Is Brazil the next “hot market”?
As online shopping has already become a habit to over 80 million Brazilian consumers, our answer is yes. If you sell goods or services online and have an opportunity to go global, Brazil is the place you can’t ignore.
Why is this happening?
Brazil is the biggest payment market in Latin America according to the card transaction volume and number of cards possessed by people. It’s happened due to the shift in consumer behavior of Brazilians, who have become more familiar with the online shopping process on a daily basis.
Brazil has rightly been described as the “Social Media Capital of the World” as locals are fond of modern technologies and spend a lot of time online, following their favorite brands, and keeping track of the global trends.
By the end of 2020, the revenue of the eCommerce market in Brazil is expected to increase by 20% and reach $16.9 billion. If this trend continues, the Brazilian eCommerce market will soon become the largest in the world.
Unearthing just the right opportunity
2020 has driven the sudden increase in sales of Brazilian eCommerce with consumers that are mostly involved in buying goods that satisfy their needs and efforts to fight the ongoing pandemic.
According to the recent study, the top categories in online shopping in Brazil are electronics and media, home office equipment, furniture and home appliances, apparel, personal care products, medical products, followed by food and drinks. These sectors are expected to grow at 22.8% in 2020 and show a giant opportunity for global and local merchants alike.
Brazil made it possible for vendors to start selling online simply, with no need for large investments.
It means that even brick and mortar businesses have pushed to increase their sales by going online.
What’s the catch?
Brazil reaps the benefit of innovation and economic growth but there are still particular obstacles that hinder the expansion of international businesses.
Credit and debit cards (more specifically, domestic cards) are now common ways to pay online, followed by local payment methods and cash. However, the majority of Brazilians don’t have international cards and thus the opportunity to shop on foreign websites. That’s one of the biggest challenges that new merchants face when entering this up-and-coming market.
PayPal may be great to handle online payments in the EU. But in Brazil, most people cannot use these services with their domestic credit cards. Because of that, vendors who are planning to do business in Brazil should start preparing today and learn about the local payment trends.
What’s the solution?
In spite of the banking sector that is historically considered to be “un consumer-friendly” and a large proportion of people that remain unbanked, merchants can use a wide range of financial services offered by the third party payment providers.
This gap has been filled by fintech companies that provide various solutions such as payment gateways, payment processing, and point of sale hardware/software. They can also cover online and mobile payments, have loyalty programs and guarantee fraud protection.
Payment options for banked and unbanked consumers
Have you heard of Parcelamentos and Boletos? These are the two most popular payment methods used by Brazilians.
Parcelamentos or installment payments
When it comes to people with credit cards, 79% of the population typically pays in installments – an interest-free option of paying for the goods or services on a monthly basis, usually within 6 months. 30% of Brazilians admit that they will not make a purchase if the store doesn’t offer this payment method. That’s why, without installments, you may have a very low approval rate, around 30-50%.
Boleto, or a ticket, is used in 15% of all payments in Brazil. It is highly popular among consumers who don’t have any financial product or are reluctant to share their credit card information online. The process is quite straightforward: shoppers can generate Boleto on the e-commerce website, print it out, and get to the nearest ATM or a lotto house to pay for the purchased items in cash. After the bank credits the store’s account, the merchant confirms payment and sends products to the customer.
In addition to installments and Boleto, Brazilians also use e-wallets and bank transfer.
Unlimint payment solutions for forward-thinking businesses
When you venture abroad, you’re taking your company into possibly unchartered territories. With a local partner in Brazil, you will have access to a wide range of payment methods, multi-currency digital banking, and comprehensive support from the local experts. You no longer need to look for ways to add specific payment options into your portfolio or do your own research. We’ve got you covered and help you in your expansion with custom solutions and 24/7 support.
Tips to pivot your business toward the Brazilian market
What are you doing today to have a strong business tomorrow? If you are growing your business and want to succeed in the Brazilian market, it’s always best to think very carefully about how to navigate these next steps.
Research the local payment methods
1. Offer local credit cards to your customers. Don’t only stick to the international credit cards as they are mostly unavailable in Brazil.
2. Provide cash payment methods like Boleto Bancário to cover the needs of the unbanked part of the population.
3. Installments. If you can’t offer this option, you may lose around one-third of potential clients.
Research your customers
Always consider the consumer behavior of your target audience. When building a business in Brazil, don’t forget to launch social media pages of your brand and promote your business this way.
Find the local partner
Working with a local partner will give you peace of mind in knowing that your company reaches its full potential in a foreign market. With Unlimint you can get the local expertise, custom payment solutions, and the on-ground support that will help you get your business ready for tomorrow.