So, you’re thinking about entering the Brazilian market with your business. But you’re not sure about the potential challenges.
Just like any other business venture, there are definitely challenges when it comes to e-commerce business in Brazil.
Before you find out e-commerce challenges in Brazil, be sure to take a look at our latest Brazil in Business report, which details top trending markets and key information in the region!
One of the biggest challenges for foreign companies doing business in Brazil is high taxes. Brazil has high sales taxes for online transactions as well as high taxes on imports.
To compensate for the high taxes, e-commerce businesses usually increase the price of their products.
This, however, discourages many Brazilian consumers.
Brazilian customers are very price sensitive, so if products are priced too high, they will often be overlooked by consumers.
As an e-commerce retailer, you have to show the benefits of your product and explain why the price point is justified. You have to show that your product is of high quality and will last a long time.
The second challenge is online security. It goes without saying that privacy and online security measures are things e-commerce businesses everywhere have to consider.
As the e-Commerce activity in Brazil grows exponentially, the level of security for thousands of businesses on the Internet becomes more important.
You’ll have to make sure your website is secure and that your customers’ private information is safe. You’ll have to invest in a proper security system that protects transactions between you and your customer.
Your customer will be entering personal information along with payment information such as credit card numbers and more. So, they’ll have to feel comfortable with your platform’s security system in order to consider making a purchase.
Transportation, Logistics, and Infrastructure
Thanks to companies like Amazon, consumers around the world have gotten accustomed to fast delivery options such as 1-day delivery.
Brazil hasn’t achieved that level of speed, especially in more rural parts, where roads and infrastructure are difficult to navigate.
While the government is currently investing more in hopes of improving infrastructure and reducing issues with transportation, businesses will certainly still have to deal with the rough conditions of winding trails and tightly packed roads in many parts of Brazil.
In the meantime, you might have to charge higher shipping & handling fees to cover higher gas prices, tolls, and additional transportation costs.
If you end up needing to do this, make sure to let your customer know that they will be paying a little extra in order to get exceptional service and fast delivery!
When tackling this issue, consider working with an experienced international business professional who knows more about the regions you will be working in and help you reduce risk!
When considering which payment methods to offer in your e-commerce platform, make sure to include more than just credit cards!
About 25% of online payments are done through a Boleto Bancario, a cash-based payment slip that can be paid at any participating bank branch. The remaining 75% of online payments are predominantly made through credit cards.
Domestic Vs. International Credit Cards
However, with credit cards, international cards often have a higher fee. So, many consumers tend to prefer using their domestic credit cards and making payments in local currency, Brazilian Reals.
If you’re a foreign company trying to sell online, you’ll definitely benefit from selling to Brazilians in their own currency.
Many Brazilian consumers like to pay high-value e-commerce purchases through installments. In fact, installment payments accounted for about 45.8 percent of purchases made in Brazil in 2018!
If your business will be selling higher-value items, you’ll see stronger customer reception by offering options to pay in installments!
Overcoming the E-Commerce Challenges in Brazil
Brazil is a tough market to get into. However, expert information can go a long way to getting your e-commerce business up and running in the Brazilian market.