Online Sales Growing 18% a Year in Brazil, Forrester Says

Brazilians Like Free Shipping and Installment Plans, but Import Duties Are Hefty

By Published on .

Online sales are growing almost 18% a year in Brazil, but retailers need to be aware that Brazilians like to get free shipping and pay in installments, and that import duties for sellers based outside Brazil can be sky high.

With 81 million online users, Brazil will account for about 40% of Latin America's internet population and almost $10 billion in online retail sales this year, according to a new Latin American Online Retail Forecast by Forrester Research.

Although online shopping lags other activities on the web, marketers should be encouraged that 83% of Brazil's online users are on social networks at least once a month, and more than half have done some kind of online banking, even if it's just checking an account balance, in the past three months. For those who do shop online, consumer electronics are the biggest category, accounting for almost 37% of sales. Although still way behind, online sales of books, music and videos are growing. (In its calculations of online retail sales, Forrester excludes the travel category).

Free shipping is common, and is offered by leading online retailers such as Submarino, Magazine Luiza and Americanas (the website of retail giant Lojas Americanas), usually on orders worth over $60, according to Forrester. Due to widespread distrust of Brazil's postal system, some shoppers choose to pay for private carriers to deliver their purchases. And just like when they shop at brick-and-mortar stores, Brazilians often opt to pay using interest-free installment plans over a year or longer.

Latin America's second-biggest market, Mexico, is far behind Brazil. Only one-third of Mexicans are online, and barely 10% of the population has broadband access. And about half of online users say at least some of their internet activity is done at internet cafes rather than at home or at work. Given all those factors, only five of the top 50 U.S. online retailers have set up websites for Mexico so far, according to Forrester. Online retail sales are still low, estimated by Forrester at about $1.4 billion a year, although high growth of about 19% a year is forecast from that low base.

In another challenge for marketers, Mexico is still a cash culture, Forrester says. Online customers often pay through online bank transfers through a company called SafetyPay, and local online retailers let customers print out deposit slips to make payments at local banks.

Import duties, especially in Brazil, can be a major hurdle for online retailers from outside the country. Forrester cites the example of a Dell Inspiron laptop that sells online for $500 in the U.S., and just under $800 in Mexico, but carries a hefty $1,400 price tag in Brazil. Online retailers also need to understand the local Latin American culture and know, for instance, that no one will be shopping online on a day when their country is playing in a World Cup soccer match.

In this article:
Most Popular