Strong understanding of local market challenges is helping Brazil lift off with mobile commerce.
While Criteo’s State of Mobile Commerce Report indicates that mobile transactions in Brazil grew by 70% in the first half of 2016 (compared to the first half of 2016), only 14% of retail e-commerce orders in Brazil are made through mobile devices.
Lots of challenges face entrants into Brazilian m-commerce, so a partner with a keen, detailed understanding of the local context in each market when it comes to mobile and the payments market can be crucial.
To help companies understand these challenges better—and get a basic idea of how to meet them—we’ve put together some examples of Brazilian companies who leveraged local understanding to work around the typical barriers to mobile commerce in the country.
Not surprisingly, transportation has been one of the first industry segments to excel in Brazilian m-commerce, led by Easy Taxi (who recently merged with Tappsi, a taxi-hailing app that is strong in Colombia), 99Taxi (with 150,000 registered drivers in the country) and Uber (which plans to add 50,000 more drivers in Brazil this year). Company-issued debit cards are among the workarounds used by ride-hailing apps to circumvent low credit card penetration in the country.
Launched in 2011, iFood is Brazil’s largest online marketplace for restaurant delivery services. It allows consumers to browse nearby takeout options and make orders online. With 200,000+ delivery orders per month—75% of them placed via mobile—iFood estimates it is capturing 80% of the online takeout market valued at US $1.5 billion.
A large part of its success comes from enabling small, informal restaurants to utilize the service—even if they don’t have a broadband connection. This is done using a special iFood POS device, connected via 3G, that receives and prints orders. This is crucial in countries like Brazil where broadband penetration is relatively limited and doubly so among local mom-and-pop establishments.
Of course, restaurant food is only a small slice of the enormous delivery market being disrupted by m-commerce in Brazil. Rapiddo is an Uber-style service providing on-demand package delivery via motorbike, bicycle or van. In Sao Paulo, where traversing the city can take longer than an international flight, such services are embraced wholeheartedly.
Free Surfing for Mobile Shopping
Another interesting Brazilian m-commerce workaround is happening with MUV, a mobile marketing firm. Throughout Latin America, 90-95% of mobile users are on a prepaid plan: they purchase data in bundles to be used on social media and messaging instead of a fixed monthly rate. Customers are reluctant to deplete their limited data by visiting websites and online shopping suffers for it.
So MUV responded to this Latam m-commerce marketing challenge by creating a product that enables consumers to surf merchant sites on their cell phones for free without consuming any data. A pilot launched in November 2015 with Netshoes, a popular Brazilian sporting goods e-retailer, yielded astounding results. In the month of November, mobile surpassed desktops in visits for the first time ever and 3G visits experienced higher conversion rates than Wi-Fi visits. App downloads grew by 150% and the mobile channel now accounts for 40% of all NetShoes’ online traffic.
Taking Next Steps
Despite the success of these firms in Brazil, m-commerce is likely to remain a challenge: Internet access is dodgy, local logistics can be a nightmare and social media dominates mobile activity. But with a partner like Americas Market Intelligence that understands the local lay of the land for payments in both Brazil and Latin America, companies can better prepare themselves to leverage m-commerce in the region by tailoring their approach to the conditions in each market—and the region.
Contact Americas Market Intelligence to obtain strategic insights into the payments market in Latin America that will drive your business decisions successfully in areas such as e-commerce, affluent business or consumer cards, mobile money, digital wallets, POS systems and more.