponto Com in creating mobile sites and applications for the diverse businesses of the company and once this step is accomplished they will create forms of tracking consumer behaviour once they are inside the physical stores of the group.

Mobile commerce in Brazil is still in it´s infacy, but when the results of 2013 are compared to the results of 2010, the results are great, and always above the previous years. The total transactions made via mobile in Brazil are still very small compared to the total ammount of transactions done via desktops, as you can see in the figure.

mobile commerce brazil

Challenges Danes could solve and turn them into opportunities for the Brazilian Market 

 According to a survey done by the company Devicelab 100% of E-commerces in Brazil show errors that are hampering consumers to finalize their purchase using their mobile, thereby underminging the companies reputation and earnings.

Google Mobile Planet Brazilian edition from May of this year ( 2013) has released a survey done in a partnership with Ypsos analyzing how consumers use the internet on their smartphone.They came up with some quite interesting conclusions like the penetration of smartphones in Brazil is on the rise and in the first quarter of 2013 has penetrated 26% of the population. 17 apps are installed on average, being that 7 of the apps were used during the last 30 days and on average there are 3 paid apps installed per smartphone.

The most interesting conclusion, however, is the one about online purchasing with a smartphone.

barriers

Conclusion:

There is a sea of opportunties to be explored within the digital market in Brazil. Challenges do exist, no doubt about it, as anywhere else in the world. But there are a few reasong why you should start thinking outside of the box and considering Brazil as a potential market for your Danish digital business:

  • Foreing digital business are finding many opportunities in specific niches in Brazil, and finding great opportunities. Many North American companies are alone, or facing little competition, that most of the times aren´t a fair opposition given the low quality of the services provided;

 

  • The players that are good, and by that I mean all the decent digital supplies ( BI systems apps developers, E-commerce platforms,etc) are swamped with work and a vast majority of supplliers are delaying the deliveries of the projects;
  • If you have a good product, there are great chances of charging a premium price for it;

 

  • Internet is still in it´s infancy in Brazil, and has along way to go to reach the majority of the Brazilian population;

Did you like this article? Let me know if i missed something,

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Carlos Monteiro is a Brazilian citizen, graduated in Business Administration by the Catholic University of São Paulo. He lives in Odense, Denmark with his Danish Wife, Cathrine, and their half Danish /Brazilian daughter Ines Marie. You are very welcome to be in contact him at any time.

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