With e-commerce invasion from Asia, retail giants within the nation counterattack
E-commerce is booming in Brazil. Boosted by the pandemic, internet sales reached record figures in 2021 and strengthened national companies such as Magazine Luiza, which recorded average annual growth of 61% in the last three years.
Founded in Argentina, but operating in Brazil since 1999, Mercado Livre also grew tremendously in the period. Last year alone, more than 1 billion items with the company’s label were delivered to Brazilian customers’ doors.
What did not go unnoticed by delivery people, building doormen and obviously the customers themselves who bought more in the pandemic, however, was the increasing volume of packages with senders from the other side of the world.
These are the orders from AliExpress, Shopee and Shein, which have been so popular with consumers and have made digital retail giants here declare war on foreign packages.
good and much cheap: These are the main reasons that have led Brazilians to prefer Asian women when shopping online.
“The clothes I buy on AliExpress are pieces that you can’t find in more affordable stores. If there is a similar model, it has a very large variation in value”, explains architect Matheus Freitas, 26, who has been shopping in Asian e-commerce stores for at least five years.
Delivery times, which until recently were the main obstacle to the purchase of products from abroad, have been falling dramatically, with Shein and AliExpress items arriving in deadlines of up to 10 or 15 days — there was a time when deliveries took literally months to arrive.
This happens because the Asians already understand Brazil as one of their main international markets and have started to invest heavily in local sellers, distribution centers and delivery partners.
Even though it only arrived here in 2019, Shopee already set up its own distribution center at the end of last year. With high investments in marketing, the Singaporean company hired none other than Xuxa as its poster girl on TV and, months ago, surpassed Mercado Livre in the ranking of most accessed apps by Brazilians, according to a report by the Conversion agency.
A reference when it comes to Chinese imports in Brazil, AliExpress changed the ships that used to bring the goods to planes. The goal is bold: to reduce the delivery time to just 7 days.
Unfair competition, tax evasion and sale of counterfeit products: Brazilian digital retail companies have a fine-tuned — and sharp — speech to fight back the Asian invasion of the country.
The Institute for Retail Development (IDV), which brings together groups such as Magazine Luiza, Americanas and Via (Casas Bahia and Ponto Frio), formally asked congressmen for measures to combat what it considers an illegal online market.
The main accusation is that Asian women are taking advantage of loopholes that allow them to sell here without paying taxes and even sell illegal products, says Maurício Morgado, professor and coordinator of the Center for Excellence in Retail at FGV/EAESP.
“Our marketplace is 100% legal and formal. Some competitors from outside are not playing in a formal and correct way”, says Eduardo Galanternick, vice president of business at Magazine Luiza.
Alberto Serrentino, a consultant at Varese Consultoria de Varejo, says that there is a “regulatory limbo” in Brazil that allows orders of up to US$50 to enter the country tax-free. The rule applies to orders from one individual to another, but Serrentino says that this was “extrapolated” for the relationship between companies and consumers.
The purchase and sale of products from other countries is growing worldwide, but it is still a novelty, according to Serrentino. For him, this situation is a reflection of the complexity of this new system which, because it is unknown, is not yet well regulated.
O UOL found that the Federal Revenue Service is studying measures to prevent foreign e-commerce companies from selling goods to Brazilians without paying the due taxes. The IRS declined to comment on this initiative.
Shopee, AliExpress and Shein deny wrongdoing: Companies say they are more interested in becoming platforms that sell products from Brazilian sellers or recognized brands than importers.
Filipe Piringer, responsible for Shopee’s marketing in Brazil, highlights the company’s partnerships with brands such as Heineken, Nivea, L’Oréal, Motorola and Philips.
Briza Rocha Bueno, director of AliExpress’s Brazilian operation, refutes accusations of forgery and tax evasion. “This accusation makes no sense because AliExpress only sells products from sellers with a Brazilian CNPJ and after a validation process of these CNPJs”, she says.
Shein, which, in addition to selling, also creates its own collections betting on low prices, has tried to win the trust of Brazilians through partnerships with digital influencers and even celebrities like Anitta and Khloe Kardashian.
Faster and cheaper deliveries: The giants of the e-commerce sector in Brazil know that they will not win this war idly and have also invested in their logistics chains.
Magazine Luiza, for example, decided to fight back by using its nearly 1,500 stores across the country as delivery points for those who buy online from its more than 180,000 sellers.
“With physical stores, we will make the best connection between sellers and customers, in the shortest time and at the lowest cost”, says Eduardo Galanternick, vice president of business at Magazine Luiza.
Mercado Livre said it is investing R$ 17 billion this year in opening four new distribution centers, adding up to 12 in total, and in expanding its fleet from four to ten aircraft. The goal is to reduce delivery time by 80% in more distant markets, in states in the North and Northeast.
Even the North American Amazon, which has been operating in Brazil since 2012, recognizes that it needs to strengthen itself in this fight. Its bet is on fast and free deliveries, which it intends to extend to more cities in Brazil, and on the increase of Brazilian sellers on its marketplace platform.
“They are doing what has to be done, which is investing heavily in logistics infrastructure and technology, accelerating growth, developing services and making strategic acquisitions to diversify infrastructure and technology,” says consultant Alberto Serrentino, about the reaction. from the local market to the invasion of Asians.
For Eduardo Yamashita, Director of Operations at Gouvêa Ecosystem, a company focused on retail solutions, the biggest winner in this war is certainly the consumer. “He has more options, and prices tend to go down. This is good, as long as everyone pays the same taxes”, he concludes.