300 new sellers poured in overnight after the Amazon Brazil site added an electronic category (including TVs, cell phones and laptops).
Amazon Brazil launched the Kindle e-book store in 2012 and printed books in 2014. In April this year, Brazil opened up third-party sellers market, but only selling books. Since then, this market has grown to more than 1,400 sellers.
Today, with the opening of the electronic product category, there are more than 1,700 existing sellers on the platform. Brazil is forecast to be the tenth largest e-commerce market in the world. Amazon is one of the leaders in half of the markets, including the United States, Britain, Canada, France, Germany and Japan. Therefore, in addition to selling books, the Brazilian market is bound to be Amazon's battleground.
Amazon's main rival in Brazil is Mercado Libre. Brazil is a major market for Mercado Libre and encompasses more than half of the platform's sales. Shares of Mercado Libre fell more than 14% in a week as news of the expansion of Amazon Brazil's market started to spread. However, Mercado Libre has grown steadily over the years – compared to 30 million in 2015 and 43 million in 2016, with sales exceeding 61 million last quarter. Therefore, we still think it is more advantageous to win the market than Amazon.
"Latin America's Internet penetration is much lower than in the United States, with e-commerce accounting for half of the total retail sales in the United States, which represents a huge potential for untapped development in the future, and today MercadoLibes is more capable of dominate the market than Amazon. MercadoLibre's country is too small for Amazon to be worth the effort, and with the passage of time infrastructure and homegrown programs will be more difficult for Amazon to copy. "
On the market, more than 2 million sellers have been selling products on the platform since Mercado Libre went live in October 1999, and any users could sell goods on the platform initially which is like eBay. However, many of these online sellers only sell a few items, while less than 10% sell more than 100 items successfully. During 18 years of operation and development, the current Mercado Libre is becoming more and more Amazon-like in functionality and service. Amazon has so far not launched FBA in Brazil (Amazon, on the other hand, launched its FBA service the first day it was launched in Mexico in 2015).
Prme and FBA are key factors in other Amazon markets, and without these two key elements Amazon seems to be just testing the market. What's even more interesting is that Amazon itself does not sell products in any electronics category at its Brazilian site. Instead, it uses third-party sellers to launch their product categories. Amazon's 1,700 sellers in Brazil are negligible compared to 2 million of Mercado Libre, the main rival, but this is Amazon's first step in Brazil's expansion. When Amazon opens all product categories and offers FBA services to sellers, it's time to enter the Brazilian market on a large scale!