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Deep Dive Brazil: the dynamic digital landscape within the largest economy of the region

Brazil us the largest economy of the region and thus it appears as an extremely attractive market for the FMCG industry. It has huge potential for growth in online sales and it is an economy where multiple players are battling to become leaders of the channel in the country. In this article we explore in detail Brazil’s online market for FMCG in order to understand current positioning of each retailer as well as their performance.

 

Brazil represents more than 33% of Latin America’s GDP and has more than 210 million citizens. Though it is not among the most developed countries in terms of online sales for FMCG categories (this ranking is led by Argentina and Chile), Brick&Clicks do have a strong penetration among population, reaching 13%. This means 3 points ahead of the region average.

This means that the potential for growth within the industry is huge, and this is why Brazil is such an attractive economy for retailers to expand their businesses and development plans. The digital channel in the country is accelerating its growth, showing a rate 5 times higher than traditional offline channels.

For this study, we analyzed 26 platforms in the country. We will now review the main conclusions.

 

The online channel in Brazil

Brazil counts with the presence of multiple players fighting for the digital consumers. Nonetheless, and just like in the rest of the region, there is a concentration of players when it comes to users. Up until today, 4 of the Brick&Click platforms account for more than 70% of users: Carrefour, Walmart, Pao de Acucar and Drogaraia. It’s worth noticing, though, that Walmart has just sold in the country 80% of their business to Advert, a local private capital enterprise located in Sao Paolo.  This is why visits in Walmart’s site are declining heavily, at least until the new business strategy is decided and put in place. However, the site still has more than 10 million visits per month and is still within the most visited platforms for CPG categories in the country.

 

Capabilities Development 

Brazil is slightly below regional average in terms of performance indicators. Users visit these web pages on average less than once a month, accessing 3.6 pages per visit and spending a bit more than 3 minutes each time.

Payment options that etailers offer is also below regional average. While all retailers accept credit card, less than 20% of them take cash or debit cards. Since 70% of Brazilians have access to a credit card, this does not seem like such a significant growth barrier as it is in some other markets. However, it does represent an opportunity for retailers to broaden their access to more consumers and improve their overall online purchasing experience.

In terms of delivery capabilities, more than half of Brick&Click platforms offer delivery in less than 24 hours at an average cost of USD 5.5, that is 30% above regional average.  Currently none of the retailers offer click&collect option and so this stands as an opportunity for differentiation. Click&collect method is growing worldwide and it helps eliminate one of the online purchases barriers for shoppers who have, for example, time restrictions to receive their purchases at home. It also improves overall purchasing experience and increases profitability for retailers since it drastically reduces logistic costs related with delivery.

Brazil also counts with the presence of the most important Last Milers of the region. Rappi and Glovo are already operating and constantly expanding themselves in terms of categories, regions and retailers they work with. Recently, the GPA group acquired James Delivery, a Brazilian born startup dedicated to Last Mile delivery in the main regions of the country. Just like in other markets of the region, Last Milers act as important catalyzers of ecommerce adoption for consumers as they tend to improve overall shopping experience.

Market Places and Pure Players revolution

Amazon’s recent launch in Brazil is shaking up online FMCG sales market. Though their operations in the country are very recent (they just started last month), their results in terms of users and performance are outstanding. They already have more than 44 million visits per month, that is almost 3 times as many as all Brazilian etailers together! These users visit almost 6 pages per time, remaining in them almost 4 minutes.

Mercado Livre, the Portuguese version of the giant Argentinian enterprise, has an overwhelming performance in Brazil.  The platform counts with more than 300 million visits per month who Access more than 9 pages and remain 6 and a half minutes.

Both companies have declared that FMCG products would be an important growth engine for them, thus becoming a priority.

 

New players are joining the FMCG online battle

It is worth noticing, in the case of Brazil, that more and more players are placing their focus on FMCG categories within their online sales. We already mentioned the case of Drogaraia, which is among the top 4 most visited places for FMCG online. Some of their competitors, such as Drogasil and Droguería Pachecho, count with about 1 million visitors per month and the capability of delivering in less than 24 hours. In addition, retailers who have historically focused on general merchandise are today exponentially increasing their offer for CPG categories. Such is the case of, for example, Magazine Luiza. Their platform has more than 40 million visits per month with an average of 4 minutes per visit, which is a performance well above traditional retailers.

 

Conclusions

Since it is the largest economy of the region, there are multiple regional and global players showing their interest in developing online sales. Their capabilities are improving constantly as well as Last Milers, who work as Accelerators of growth in this industry. The increasing presence of Market Places and Pure Players, with their outstanding performance in terms of users and overall shopping experience round up a more than interesting landscape to follow during the following years. The battle for online shoppers Will become fiercer every day!

 

 

Source: BeOn proprietary study based on SimilarWeb