The next major move by Amazon is to enter Brazil. The online retail giant may be ubiquitous in the United States, but this is not the case in other countries in the world – at least not yet. However, the situation may soon change.
According to Reuters,Amazon met with “a group of manufacturers” in Brazil to discuss plans to store and sell consumer electronics and fragrances in the country last week. If the talks are successful, Amazon will gain a foothold in this largest Latin American retail market.
At present, Amazon does not have much involvement in South American countries. In 2012, Amazon began selling e-books in South America; two years later it increased the sales of physical books. In October 2017, Amazon began selling electronic products to third-party sellers. Over the past five years, the Amazon representative said that they had held hundreds of meetings with potential suppliers regarding their business in Brazil and possible future plans. Today, the content of these talks may have to become reality.
In order to control the entire sales channel as much as possible, Amazon is said to use its own transportation and call center when entering Brazil. The company increasingly hopes to achieve autonomy at every step of the transportation process. In the United States, Amazon has been testing its own delivery service called Shipping with Amazon, which will lead it to compete directly with its own logistics provider UPS and FedEx.
As for how Amazon plans to obtain inventory sold in Brazil, Reuters learned that "they will buy and resell directly from the manufacturer" (sourced to the Amazon representative).
Brazil – Latin America's largest retail market
According to informed sources, in order to accelerate the layout of Brazil-the largest retail market in Latin America, Amazon will rent a warehouse with an area of 50,000 square meters in the suburb of Saint Paulo, which is four times that of its local book distribution center.
It is reported that this warehouse is provided by Prologis, a San Francisco-based logistics company.
This indication shows that Amazon will start processing product delivery at Brazilian stations soon. At present, Amazon Brazil Station relies on third-party logistics providers to deliver products.
Brazil has a population of 209 million, and about two-thirds of people are able to connect to the Internet. However, due to security, taxation, and logistics problems (wide land area), e-commerce retail business has developed slowly in Brazil.
The data shows that Brazil’s retail market value is about 300 billion U.S. dollars, and e-commerce retail sales account for only 5%, which is only half of the United States. However, in the past four years, the Brazilian e-commerce market has doubled and is expected to maintain double-digit growth every year. This is a good opportunity for Amazon.
In October 2017, Amazon expanded its business in Brazil from books to electronic products and is preparing to compete with Mercado Libreand B2w Cia Digital, the local e-commerce leaders in Latin America.
Mercado Libre and Brazil's local retailer, Magazine Luiza SA, have taken the lead by Amazon to provide third-party sellers with product distribution and storage services to ensure delivery speeds and customer satisfaction.
Mercado Libre's shares have nearly tripled in value since 2014,with a market value of more than $15 billion.
In the Brazilian market, logistics and taxation are the main problems that Amazon needs to face. These two issues have long led many retailers to lose a lot of profits.
Compared with the Mexican market
Amazon opened the Mexican site in 2015 and launched its own FBA.
E-commerce analysis company Marketplace Pulse data shows that the negative rate for Amazon Mexico station is 10%, while Brazil station reaches 20%, and US station only 4%.
The main response from Brazilian customers was that orders were delayed or cancelled. These issues have been greatly reduced in Amazon's other sites, mainly due to Amazon's provision of FBA services to third-party sellers.
In 2017, Amazon Brazil released more than a dozen logistics and distribution jobs on LinkedIn, including the "Site leader, Fulfillment Center" (head of the logistics center), which is one of the signs that Amazon is pushing the Brazilian market.
In addition, according to sources, Luft, the logistics operator of Amazon's Brazilian book business, will move out of Baruli and move to Prologis, another site near Kajamal.
Brazil will not be the first country where Amazon will seek a foothold. At the end of 2017, Amazon's territory has expanded to Australia. It is now ready to take the next step.