Amazon formally enters Brazil’s local market for e-books and Kindles – Part 2

“Amazon is looking at Brazil as a future growth market,” said S&P Capital IQ analyst Michael Souers. “But the way of doing business in Brazil is different than here. There are complications, delays.”

MercadoLibre, whose literal meaning is FreeMarket, has the benefit of being the first entrant in the market. It covers almost 550 million potential consumers in seven countries including Brazil and Argentina. The Buenos Aires-based company is operating in Venezuela, Mexico, Colombia, Ecuador, Panama and Portugal as well. Therefore, for Amazon’s capital strength it might not be more than a speck on the wall but from the market share view point it is a big competitor to the US company.

Besides, MercadoLibre has a strong backing from Amazon’s archrival in e-commerce, eBay. The company owns 18 percent stake in FreeMarket. eBay took everyone with a surprise in second quarter announcement when it showed the profits soar more than 67 percent in this aching economy.

Brazil offers a rich market. Its middle class is surging. It’s one of the world’s fastest-growing markets for smartphones, though Internet penetration remains low.

Baggio says in his report that Amazon probably won’t enter Brazil until October or November, not the Sept. 1 date that has been reported by Brazilian and international news media.

He says it will settle for a less ambitious strategy, selling its Kindle e-reader and a Portuguese-language catalog of digital books, but not other goods it originally planned to sell right away.

Amazon didn’t return requests for comment, but a June 29 Reuters story says Amazon had to temporarily lower its sights in Brazil due to local obstacles. Brazil’s labor costs are relatively high and its tax system complex. And shipping products to consumers can be a slower process, since only about 20% of the nation’s roads are paved.

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Posted by Usman Khalid on Aug 9 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.