E-commerce giants are flooding into the Latin American market
After Southeast Asia, the Latin American market with Brazil as the core has also become a nugget "mecca" for overseas players.
Since last year, Shopee has begun a significant strategic contraction, successively shutting down European sites such as Poland, Spain, and France, and only some countries and regions in Asia and Latin America are in the operating market.
According to industry insiders, Shopee has almost no subsidies in the core market of Southeast Asia, but has left the budget to Brazil. Shopee has also made it clear that it will continue to invest more in the Brazilian market.
The competition between Ali and Shopee in Southeast Asia has also continued to Latin America, but this time it is not Lazada who fights Shopee, but AliExpress.
AliExpress, which has been working in Brazil for 10 years, can be said to be the first overseas player to enter the Brazilian market, and in 2021, AliExpress once again raised the strategic level of the Latin American market and formed a team in Brazil.
In addition, new cross-border e-commerce forces are also rushing into Brazil.
SHEIN, which has created numerous myths in recent years, accelerated its attack on the Latin American market last year.
SHEIN not only opened its first offline pop-up store in Brazil, but also piloted the platform model in Brazil to open up local stores.
In addition to the appointment of former SoftBank COO Marcelo Claure as chairman of SHEIN Latin America, responsible for the company's Latin American strategy and shareholder affairs, Philip Faessler, former head of Shopee's Latin American e-commerce business, also joined SHEIN as head of the Brazilian market
It can be said that SHEIN is the fastest growing platform among cross-border e-commerce in Brazil, and in 2022, SHEIN's sales in Brazil reached 8 billion reais, about 1.56 billion US dollars, an increase of up to 300% compared to 2021.
TikTok, which has swept the world, also plans to launch TikTok Shop Brazil this year.
In order to be able to smoothly develop the Brazilian market, TikTok accelerated recruitment, not only increased the recruitment of relevant personnel in the Brazilian e-commerce business, but also made personnel adjustments, transferring Huang Yuanjian, the former head of Didi's international products, to be responsible for TikTok's market operation in Brazil.
In addition, even Kuaishou, which has been repeatedly frustrated by going overseas, has identified Brazil as a priority area for commercialization, launched a branded advertising platform "Kwai for Business" in Brazil, and Kwai has also tried e-commerce live streaming cooperation with local retailers.
The Latin American market, with Brazil as the core, has become a must-compete place for domestic enterprises going overseas.
The last blue ocean of cross-border e-commerce
Compared with Europe and the United States, where the market is gradually saturated, and Southeast Asia, which is becoming more and more involuted, Latin America can be regarded as the last blue ocean of cross-border e-commerce.
First of all, Latin American e-commerce is still in its infancy. Data shows that in 2021, Latin America's e-commerce penetration rate was only 8%, in contrast, China's e-commerce penetration rate reached 30%. This means that Latin America's e-commerce market has greater room for growth.
Among them, as the largest economy in Latin America, Brazil is the country with the most significant growth in the e-commerce market, and the growth rate of online sales in Brazil reached 20.7% in the first half of 2022, much higher than that of developed e-commerce markets such as Japan, the United States, and Germany.
(CouponValido Research Report)
In addition, the Latin American market has a high-quality e-commerce user base.
With more than 90% of the population under the age of 65, Latin America has one of the youngest demographics in the world. In Brazil, where there are 215 million people, more than half of them use the Internet, more than 50% of Internet users prefer to shop online, and 49% of Brazilian e-commerce consumers are under the age of 35.
Young people are more receptive to new things and have stronger purchasing power, laying a good foundation for the development of e-commerce.
After a series of excellent data listed, it is no wonder that overseas giants have poured into the Brazilian market.
However, to succeed in mining gold in Brazil, there are still several major mountains to cross.
The first mountain is the strong local e-commerce force in Brazil.
Mercadolibre, founded in 1999, has been a frontrunner in Latin America's e-commerce market, with Brazil being its largest market with about a third of the market.
According to a research report released by Haitong International, in 2021, Mercadolibre and the other two local e-commerce platforms Americanas and Magazine jointly occupied 73.9% of the market share of the Brazilian e-commerce market.
Although there is no absolute monopoly e-commerce platform, it is not easy for outsiders to break through from it.
However, fortunately, with the rise of social media, social e-commerce has a rising trend in Brazil, which is undoubtedly a good opportunity for new cross-border e-commerce forces with strong Internet genes and good marketing.
The second most important mountain is the logistics and tariff problem.
Brazil's local infrastructure logistics facilities are relatively backward, and there have always been major logistics and distribution problems, while the distance between China and Brazil is long, and the transportation links are full of barriers, resulting in lower logistics timeliness.
After Amazon entered the Latin American market, it not only completed the acquisition of nearly 10% of the local logistics company Total Express, but also set up more than a dozen warehouses in Brazil, covering two-day delivery services in more than 1,000 cities.
Alibaba's logistics division Cainiao also opened its Latin American headquarters in Sao Paulo, Brazil, planning to add 1,000 lockers in 10 Brazilian cities in three years and nine more distribution centers in seven Brazilian states to ensure distribution efficiency.
However, in the case that Meikeduo has established a logistics network with a wide coverage (more than 90%), how to build its own distribution advantages is still a big problem.
On the other hand, with the continuous influx of cross-border e-commerce, some local Brazilian retail enterprises that are threatened have submitted a complaint to the government against cross-border e-commerce platforms, asking the government to strengthen the taxation of e-commerce platforms.
Under domestic pressure, the Brazilian government plans to increase the tariff of cross-border e-commerce products to 60%, and also impose a turnover tax of 17%-25%, which undoubtedly further increases the cost of cross-border e-commerce selling goods in Brazil.
The situation is grim, in order to gnaw this cake, localization construction has become the most urgent thing for cross-border giants at present.
Localization is a top priority
Localization is the key to winning at sea, if you just blindly copy the past successful experience, it is easy to appear unsatisfied.
In the complex e-commerce situation in Brazil, accelerating localization construction and attracting local merchants has become an urgent task for e-commerce giants.
Therefore, SHEIN set out to build a local clothing supply chain in Brazil, and did not adhere to the buyout model of centralized sales in the past, but piloted the platform model, allowing local merchants to open their own stores, operate and distribute to terminal consumers on the platform.
The reason for this, in addition to shortening the lead time, also has the impact of reducing the status of "cross-border seller".
Coincidentally, AliExpress announced that it will build a platform for local merchants in Brazil to sell local goods, and maintain transaction commissions at 5%-8%, which is much lower than the commission level of local e-commerce platforms; Shopee has also increased its recruitment of local merchants in Brazil, with approximately 2 million local merchant stores on Shopee's Brazil site as of April 2022.
Despite the difficulties, the potential of the Brazilian e-commerce market and the possibility of breakthrough are still worth the efforts of e-commerce giants to overcome the problems.
The last blue ocean of cross-border e-commerce has opened, and who can stand out among the heroes and deer can only speak with their skills.
Author | Li Ying