As the fifth largest country in the world and with retail e-commerce sales expect to reach $17.3 billion by 2016, Brazil’s ranking on many corporate new business agendas has transcended from ‘maybe’ to ‘definitely’.
On the international stage Brazil has come to the fore with both the World Cup and the Olympics on the horizon. With such high-profile events, the region is attracting new suitors from countries both in the West where growth has stalled, and the newer economies of China and India who also see the huge potential in South America.
Brazilians already spend twice as much time online as the British, French or Spanish and with a fast-growing digital population of 88 million, the risks for e-commerce organisations of not doing business in this burgeoning country – and losing out to competitors – far outweigh the risks of engaging with potentially ripe consumers.
Assessing risk is a given part of any new business venture and never more so than when entering a new market, particularly one in an up-and-coming region, where the infrastructure, bureaucracy and social-economic environments are diverse.
Here are six key elements to consider:
Market research:
Know as much as you can about the region, about your sector and about the market you intent to penetrate before embarking on any partnerships, marketing tactics or investments.
Understand who the incumbents are, the legalities around shipping to the region (particularly with reference to CNP), and refunds and returns best practice. This information will then dictate your business planning and strategy. It also ensures you are not only able to demonstrate your knowledge of the region (and so boost your appeal to potential partners) but will highlight any pitfalls and parlances.
Advice:
Governments have woken up to the global nature of business, particularly for e-commerce organisations and therefore most provide trade and business advice to support companies looking to expand into new regions.
Brazil is not just on the radar of organisations; it has awoken the governments of the world too, and many are clamouring to trade with the region which has a GPD per head greater than both India and China.
Tax incentives, partnership brokering and specialists in international trading laws are part of what some governments are offering. Additionally the Brazilian government is doing what it can to attract companies to the region, and the Brazilian Chamber of Electronic Commerce runs regular workshops on doing e-commerce in the region.
Find out about your customers:
Brazil accounts for 62 per cent of all online sales in Latin America, and with the uptake in mobile technology, and smart phones in particular this is only set to rise (currently 152 million are mobile, and in Sao Paulo for example, contracts have been finalised to run Wi-Fi hot spots covering most of the city, helping to further boost the city’s online presence).
Capitalising on this growing sales opportunity means knowing who your customers are, where they are and verifying the information quickly and easily. Most fraudulent activity comes from the instability of Brazil’s identification system; most fraudsters use a fake ID card, according to the federal police.
However, in 2010 the government introduced a new identity smart card – the RIC – which supports contactless payment, as well as biometrics and other biographical security features. The RIC programme should be fully implemented by 2019.
More on making it in Brazil:
Trade securely, but openly:
Engaging with your community securely, in a reliable and safe environment should not be laborious. The middle class in Brazil will represent 60.2 per cent of the population or 120 million people by 2014 and their expectations of a reputable e-commerce provider are likely to match those held in the West.
In 2012, almost half of consumers who purchased online in Brazil used a debit card, a sign, according to the government, of a maturing e-commerce industry. A sluggish buying experience will put off customers from the outset; try to avoid an abrasive customer experience by removing manual processes and using technology where possible to help automate laborious payment processes.
Technology front and centre:
An element in helping to fulfil many of the considerations above, technology plays at the heart of expansion into new markets. From the backend payments processes and customer verification, through to the front end website and ensuring the right products are prioritised for your new market.
Once your business is established technology can help drive increased sales with techniques such as online behavioural analysis and product placements.
Find a reputable logistics partner:
Carrying your reputation through to the last three feet, your logistics partner should not only be reliable and trustworthy, but also help you understand the cultural expectations of the consumers you are selling to.
Introductions to other local market companies, as well as other potential influencers such as local chambers of commerce, or business people that could add value to your product or service should also be brokered as part of your relationship.
