AT A GLANCE

  • Brazil’s e-commerce market has risen with annual compound growth trate of 43.5% over past 6 years
  • Brazil’s e-commerce market estimated to grow by more than $1 billion in 2014, with an approximate growth rate of 10% from 2013
  • During the holiday season in 2013, the retail sector experienced a boost resulting in a shortage of temp workers to meet the demand, with 18,200 temporary jobs unfulfilled

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Jan 01, 2014

Special Topic: Brazil e-commerce Market watch

Over the coming couple of years, the entire world will be focused on Brazil as it plays host to two of the largest athletic events, the World Cup in 2014 and the 2016 Olympics. The largest country in South America easily holds the position of one of the world’s most promising emerging nations.

Brazil offers immense opportunities for e-commerce companies that want to expand their reach. With a population of over 200 million, Brazil is among the top 10 wealthiest countries in the world, according to the International Monetary Fund.

The middle class represents the largest potential consumer base in Brazil, far outpacing the Middle East, Asia, and Africa in Internet and social media market penetration. Retail sales per capita in Brazil have grown 12 percent per year for the past four years to reach $5,514, making private consumption in the country higher than World Private Consumption. Since 2002, there has been a continuous rise of the middle class and a steady decline in the near poor and working poor populations. Compared to Europe, China, India, and the United States, Brazil’s aggregate demand contribution is substantially higher. 

With this high percentage of net-savvy, well-off consumers, and a strong and stable economy and political environment, e-commerce in Brazil is set to flourish, prompting local and international businesses to invest in the country. The country’s rapidly rising economy, high levels of disposable income, and well-established online framework makes it an attractive area for investment.

E-commerce and the subset mobile commerce (m-commerce) addresses the broader prospect of an economy in terms of connecting consumers to the outside world through internet and wireless technology. The application is not limited to retail but also has wider prospects such as education, social development, employment, and accessibility to faster and more accurate information.

While Brazil’s e-commerce market has risen notably in recent years, with an annual compound growth rate of 43.5 percent over the past six years, there is still space for new and early entrants.  Currently major players such as Amazon and eBay have not entered the market.

The biggest inhibitors have been the lack of venture capital, risk capital, and the amount of time it takes to reach a break-even point. According to the latest income tax rules, profits gained in Brazil and remitted abroad were subject to withholding taxation of 15 percent.

Consumer Behaviors
New consumers have exhibited confidence in e-commerce sites, with 47 percent of e-consumers using a debit card to make their first purchase on the Internet. Female consumers have a higher debit card usage than males.

Brazil’s Internet Demographics

Brazil’s Internet Demographics

Brazilians on average spend 27 hours per month on the Internet (compared to the global average of 24.7 hours), with 8 hours monthly on social media sites. Internet engagement of Brazil is the highest in Latin America and the seventh highest in the world. Mobile usage in Brazil is also the highest in the region with 23.3 percent of the population using their phones to access the Internet.

Internet Usage compared to Per Capita Income

Internet Usage compared to Per Capita Income

Per capita income is a significant indication of the purchasing power of the consumers of a country. Brazilian per capita income increased 3.6 times over the past ten years, following the same upward trend of internet users. As the size of each consumers’ walletincreases, so does their access to e-commerce, which is a positive sign for companies looking to invest in the country.

Internet Usage by Country

Internet Usage by Country

In a recent survey, it was found that Brazilians spend time online to seek out new brands and products. 80 percent of those surveyed use the Internet to discover new brands and research products. Online retailers are continuing to shift advertising dollars away from traditional channels such as television, to spend more in digital ads.

How Brazil Compares to Other Emerging Economies

How Brazil Compares to Other Emerging Economies

Although China tops the list of GDP among the BRIC countries at approximately 3.71 times higher than Brazil, the latter’s per capita GDP is on par. This is a positive indicator of consumer potential in Brazil and their growing purchasing power.

BRIC GDP per capita Comparison

BRIC GDP per capita Comparison

Consumption in Brazil

Consumption in Brazil

The Final Consumption Expenditure trend in Brazil is strongly indicative that e-commerce is a large source of consumer potential. This figure is the market value of all goods and services, including durable products (such as cars, washing machines, home computers), purchased by households. It excludes purchases of dwellings but includes imputed rent for owner-occupied dwellings, and also includes payments and fees to the government to obtain permits and licenses.

The booming retail market in Brazil is also evident through the rise in retail trade. Overall, retail sales were up 7.3 percent in the first half of 2013, and up nearly 9 percent over the past 12 months, surpassing the percentage growth in Brazil’s GDP. Large areas of purchase include clothing and fashion accessories, and computer and technology goods. Currently, the fashion and accessory industry makes up over 12 percent of all online retail sales.

What’s Hot in E-commerce?

Worldwide e-commerce sales are expected to reach $1.4 trillion in 2013. Travel is the largest e-commerce category currently, led by airline ticket sales. In the United States, it is estimated that business and leisure travelers spent $85.7 billion online in 2012, representing nearly 58 percent of total online spending. This is expected to increase to $110.2 billion in 2016.

Predictions for Brazil’s E-commerce Growth

Using microeconomic data from Brazil, our analysts forecasted the size and growth of Brazil’s e-commerce market. 

Brazil’s e-commerce market is estimated to grow by more than 1 billion dollars in 2014, with an approximate growth rate of 10% from 2013. The GDP per capita will not fluctuate much in 2014 and 2015, and Internet business growth is a major deciding factor for the market.

The federal government of Brazil is launching a national plan to provide cheap broadband Internet access, which could potentially substantially increase the size of the country’s online population.

According to eMarketer, e-commerce in Brazil is projected to reach $29 billion by end of 2017. The upcoming events, the World Cup and Olympics, will upgrade the country’s transportation infrastructure, simplifying and expediting the logistics of shipping goods.

Estimated Brazil E-commerce Sales

Estimated Brazil E-commerce Sales

Impact on Temporary Workers

An increased amount of investiture in e-commerce would result in a growth of the supply of jobs in the country. During the holiday season in 2013, the retail sector experienced a boost resulting in a shortage of temp workers to meet the demand, with 18,200 temporary jobs unfulfilled.

Retail and industrial sectors offer attractive opportunities for job seekers with competitive compensation, access to transport vouchers and other perks. The monthly average wage in Brazil for retail has increased by 11.8 percent in the past year. Retail trade accounts for 70 percent of the temporary job opportunities, where 16,800 positions have not been filled representing a shortfall of -15 percent.

Traditionally, the industrial sector accounts for 30 percent of seasonal vacancies, of which 3 percent have not been filled, leaving 1,400 temporary jobs open for workers.

Temp Vacancies in Brazil

Temp Vacancies in Brazil

“B2C eCommerce has benefitted from the growth of the middle class in Brazil, but consumers from lower income groups also have begun to be comfortable shopping online. There were over 40 million online shoppers in Brazil in H1 2013, with the numbers expected to top half a hundred million by the end of 2013.” ~yStats.com in B2C eCommerce Report 2013.

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