Why Your Ecommerce Business Should Look to Brazil
There's a business opportunity gleaming just south of the border, perfectly ripe for ecommerce disruption.
According to a study by Internet Retailer, Latin America is the second fastest-growing ecommerce market in the world. Even Amazon, with its finger ever on the pulse of great opportunities, raked in $475M in Latin American web sales in 2013, indicating that the market’s growth is no passing fluke.
And at the heart of Latin America’s ecommerce growth lies Brazil.
Of the 500 ecommerce businesses ranked in the Internet Retailer study, 299 are based there. With Brazil’s tech-savvy population, in which more than 60 percent are under the age of 30, the country offers an appealing audience for hopeful U.S. merchants.
So how can small ecommerce businesses tap into Brazil? It’s no cakewalk, but with a little knowledge and planning, they too can reap Brazil’s rewards. Here’s how to get started.
1. Understand how Brazilians shop
Before expanding to any new market, it’s important to research its particular tastes as well the specific products consumers tend to buy online.
In Brazil, the most commonly purchased online goods include books, music, movies, apparel, toys and games, shoes and consumer electronics. If your business dabbles in any of these things, then Brazil may be worth investigating.
Equally important to determining what to sell is deciding how to market it. For example, Brazilians typically begin their product search on a search engine, so considering paid search options could help you reach this audience.
2. Choose your shipping carriers
Once you’ve decided what you want to sell, you’ll need to decide how to ship it.
FedEx and UPS both offer global shipping options to Brazil in sometimes as few as two business days. These can offer a great option for time-sensitive deliveries or deliveries that weigh more than 66 lbs., such as those going to a business address. But be aware that private shipping carriers often include surcharges that aren’t billed until after a package has been shipped -- sometimes costing businesses even more.
Another option is to use the global postal network for delivery, meaning the U.S. Postal Service handles shipping within the U.S. and then passes it off to the local post in Brazil for delivery. The postal network is a good option for lightweight, residential deliveries that weigh less than 66 lbs. Businesses typically spend less with this option, and all shipping fees are disclosed upfront.
It’s worth noting that traditional postal networks can sometimes take upward of 20 days for delivery because items need to clear customs. However, there are other services available that allow businesses to deliver products via the postal network in as little as eight to 10 days.
3. Get software in place
Rule number one when expanding your business globally is, “Don’t do it by hand.” You need to set up your business to run on its own -- otherwise the time you spend doing international business will cancel any profit you might get from it.
Look for software like customs info that can manage the tricky stuff such as landed costs and global tariffs. You’ll also want to consider pre-paying duties and taxes.
Brazil imposes a flat import tax of 60 percent on the cost of goods valued up to $3,000. If these fees aren’t collected from the buyer up front, they can slow the delivery process because the buyer needs to pay before receiving the item. (And needless to say, customers don’t appreciate having to pay a fee that wasn’t disclosed at purchase).
On the shipping end, you’ll want software that can auto-fill customs forms and alert you to any import bans in a particular country.
When all is said and done, global selling success depends on starting small, testing it out and making changes based on what you see. It likely won’t be a seamless process from the start, but being observant and adapting your methods will help you master new markets. Brazil in particular presents an enormous opportunity for U.S. online businesses - it’s just a matter of whether you decide to take the leap.
Source: ENTREPRENEUR - Harry Whitehouse published on May 18, 2015.