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Why Amazon Is Keen to Expand in Brazil

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Amazon entered Brazilian market six years ago

Amazon (AMZN) is preparing to expand its presence in Brazil, a market it entered in 2012. However, it’s been slow to scale in that country compared to other international markets such as India. Amazon has lined up a $5.0 billion budget to fund its growth in India, and it recently launched its on-demand music service in India. Amazon is competing with Apple, Spotify (SPOT), and Tencent-backed (TCEHY) Gaana.

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In India, Amazon has grown to be one of the top e-commerce providers in the country, but it faces stiff competition from Flipkart and Snapdeal. These companies have deep-pocket backers such as Microsoft (MSFT) and Alibaba (BABA). Last year, Microsoft teamed up with Tencent and eBay (EBAY) to raise about $1.4 billion for Flipkart.

Amazon courting local partners in Brazil

As part of its effort to ramp up its Brazilian presence, Amazon is courting suppliers and logistics companies. It plans to build a major warehouse just outside São Paulo. With respect to logistics, Reuters reported that Amazon is negotiating a nationwide air cargo deal. 

As consumers increasingly turn to the Internet to shop for everyday items, online retailers like Amazon are investing in express delivery to fulfill orders within a few hours.

Brazil’s online retail sector presents a $31.7 billion opportunity

Brazil, with a population of more than 200.0 million people, presents an attractive market for Amazon’s retail business. With the proliferation of the Internet and smartphones, Brazil’s digital market is expanding as well. Brazil’s online retail sector is poised to hit $31.7 billion in gross sales by 2022, nearly doubling in size from $16.6 billion in 2016, according to Statista.

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