The Latin American Payments Blog
Around the world, it’s no secret that the e-commerce market is booming. In 2019, the industry as a whole amounted to global sales of over 3.5 trillion US dollars. It is expected to continue its incredible growth over the coming years, almost doubling to 6.54 trillion dollars by 2022. Whilst geographies like America and Europe are established players in the global e-commerce market, Brazil has recently been labeled one of the fastest growing online markets in the world. This is thanks to a rise in the use of mobile technology and increasing access to the internet. With the rise of e-commerce, dropshipping has also been on the rise in the country.
As it’s a new retail strategy, many may not be familiar with dropshipping and how it works. Dropshipping is the fulfillment of a retail item without the store actually keeping the product it is selling. That means that when an order has been placed, the retailer will then purchase that item from a third-party seller and then ship it to the customer. This means the merchant selling the product directly to the consumer is not handling the products themselves.
Dropshipping in Brazil
Although dropshipping in Brazil has been slower to take off compared to other countries, the market has been changing.
Traditionally, mail delivery services in Brazil have been known to be poor, with many deliveries not making it through from overseas senders at all. Or customers receiving packages after long delays due to inconsistencies in the local postal service system. There are a number of other contributing factors as to what is making the process so difficult. One of the leading reasons is that Brazilians are unable to import products through the mail or a FedEx delivery without having to pay extensive tax on the item. This puts a lot of retailers and customers off of the idea.
These import taxes can reach up to 60% of the overall product price. Even if the customer is willing to pay that, the fact that customs can take anywhere between 30 to 180 days to check the products can make ordering products from abroad very unappealing to most Brazilian consumers. There are a number of things that can cause a delay at customs, including:
– Improper documentation
– Importing food, health products, cosmetics and medicines
– Importing goods made from animals and vegetables
– Goods no meeting the required certification standards
– Forbidden goods or contraband
– An audit by the Brazilian Federal Revenue
However despite these challenges, the e-commerce and dropshipping market is on the rise and in 2018 58.5 million people purchased something online.
So what’s changing?
Firstly, in September of 2018 the Brazilian Post Office introduced a $15 fee for all international mail. Even though this is an additional cost to the end-user, it has incentivized the postal service to improve their delivery. And since its activation, more parcels are being delivered on time.
This has helped to bring new e-commerce opportunities for Brazilians and for retailers. Improved logistics plus Brazil’s current rank as the leading market for internet usage in Latin America and fourth overall in the world, means online shopping is not going to slow down in the country any time soon. The most common products being purchased online include;
– Cosmetics and Beauty Products
– Home Décor
– Pharmaceutical Products
This rise in demand and improved delivery service has helped to reduce the ePacket delivery time from China to just over three weeks. As the largest supplier of goods, China is a key market. This use of ePacket has become the main source of products being shipped to Brazil.
ePacket is one of the most popular methods of shipping products from China and Hong Kong. It is used by the majority of merchants. It allows users to track their products throughout the shipping process and it is one of the fastest international delivery services.
How have companies been growing their dropshipping methods in Brazil?
With these improvements to logistics and widespread access to internet across the country, it’s no wonder that more businesses are looking to take advantage of the region and there are several ways in which you can successfully market yourself as a drop shipper to increase their revenue in Brazil.
1. Use a Reliable service
The first tip for anyone looking to begin an e-commerce business in Brazil is to use reliable dropshipping solutions. For many of the leading merchants who are operating on a Shopify system, they opt to use services such as Oberlo as their solution to not only find products to sell but also then ship them to customers around Brazil. Of course with the import tax and additional costs raising the overall cost for the consumer, retailers are having to find ways to improve the overall value of the service that the end-user is receiving. From improving their customer service to the quality of the products, it will all help to improve their reputation and in turn their customer base.
2. Utilize Effective Social Media Strategies
Utilizing effective social media strategies to market their products is a vital tool for the most successful dropshippers in Brazil. The average Brazilian spends three hours and forty minutes each day on social media! With nearly 90% of the country on it, a company directly targeting their potential audience can help to yield big returns. Equally, those companies that are closely monitoring and adapting to what their competitors are doing in their digital space are the most likely to succeed.
3. Accept Payments in the Local Currency
By far though, those businesses that are accepting payments in local currency are the ones that are profiting the most by dropshipping in Brazil. With only 6.5% of the country having an international credit card. Almost 45 million citizens being unbanked. The ability to accept Boleto Bancario is vital if you want to be able to reach the entire population.
Every day, millions of Brazilians use a Boleto to pay for everyday goods, services, and bills. That is why if your dropshipping company is able to accept Boleto, you will be reaching more customers and embracing a local tradition.
The rise of e-commerce has helped increase the payment method too. With many preferring to use a Boleto for online orders rather than other payment alternatives. The problem with accepting a Boleto however is that the payment process has to be handled by a local entity. A costly and incredibly complex process to try and establish yourself.
How epag can help your dropshipping business in Brazil
Epag was established to help businesses around the globe operate in Brazil. It accepts payments in the local currency without having to worry about expensive FX fees, complicated local taxes, and impossible international remittances. Our entire team has lived and worked in the country. We are experts in the intricate banking systems of the country.
Providing a one-stop-shop for large businesses and SMEs alike, the world-leading facilities that we use will collect payment for you before remitting it in EUR or USD to anywhere in the world. This will enable you to successfully operate your dropshipping business. Focusing on expanding your customer base without having to worry about how you will receive payment. To learn more, get in contact with us here.