I’ve blogged several times about the growing strength of the Brazilian eCommerce market and the proliferation of services that help US and EU companies successfully expand into that marketplace. Yesterday, Forrester released their Latin American Online Forecast that outlines many of the reasons why this market deserves the attention it is getting.
Over the next few years, Brazil is expected to maintain its designation as the eCommerce Powerhouse of Latin America and rightfully so. The online market is expected to grow at a rate of 18% per year for the next five years largely due to high amounts of consumer electronics spending. Forrester also mentions a few things I’ve been blogging about for the past several months (nice to see we’re on the same page here!) that can create significant barriers to entry if not given due attention. The report states,
eBusiness executives looking to expand online sales into Latin America must pay attention to import-duty hurdles, focus localization efforts on language, payment, and fulfillment options, as well as watch local and national events that can affect online sales and business overall.
How true. In a previous post I wrote about companies that can ease the burden of doing business in a new market like Brazil. The biggest challenges come after a company has its web strategy in place, a strategy that should obviously include localization. These challenges, as Forrester states are fulfillment and what I see as a an adjunct to disaster recovery, responding to political changes that could affect the business. This last area includes many things such as the distrust of some government postal services to disruption of internet services including email and social networking sites.
It is important to understand the political climate that surrounds any new market a company is approaching and how the end consumer may alter their buying behavior given their unique view of things. For example, what if someone in a rural area doesn’t trust the local postal service to deliver? In this case the consumer may choose to do business with a vendor that offers delivery via a private courier. If this isn’t part of a current fulfillment strategy, there are companies like Punto Mio that offer fulfillment services through their own private courier services which have been built over the last 20 years. There are other companies out there, too, that could be partnered with as part of a successful eCommerce strategy. Whatever path is chosen, don’t forget to factor the increased cost of import duties (which can run to 60% and higher) into the end cost to the consumer as well as any fees for private courier service. This can cause a significant cost increase for the consumer, but in the majority of cases, the resulting cost is less than the cost of the same item in a local store.
The report also mentions Mexico’s growing eCommerce market and is expected to top $3bb in the next 5 years. The US neighbor to the South might well become a great secondary market for US-focused eCommerce companies, especially since import duties are significantly less in Mexico that in Brazil.
In the end, it all comes down to an overall strategy for going international. The primary topics remain internationalization and localization, fulfillment, geographically focused customer service in addition to actually developing an engaging web presence.