Ralf Germer, CEO of PagBrasil, reveals how alternative payment methods increase conversion rates in Brazil, plus other strategies to stay relevant in this market
Brazil is an outstanding opportunity for ecommerce businesses. In fact, eMarketer estimates that Brazil will have over 63 million digital consumers by the end of 2020, representing 37% of the population. The country is by far the largest online retail market in Latin America and has over 23 million cross-border digital buyers, a number that should increase even more over the years.
However, global merchants might not attain the best conversion rates when selling to the country and wrongly assume that Brazil is not a prosperous market after all. Why is this so?
Many ecommerce businesses selling to Brazil offer credit cards to Brazilian shoppers as their single payment method. However, not offering domestic solutions hinders the true potential of succeeding in the country.
Why credit cards aren’t enough
Credit cards might be the most-used payment method in Brazil, but there are a few complications: most credit cards issued in the country are limited to domestic transactions only, meaning customers are unable to purchase from cross-border online stores. In addition, the Webshoppers 40th report shows that nearly half of online payments are made in installments, a popular practice in Brazil that is only available through local payment processors.
Another issue that makes credit cards ineffective for some Brazilian digital customers is the population’s preference for cash payments. The Locomotiva Institute found that 71% of the population prefers to pay in cash for their daily purchases. In addition, 45 million adults do not have a bank account. For that matter, the boleto bancário and Boleto Flash are one of the most popular payment methods in Brazil, as they allow customers a secure way to pay in cash for online purchases. Further, according to a research carried out by Forrester and Fiserv, when it comes to digital goods and services, credit cards are the main preference; however, cash is the second most-used payment method.
By offering local payment methods, global merchants reach a large range of customers, from the unbanked population to those who simply do not wish to compromise their credit card limits.
How alternative payment methods increase conversion rates in Brazil
According to Google’s Online Shopping Trends report, Brazilian consumers value payment option availability the most when compared to markets such as the US and the UK. In addition, the study shows that Brazilians are willing to purchase from international online stores in order to obtain lower prices.
Offering local payment methods when selling to Brazil has proven to remarkably improve payment authorization rates by 20% and nearly double cart conversion rates. Therefore, working with a local payment processor is a fundamental strategy for online stores that wish to sell to Brazil.
Additional strategies to succeed in Brazil
Along with providing local payment methods, global merchants may also work with additional strategies to boost their sales in the country and offer a positive customer experience. Understanding the Brazilian digital consumer’s needs, expectations and habits is essential to engaging with them on a higher level.
Providing clear information and specification about the products and services offered on the website is also important: according to Google, Brazilians deeply appreciate details about the product when compared to other markets. Customers also enjoy reading reviews before shopping, in order to help them with decision-making. The study has shown that Brazilians value customer reviews almost twice as much as buyers in the US and the UK.
Logistics is a critical element cross-border merchants must keep in mind when selling to Brazil. All goods that arrive in the country go through customs for a series of inspections, which may delay the delivery process. Furthermore, national postal service Correios charges a handling fee called despacho postal, which the recipient must pay in order to resume the delivery process. Providing a tracking code and clear information for digital buyers is key to a positive customer experience.
Considering all the above, Brazil represents not only a great oppotunity for ecommerce, but also for the cross-border commerce. Even with currency fluctuations and delivery issues, attractive prices continue to encourage Brazilian customers to purchase from cross-border ecommerce stores. Enabling customers to purchase in their local currency and choosing their preferred domestic payment method are key resources to increasing conversion rates in the country.
About Ralf Germer
About PagBrasil
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