Amazon Expansion in Brazil Could Scramble Market
The ecommerce giant has plenty of room to grow
This story originally appeared on eMarketer's blog and has been modified from its original version. Click to read this and other stories from around the world.
eMarketer - New York, NY (October 26, 2017) —Amazon is expanding its efforts in Brazil with a new initiative that lets third-party vendors sell electronic goods within its marketplace in the country.
Consumers in Brazil will find more than 110,000 electronics and accessories, which add to the already existing marketplace catalog for books on Amazon.com.br. The selection includes items such as smartphones, computers, and TVs from various brands such as Samsung, Motorola, and Sony.
As a result, the stock price of Argentina-based MercadoLibre has tumbled by more than 10% since Amazon's announcement, driven by worries about increased competition from the ecommerce giant. Brazil accounted for 54% of MercadoLibre’s total revenues in 2016.
Yet, as of January this year, Amazon remained a relatively small player in the Brazilian market—at least in terms of unique visitors.
MercadoLibre, or MercadoLivre in Portuguese, ranked as the country’s top ecommerce platform among desktop buyers in January 2017, according to data from comScore. The firm reported that there were 27.7 million unique desktop visitors to the site during that month.
Meanwhile, CNova-owned platforms took second place with 23.4 million visitors, followed by B2W Digital’s platforms, which accounted for 21.7 million visitors.
Amazon, by contrast, was in ninth place with 6.1 million visitors.
An August 2017 report from local ecommerce research company E-bit Informação showed that there were 25.5 million digital buyers in Brazil during the first half of 2017, a 10.3% increase compared with the same period a year prior.
Adults ages 35 and older accounted for 69% of digital buyers, while those 25 to 34 made up 23%. The remaining 8% were ages 24 and younger.
Improved 3G and 4G internet speeds—in addition to the already known advantages offered by ecommerce, such as low prices and product information—were some of the main growth drivers for ecommerce adoption in Brazil, according to E-bit Informação.
Nonetheless, the country’s growing digital buyer population presents ample opportunity for the ecommerce giant.
"We know how much Brazilians love technology and are very happy with the launch of this new marketplace category on our site,” said Alex Szapiro, Amazon’s Country Manager for Brazil.
"We are joining our global experience of more than 20 years in ecommerce with everything we have learned from our Brazilian customers in recent years."
In spite of currency fluctuations, challenging logistics, and the political and economic turmoil that has plagued the country as of late, eMarketer estimates that retail ecommerce sales in Brazil will reach $16.05 billion by the end of this year with modest year-over-year growth throughout the remainder of the forecast period.
—Matteo Ceurvels