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Institutional /

E-Commerce in Brazil

Industry Overview

Brazil has undergone significant structural changes over the last decade and we believe the outlook continues to be positive. According to an e-bit report, Brazilian e-commerce has had R$ 35,8 billion in revenues in 2014, reaching a nominal growth rate of 24,3% compared to 2013, with 103,4 million orders having been made over the period. This growth was expressively due to the increase in access to the internet, which had as a major cause the increase in smartphone sales in the country. The number of people with access to mobile devices in Brazil should continuously increase with the reduction in smartphone prices. Additionally, the growth of the number of people in the lower middle class (or “C” class) boosts e-commerce, and, according to e-bit, 43% of the population are now part of this group.

Growth of E-Commerce in Brazil

According to the Brazilian Association of Electronic Commerce, the sector should retain high growth rates over the next several years, with the expectation of increase in the consumption of digital goods, such as e-books, music and on demand movies. 

The e-commerce industry is evolving rapidly, as an increasing number of people seek to purchase products and services via the Internet. The new generations, which are now entering the labor force, were born in an era when the Internet was already a major part of everyday life, and foreign investments are increasingly arriving not only as capital, but also as technology and knowledge. In 2015, e-bit projects a nominal growth of 15% in for Brazilian e-commerce revenues, which would mean reaching approximately R$ 41,2 billion in sales for the sector.

We believe continued growth of e-commerce is driven by:

  • Growth of internet users. According to Nielsen IBOPE, the number of Internet users in Brazil has surpassed half of the population, reaching approximately 52% of citizens, or 103,4 million people, in July 2015. Additionally, the number of people with Internet access on smartphones has reached approximately 70 million citizens, or 35% of the population, in the same period. 

  • Increased adoption of e-commerce among internet users. We believe that the relatively high penetration of online banking and the large number of income tax returns filed online, as well as the popularity of online communities illustrate the willingness of Brazilians to adopt new technologies. E-commerce in Brazil is growing from its current penetration of approximately 52% of Internet users in the population, relative to 90% internet users in the United States’ population, and we believe that e-commerce penetration in Brazil will likely continue to increase as more people have positive experiences buying online.

  • Rising broadband penetration. According to a TIC Homes and Users report by the Center for Studies on Information and Communication Technology (CETIC, Portuguese acronym), approximately 92% of homes with access to the Internet in Brazil also had access to fixed or mobile broadband in 2014. Broadband penetration will further increase in the future, as the cost of service is reduced and greater awareness of the benefits of broadband develops; this increase in broadband penetration is expected to yield higher average expenditures per online shopper. 

  • Lack of assortment in traditional stores. Retail stores in Brazil offer a limited selection of products, and the Brazilian retail sector lacks "category killers" and "megastores." These factors favor online retailers as they are able to offer a wide assortment of products because there is no need to replicate inventory in numerous stores and also there is no physical store space limitation. 

2Q17

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