Voice of the Industry

Focus on Brazil: how the crisis scenario boosts digital services adoption

Tuesday 21 April 2020 09:39 CET | Editor: Claudia Pincovski | Voice of the industry

Luiz Henrique Didier Jr. from Bexs Bank presents insights from the exponential projections for growth in the number of e-shoppers in Brazil. The crisis is driving Brazilians to seek alternatives for shopping and accessing entertainment

Since March 2020, the COVID-19 pandemic has been spreading and creating a highly critical situation in Brazil, as already has occurred in Asia and Europe. Once the first cases were confirmed in the country, stores and malls closed their doors and many companies put their employees to work from home, following authorities’ decisions on physical distancing. The global economy is suffering a huge impact. However, a few sectors continue to enjoy demand, providing opportunities for current and future growth. These sectors include primarily the digital industry, such as: ecommerce, Software as a Service (SaaS), Streaming, Gaming, restaurant and supermarket delivery apps etc. According to a report from the market intelligence software SimilarWeb, categories such as Delivery and Streaming had a positive impact in the number of both downloads and daily active users (DAU).

Brazil is a continent-sized country with over 212 million people and internet penetration of around 80%. Although Brazil represents 42% of e-commerce in all of Latin America, its penetration in retail sales is still relatively low, at around 5%. As such, there is still much room to be explored towards a cultural and behavioural change in consumers, who still turn mostly to brick-and-mortar stores.

The reasons for preferring brick-and-mortar stores are many, such as the need to try something on, possible differences between the photo and the product, fear of fraud related to payment forms, preferring to immediately consume the product without waiting for delivery, among others.

These times of physical isolation make it necessary to adopt new consumption behaviours, and the alternative is using digital stores and services, leading many people to turn to online shopping experiences for the first time. In China, Alibaba registered growth of 22% in January and February 2020, when the country already was under lockdown, and the same trend should happen in other countries on alert. 

According to Ebit/Nielsen data, this atypical trend in new e-shoppers already emerged as well in Brazil in March, with the country posting above-average growth compared to last year. Categories such as Personal Care, Home Care, Baby Products and some supplies registered significant growth from January to March 2020.

Source: Ebit/Nielsen [click to enlarge]

Besides ecommerce, digital goods and services (deliveries, virtual content, entertainment, communication and social interaction) is another industry that was impacted dramatically by the current scenario. In this first quarter, app downloads worldwide posted growth of 7%, and this figure could rise due to the intensification of physical distancing in Brazil and most other countries.

The mass adoption by companies of working from home policies also has driven growth in e-commerce and the technology industry in general. During this period, sales of notebooks, software (SaaS) subscriptions and other computer devices has registered strong growth. Microsoft posted a 500% increase in the use of conference call tools in China since January 2020, while the app Zoom became the leader in iOS downloads in the United States and 11 other markets in early March.

Another important trend is in B2B commerce, which in these times also is expected to seek alternatives and resources for sourcing inputs and for business support. As such, they should resort increasingly more to the digital world for their procurement solutions. 

A particular characteristic of the Brazilian shopping experience is the preference for payments in local currency and local payments means, especially during these times of sharp fluctuations in the exchange rate. Thus, online stores and software and app companies must adopt ways to process local payments to reach recurring e-shoppers, as well as those just starting their online shopping experiences. Companies could lose market share if they do not present local options such as boletos, local debit and credit cards and instalment options for mid- and high-ticket purchases, which are highly sought by Brazilians and are part of the local payment culture.

Investing substantially in User Experience from end to end, including payments, is essential at this time to build an effective go-to-market strategy and win over new clients (whether B2B or B2C) to ensure their retention during and after this time of physical distancing.  

About Luiz Henrique Didier Jr.

With over 25 years of experience at leading financial institutions in Brazil, Didier’s fields of expertise include innovation in payment processing, marketing, product and business development and Brazilian foreign exchange regulations. At Bexs Bank, his main challenge is to bring innovation and technology to facilitate, through payment transactions, access to global goods and services for Brazilians and to the best Brazilian goods and services for the world.

About Bexs Bank

Bexs Bank is specialised in international payments processing and FX transactions for global e-commerce, SaaS and investments. Through a unique API Platform, our solution provides the collection of Brazilian currency via local payment methods, helping both big and small companies to connect with customers in the digital world and to expand their customer base geographically.

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Keywords: Luiz Henrique Didier Jr., Bexs Bank, COVID-19, coronavirus, ecommerce, SaaS, online shopping experiences, B2B commerce, digital world, e-shoppers, local payment culture, user experience, go-to-market strategy, B2C, US, Brazil, Asia, Europe, Latin America, Alibaba
Categories: Banking & Fintech
Countries: Brazil
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Banking & Fintech

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