The Brazilian eCommerce Market Part 2: State of a Crowded Field
Recently, we had a look at Walmart’s decision to sell off its Brazilian operation. That decision involved a lot more than eCommerce, but as Brazil’s economy emerges from years-long recession, many companies are expanding their digital activity to stay competitive in a crowded retail market. In this article, we’ll cover who’s left. Q1 2018 behavioral data can provide a solid overview of the remaining eCommerce players in Brazil, along with the strategies they’re using to expand their digital footprints in Latin America’s largest market.
Latin American Natives: MercadoLibre, Magazine Luiza, and NetShoes
Mercadolivre.com.br, the Brazilian operation of Argentine company MercadoLibre, Inc. is the unchallenged leader in the Brazilian digital marketplace. Initially known as the Latin American eBay, MercadoLibre got its start in 1999 and, in 2007, became the first Latin American tech company listed on the NYSE.
Magazineluiza.com.br is the online domain for Magazine Luiza the home furnishings and electronics retailer with 700+ stores across Brazil. Started in the 1950’s, this company introduced a virtual model in the early 90’s which allowed shoppers to visit one of their store locations and then make an order online.
Today, magazineluiza.com.br is noticeably harnessing the country’s growing eCommerce market. Sales through their mobile application were up in the first quarter and online sales from third party vendors selling via Magazine Luiza platforms have performed well. They’ve also acquired the logistics start-up Logbee to streamline distribution.
Netshoes.com.br is a sporting goods retailer operating in Brazil, Argentina, and Mexico. In March 2017, the company announced terms for its IPO on the NYSE, where it and other Brazilian tech companies are finding a wider pool of investors than in Latin America.
The Latin American Transplants: Amazon and Carrefour
Carrefour Brasil, the Brazilian operation of French retailer Carrefour S.A., is aggressively expanding its activity in Brazil as the food-retail market experiences an uptick after years of recession. The retailer hopes to grow its digital footprint via carrefour.com.br. By the end of 2018, all store locations will have offer customers the option to purchase items online and pick them up in person.
Amazon.com.br, Amazon’s Brazil venture, started out selling e-books in 2012 and only in the last year moved to actual books and online video streaming. Current efforts have included working to duplicate a model that has worked internationally and in the U.S.: letting third-party sellers distribute goods. They have also been in talks with Brazilian airline Azul SA for domestic shipping of goods, laying infrastructure for rapid nationwide distribution.
Let’s Take a Look at the Numbers
Using Jumpshot Insights data, we looked at clickstream data for the above domains and walmart.com.br for the first quarter in 2018.
In a population of 207.7 million (World Bank) these unique visit counts show that in total a 2 million to 4 million are digital consumers. At least 1% of the Brazilian population are visiting mercadolivre.com.br on a daily basis.
As expected, mercadolivre.com.br is the most frequented digital marketplace, with about 70% of the traffic across these six domains. Magazineluiza.com.br is a distant second with an average 11% share of daily visits followed by walmart.com.br (5%), amazon.com.br (4%), and carrefour.com.br (3%).
Mobile Traffic Browsing Cycle
Looking at the mobile share of traffic, we see that magazineluiza.com.br is out in front with an average of 45% of daily mobile traffic, consistent with increased sales via their mobile app.
Carrefour.com.br and mercadolivre.com.br are right behind with a daily average of 41% mobile traffic share.
The big surprise is amazon.com.br with 30% average daily mobile traffic. Looking closely, we see a distinct mobile traffic “browsing” cycle with higher mobile traffic on the weekends (40-45%) and a 25-30% mobile traffic share M-F with a little higher mobile share on Fridays (28%).
In the case of netshoes.com.br, carrefour.com.br, mercadolivre.com.br, weekend mobile traffic hovers around 55-60% and bumps up to 60%+ mobile traffic to magazineluiza.com.br. These numbers drop during the week.
Conversion Rates and the Buying Cycle
While amazon.com.br lagged behind in mobile traffic, they are full percentage and a half ahead (4.9%) of mercadolivre.com.br (3.5%) and netshoes.com.br (3.4%).
Magazineluiza.com.br (1.5%) and carrefour.com.br (1.8%) –both platforms likely used by some consumers to check a price before going into an actual store to make a purchase—show lower conversion rates.
These numbers also show Walmart’s eCommerce platform struggling to get customers to buy.
What’s pertinent about these daily conversion rates is that they show a distinct buying cycle inverse to that of mobile traffic, which might be considered a “browsing” cycle.
Conversion rates are lower over the weekend and experience a bump for all domains during the week. This suggests that Brazilian consumers are more apt to browse sites via their phones over the weekend and then could be more likely to make purchases during the week.
Organic vs. Paid Traffic
Mercadolivre.com.br, not surprisingly, has a huge amount of organic traffic (94% organic vs. 6% paid). We see that walmart.com.br was getting plenty of free attention (70% organic vs. 30% paid); however, as The Digital Consumer recently reported (insert link to other article), they were losing customers to mercadolivre.com.br.
Magazineluiza.com.br and netshoes.com.br are both fairly close to a 50/50 organic/paid split with Magazine Luiza paying less often than NetShoes for site visits.
The paid/organic traffic split for carrefour.com.br reflects an investment in online advertising. Given what we know about Carrefour Brasil’s plans for aggressive expansion, it makes sense that they have 18% more paid traffic (59%) than organic traffic (41%).
It’s All About Timing
While mercadolivre.com.br currently dominate Brazilian digital shopping activity, online traffic more evenly distributed across domains as companies expand their digital footprint. And, with walmart.com.br out of the picture, key players seem set to grow as Brazil’s largest economy emerges from years-long recession.
Unlike Amazon, home country players have decades of experience with the country’s working-class consumers and bureaucratic red tape. These are key survival skills in Brazil’s retail jungle.
Trying Something New
Just a quick closing note about amazon.com.br. Amazon is doing something new by partnering with beauty companies to tap the massive Brazilian cosmetics market—the fourth largest in the world. In other regions, Amazon started with books, then offered tech devices, games, and clothing before risking to offer cosmetics and beauty products.
However, with Brazil’s two biggest cosmetic companies, Boticario and Natura Cosmeticos SA not yet selling intensely on an online platform, amazon.com.br may have found its niche.
The Digital Consumer will definitely be watching as more and more Brazilian consumers make the transition to online shopping. And we’ll be on the lookout for how Amazon’s efforts to play catch-up play out over the next little while.