About E-Business in Brazil

8/22/2019 About E-Business in Brazil

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About e-business in Brazil

Forbes 6/11/2012 | Ricardo Geromel

Brazil is being described as the next hot tech market as online shopping is becoming a habit to Brazils

emerging middle class of almost 100 million people. Domestic demand is booming mainly because

unemployment is at historic lows at the same time that wages are increasing and credit is widely

available. Redpoint, the Samwer Brothers, Sequoia and many other venture capitalists are raising the

stakes in Latin Americas largest economy. Before you bet in Brazil, make sure you know the basics by

heart. This article brings a list of essential figures you need to know about e-commerce in Brazil:

Demographics

Brazil is the 5th largest internet market globally, 40% of Brazils total

population is regularly connected to the internet. These 80 million

Brazilians are already spending $13 bn online per year. With 129 millionpeople online, Latin America represents 9% of total online population

worldwide. 62% of all Latin America online population comes from Brazil

alone.

Broadband Internet access costs around $27 per month, compared to $30

per month in India and $10 per month in China. To make broadband

internet access cheaper, President Dilma Rousseff has promised to invest

up to R$1 bn (US$ 500 million) a year until 2014 in a national broadband plan.

In Brazil, young people are spending disproportional time online.

Age % total users % Total Time spent online

15 to 24 28.2% 33.1%

25 to 34 31.9% 29.5%

35 to 44 21.1% 19.3%

45 to 54 11.4% 10.4%

55+ 7.4% 7.6%

M-commerce

Mobile commerce is one of the most promising industries in Brazil. Although there are there are 116 cell

phones for every 100 people in Brazil, online traffic generated from mobiles and tablets represent only

1.5% of all internet traffic. By comparison, worldwide global mobile traffic represents 10% of total online

traffic, according to StatCounter Global in 5/12. In India, more than half of total online traffic comes from

mobile devices.

From the 1,5% of all web traffic that is generated from mobile devices, 42% comes from tablets and 55%

mobile phones. Brazil had only 16 tablets available at the end of 2011, much less than smaller South

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American neighbors, such as Argentina, which had 39 different tablets available. At the same time, Brazil

accounted for more than one-third of the value of sales of tablets in all Latin America, according to

Euromonitor. The main reason why there are not so many tablets available in Brazil is because of high

import taxes.

Ipad, the market leader in tablets, is assembled locally. Foxconn has a factory in Jundiai, near Sao Paulo,

with a curious address: Steve Jobs Avenue. Recently, Foxconn was involved in a big scandal in Brazilafter Terry Gou, Foxconn owner, called workers animals ata company meeting.

Brazilians are not used to use their phones to shop. Below 1% oftotal online sales is made with mobiles

phones. By contrast, in the US 8% of all online sales is made on mobile phones.

By 2015, at least half of Brazils population, or 100 million people, will have a mobile phone with Internet

access.

One of the most expensive phone rates in the world

Brazil has the third highest phone rates in the word when the size of population and economy is taken intoconsideration, only behind Nigeria and South Africa, according to a research by Bernstein. While in Brazil

mobile interconnection fee is 48 cents per minute, the current average fee is only 6.2 cents a minute in 33

members of the Organization for Economic Cooperation and Development. Vincent Bevins, a Financial

Times contributor, says:

In So Paulo I pay around R$400 a month here for my blackberryplan, more than 4 times more

what I paid in London.

Why is it so expensive? As everything else in the country of the future that depends on infrastructure, the

government has not put the necessary effort to develop it. From the entire area of the country that is

covered with mobile Internet, only 12,6% of the municipalities have two or more competing operators,revealed a study by the Chinese multinational Huawei.

3G penetration is only 17%, but it represents 99% year on year growth. Even though 3G is not yet

completely developed, Brazils government is preparing to dole out licenses for 4G. Why? Because it

doesnt want to be ashamed when hosting the World Cup in 2014 and the Olympic Games in 2016.

Social Media

According toSocialbakers, there are 48041640 Facebookusers in the Brazil, which makes it #2 in the

ranking of allFacebook statistics by Country.

Penetration of population: 23.89%Penetration of online population 63.26%Average CPC: $0.28Average CPM: $0.07

According toSemiocast, with 33.3 million twitter accounts, Brazil has the second largest number of twitter

accounts, surpassing Japan now third with 29.9 million.

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Advertisement displaying

Facebooks serves 1 out of 5 displays ads in Brazil. Top 6 players in advertisement display in Brazil:

1. Facebook 17.4%

2. Globo 14.1%

3. UOL 12.2%

4. Terra e Telefonica 11.4%

5. Google Sites 10.3%

6. Microsoft Sites -10.2%

Videos

As more people have access to faster internet, Brazilians are watching more and more videos.

Total online videos watched: 4,704,910, +74% year on year growth Youtube dominates online video in

Brazil, others are:

Google 67,4%

VEVO 5,7%

Viacom Digital 1,2%

Most active VCs in Brazil:

Daniel Cunha, cofounder ofInitial Capital, an early-stage investment firm focused on investing in Israeli &

Brazilian startups, lists the most active players in Brazil who are particularly focused on the internet

space:

Institutionals

Monashees (BR), FIR Capital (BR), Kazsek Ventures (BR / Argentina), Redpoint (US), Accel

(US), Flybridge (US), Atomico (EUR)

Early Stage:

Mountain Partners and 500 Startups

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(Note that some of these companies are actually US-based funds that have varying degrees of presence

in the ground here.)

Interested in Social Innovation in Brazil?

Contact New Ventures Brasil. NVB is a VC focused on cleantech companies in emerging markets. NewVentures addresses the key barriers to green entrepreneurial growth by building in-country support

networks for environmental enterprises and increasing their access to finance. Marcelo Torres Alvesis

the responsible for running the operations in Brazil, where New Ventures has six companies in its

portfolio:A7 Brasil,Adespec,BioOctane,DryWash Indstria e Comercio, Florestas,Ouro Verde

Amazonia (Ecoban Agroindustrial Ltda).

Become familiar with Makesense(http://we.makesense.org). Basically, Makesense find solutions to social

entrepreneurs by connecting them to individuals ready to take up their challenges. Their main advocate in

Brazil is Paulo Monteiro. If you are in the US or in Europe and wondering how you can help a social

entrepreneur in Brazil- or anywhere else- contact Makesense directly and they will present you with a list

of social entrepreneurs that you could help from home, using the skills you already have.

Have more questions about Brazil internet space?

Follow/reachBedy Yang, founder ofBrazil Innovators. Connected to Dave McClureand 500 Startups,

Bedy is THE person responsible for making the bridge between the Silicon Valley and Brazil.

I have also published a list of the main Brazilian entrepreneurship blogshere.

Obviously, there is much more you need to know to succeed in Brazil online business. This was only a

very succinct crash course on Brazil e-business 101. Comscore (NASDAQ: SCOR) does the best reports

about Brazils internet industry. Additionally, KPCB recently came out with the 2012 internet trendsreport that is a must read for anyone interested in internet business.

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About E-Business in Brazil