This year, 36.1 million of Brazil’s 200 million population will purchase products online. Whilst this is a low percentage by European standards, it still means that it has more online shoppers than Benelux and Nordics combined.

Famous for its world class footballers and six foot tall supermodels, Brazil can also boast its place as the largest e-commerce market in Latin America, and it’s anticipated it will be quite some time before it relinquishes the top spot.

The country represents more than half of the market for the continent with total sales expected to reach 37 billion USD in 2015. This makes Brazil amongst the largest e-commerce markets in the world, with eMarketer ranking it as the number ten worldwide.

Brazil is not only the biggest market in Latin America for macroeconomic reasons such as population and economy, but also because it has one of the most mature e-commerce markets in the region.

Mapping out a strategy

Mobile penetration is high, with an average of more than one phone per capita. From the Copacabana beach to the Amazon basin, over half (53.7%) of Brazilians are now accessing the internet and by 2017, it is estimated that almost all of these internet users will access the internet with a mobile device.

Therefore, it is important for merchants to keep mobile payments in mind to fully capitalise on the future potential in the market.

43.7% of Brazil’s population is aged between 25 and 54, with 85% residing in urban areas, whether it is in the emerging modern apartments in the Leblon region or the famous Favelas on the outskirts of Rio de Janeiro.

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Almost half of online shoppers are aged between 18 and 34, with the majority located in urban zones in the southeast (including São Paulo, Rio de Janeiro), the northeast (Salvador and Recife) and the south (Porto Alegre, Curitiba, Florianópolis).

In the last couple of years fashion and accessories overtook household appliances as the most popular items for Brazilians to place in their shopping carts.

Ways to pay

In Brazil it’s not just the likes of Visa and MasterCard that e-commerce sites need to accept. It is important for those wishing to dance to the samba beat to differentiate between national and international cards and ensure they have payment systems in place for all.

Only 20% of Brazilian buyers have access to international credit cards and their national cards only process in Brazilian Real, making them unsuitable for cross-border payments. Therefore, international merchants are advised to process payments locally if they have a domestic presence and bank account.

Retailers need to particularly look at providing support for the local Hipercard and ELO credit cards that are targeted at lower income earners; they are gaining in popularity and will play an increasingly important role in coming years.

Boleto Bancário (Portuguese for ‘bank ticket’) is a payment method regulated by the Brazilian Federation of Banks and represents about 15% of all payments. A boleto can be paid at ATMs, branch facilities and internet banking of any bank, post office, lottery agent and some supermarkets until its due date.

After the due date it can only be paid at the issuer bank facilities. It remains a popular payment method, particularly for the half of Brazilians that don’t currently have access to a bank account, so needs to be considered for retailers wishing to physically enter the market.

Piece by piece

Payments in instalments are very common in Brazil and currently make up around 80% of all e-commerce payments. Spread across anything between three and twelve payments depending on the goods being purchased, payments in instalments are usually free of interest for the buyer and are collected monthly by the vendor.

Vendors have the possibility to anticipate the payment of the full amount but this generates a so-called anticipation fee, which is charged by the acquirer. Anticipation fees may be as much as 18% depending on the amount of instalments to be paid upfront.

An appetite for digital currencies

Whilst online payments are currently dominated by Credit Cards and Boleto Bancário – accounting for more than 93% of all online purchases in total in Brazil – in many ways, Brazil is a progressive nation when it comes to e-commerce.

Research from PwC shows that some two thirds (66%) would be open to purchasing with the new breed of digital currencies, ahead of China’s 58% and significantly higher than the 28% in US and 23% in the UK that would be comfortable to do so.

In the next few months there is expected to be a hearing involving representatives from Banco Central do Brasil; the Receita Federal, the Brazilian tax enforcement agency; Conselho de Controle de Atividades Fiancerias, the country's anti-fraud agency; and representatives of the local Bitcoin industry to discuss digital currency regulation.

Crossing the virtual border

The US remains the primary destination for cross-border e-commerce by Brazilian buyers, but it has dropped from 79% in 2013 to 71.7% in 2014. Moving east to China meanwhile has increased from 48% to 55.1% as a destination for cross-border purchasing during the same time.

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This is followed by Hong Kong (18%), Japan (15%) and Canada (9.5%).

The good news for online retailers is that returns in Brazil are comparatively low – only 15.6% of customers in Brazil returned goods, 10% below the global average of 27.5%.

The bottom line

As the most technologically savvy and economically rich nation south of the Panama Canal, Brazil presents retailers prepared to adhere to its cultural traits and differing payment methods a huge opportunity now and in the future.

Just a year ahead of it hosting the Olympics for the first time, Brazil is full of potential for retailers willing to take the plunge.

Sourced from Ralf Ohlhausen, Chief Strategy Officer, PPRO