The company named after one of the World’s largest rivers that is physically in South America appears to be on the verge of “coming home” 18 years later.
Before we dig into the details, most readers probably are not familiar with the size and opportunity of the Brazilian/LATAM market.
Background on South America/Brazil/LATAM.
The South American e-commerce market (I’ll call it LATAM for Latin America which loops in Mexico) as that’s how it’s commonly referred to is exploding. Forrester has Brazil at $11.9b for 2012, doubling to $22b by 2016.
All of Latin America is at $87b growing 30%, making it as big as the US is today by 2017.
So from an addressable market perspective, LATAM and Australia are the two continents where Amazon does not have a presence that have large and growing e-commerce markets that would be very appealing to them.
E-commerce channels today in LATAM
The market in LATAM is split pretty evenly between:
- Search -Google is very dominant as the search engine with > 90% market share
- CSE – LATAM has a very robust comparison shopping industry with ~10 engines such as Buscape and Submarino. If anything, the CSE segment is larger than the US from a share perspective.
- Marketplace – Mercado Libre (eBay is an investor) is the dominant player in this segment. They have been able to develop without much competition for quite a while and are a public company. Their GMV is > $4b and growing very rapidly.
Amazon and Brazil
While Amazon has had a datacentre in Brazil for a while now, there are two pieces of evidence recently surfaced by Wall st. firms that show that Amazon is active in the area.
First, there was recently an article in Brasil Economico with these details, reportedly from an Amazon insider->
- They are opening an distribution centre in São Paulo, Brazil.
- They expect to start selling by September 1st.
- They will start selling small items (due to postal/delivery complexities) such as Kindle, book, CDs, etc.
- They expect to sell 1.1m items in yr1 and 4.8m by 2013
No word on if this will include 3P or FBA, but if Spain, Italy, China, Japan are indications, 3P usually comes right on the heels of 1P.
Second, there are job openings on Amazon that do appear the company is ramping up it’s efforts in the region.
It will be interesting to see if these reports are correct , and if they are how aggressive Amazon is in this hot rapidly-growing region.
SeekingAlpha Disclosure – I am long Amazon and Google. eBay is an investor in ChannelAdvisor where I am CEO.