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Price is the main driver when Brazilians decide to buy on foreign websites

New report shows Brazilians consumption profile on cross-border ecommerce platforms: they look for cheaper goods and worry about taxes

Cross-border e-commerce is set to play a bigger role in Brazilians‘ consumption profile, according to the third NeoTrust report edition by Compre&Confie and E-commerce Brasil. The survey presents the market and e-commerce vision for online retailers selling to Latin America’s largest country and it shows that, when looking for something to buy online, Brazilians choose international sites because of the cheapest products.

Of the total respondents in the survey, 44.9% bought on international websites and on average four purchases were made per person. Among consumers who made at least one purchase on these platforms, 82% intend to buy again in the future.

The sample of cross-border merchants in Brazil in 2019 had a total of 2,397 responses from Brazilian consumers with internet access in the past year and the answers were collected from February 3 to March 9 – prior to the coronavirus pandemic reached the region.

Talking about Brazilian online domestic sales, the results for 2020’s first quarter show e-commerce growth throughout the country, following the upward trend observed in recent years. The number of orders had a spike of 32.6%, more than double what was reached in the same period last year. The report attributes it largely due to promotions such as the week of the consumer in March.

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The survey shows that cross-border sales are stepping up its pace as it reaches more and more Brazilians: data related to 2019 shows that international sites had revenues of BRL 6.1 billion, as Brazilians responded for 59.5 million purchases last year. AliExpress, Wish and Amazon were the top most wanted online stores in the country.

Domestic e-commerce is still much bigger, since it generated BRL 75.1 billion, with 178.5 million orders. André Dias, executive director at Compre&Confie told LABS that the number of orders in international sites has been significant, though. “While in Brazil we have 178 million purchases, foreign websites reached 33% of this figure. However, we know that the average ticket is not large in this segment,” he explains.

Dias says that Brazilians are not used to spend a lot on foreign sites because of the taxes. “Brazil has a rule that if the product costs less than $50 (BRL 262) there’s a huge probability that you won’t be charged for it. Taxes may not compensate, that’s one reason why Brazilian’s e-commerce average ticket is higher”. The annual average spending ticket per consumer on cross-border is BRL 429,7. In Brazilian e-commerce outlets, it’s BRL 2,121.

The executive reckons that Brazilians that buy on national e-commerce websites are also buying on international ones as well. “The Brazilian who buys cross-border is confident in waiting for the shipping cost and the tax that can be charged or not. The consumer may be less confident about making an exchange or return and that is why Brazilians have the habit of buying more standardized products, since they understand that the exchange can be a more complex logistical work”. The main fear of Brazilians buying on international websites is the delivery time (67.5%) followed by taxation (41.3%).

Shipping costs may not compensate the acquisition. Brazilian consumers are afraid to buy more expensive products and they are afraid that too much weight in transport may damage the product

André Dias, executive director at Compre&Confie

Therefore, when Brazilians are looking for something to purchase on digital platforms, they will search for cheaper websites. It’s where they find international ones. Besides, there are products that can’t be found in Brazil, according to Dias. “Smartphone accessories, for instance”, he adds. On foreign sites, electronics represent 50% of purchases, followed by telecom (29%) and fashion (21%) goods. Also, 94% of cross-border purchases are for their own consumer or family use and not for resales.

What makes a Brazilian buy on a Chinese online store?

With stricter credit limits due to the recession and unemployment, Brazilians seek mainly low prices when buying cross-border. Altogether 83% declared this factor as the main motivation to go beyond national borders to consume. Purchase of products not available in Brazil (36%) and the search for a greater variety of sale items (30%) fulfill the main reasons to buy abroad.

According to the report, 88% of Brazilians know how to differentiate an international website from a national e-commerce one and almost half of the interviewed purchased on foreign platforms in the past year.

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The usual means of payment for purchases made both locally and internationally remains the credit card (71.2%). The second option is boleto bancário (18.7%), a cash-based system popular in Brazil.

The boleto can be either a printed or a virtual (PDF or image) voucher. It has a barcode, a corresponding serial number, transaction amount, issuing bank code, customer information, description, and expiration date. The third preferred way to buy is using digital wallets like PayPal and Picpay (10.1%). Purchases are mainly addressed to Brazil (95%), rather than friends and hotels abroad.

How coronavirus can affect it?

Prior to the outbreak of the coronavirus pandemic, the Brazilians intention of future purchases on international websites was 82%. But Brazilians also said that the coronavirus had a potential to restrict foreign purchases. Data shows that more than half (57.7%) of consumers are afraid that future orders outside national borders may contribute to the coronavirus spreading.

In January, coronavirus was already spreading across Asia and Europe and a great part of Brazilians consumers were afraid of contaminated products. Now, as the pandemic has reached Brazil, it may impact cross-border sales, even because of the new consumption profile. Brazilians aren’t searching for electronics right now. They are afraid that international purchases may carry the virus.

ANDRÉ DIAS, EXECUTIVE DIRECTOR AT COMPRE&CONFIE

And what about ecommerce in Brazil?

According to the research, Brazilian consumers aged 36 up to 50 are still primarily responsible for driving digital retail. The average age of buyers in Brazil is 37 years old and 67% of purchases were paid at the expense or in a maximum of three installments. Brazilian made almost 50 million online purchases in the Q1 of 2020, which together exceed BRL 20 billion.

Since the COVID-19 pandemic, the less was spent on electronics and more on basic health, hygiene and food items. In addition, the number of unique consumers in ecommerce had an increase of 22.8%, almost 16 million people. This is the highest figure recorded in the entire historical series for the first quarter of the year.