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Amazon Boosts Presence in Brazil With E-commerce Intiatives

Zacks Equity Research

Amazon AMZN plans establish a new distribution center in Brazil in a bid to ramp up initiatives to strengthen e-commerce presence in the country.

The new facility, which will be located in Cabo de Santo Agostinho municipality, will mark the company’s second such facility in the country.

The company aims at strengthening logistics system in the country. This will enable the company to accelerate deliveries. Amazon strives to reduce its minimum delivery time to two working days.

The latest move bodes well for its constant efforts toward bolstering delivery infrastructure. The new distribution center is expected to start operating from first-half 2020.

Further, rapid deliveries will help Amazon enhance shopping experience, which in turn will strengthen customer base in the country.

Brazil Holds Promise

The latest initiative of Amazon is likely to benefit the company as Brazil is witnessing rapid increase in Internet usage.

Per a report from eEbit Webshoppers, revenues in the e-commerce space of Brazil exhibited double-digit growth of 12% in 2018 for the first time since 2015.

Further, according to a report from Statista, revenues in this particular market are expected to reach $15.3 billion in 2019. Further, revenues are expected to achieve $16.9 billion by 2023, witnessing a CAGR of 2.5% between 2019 and 2023.

User penetration in 2019 and 2023 is projected at 60.5% and 66.5%, respectively.

This immense growth potential of the market can be attributed to rising demand for apparel in the fashion world.

Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. Price and Consensus

Amazon’s Growing Initiatives

We believe Amazon is well-poised to capitalize on the prospects present in the e-commerce space of Brazil on the back of its endeavors.

Apart from the latest move, the company initiated direct sales of merchandise by establishing its first in-house fulfilment and delivery network in Brazil in the beginning of the year.

The company offers various products that include at least 200,000 books, via its direct sales platform. Moreover, merchandise offerings under 11 categories from more than 800 sellers are in sync with the company’s strategy of growth.

Further, Amazon has recently rolled out Prime Subscription services in the country. Notably, Prime members in Brazil have now access to unlimited nationwide free shipping and a maximum 48-hour delivery time in more than 90 municipalities. Products eligible for Prime delivery include all types of goods ranging from clothes to electronics.

In addition to these benefits, the Prime subscribers have access to movies, music, and digital books and magazines on the Prime platform.

We believe all the above-mentioned efforts of Amazon will provide it a competitive edge against the likes of MercadoLibre MELI, Alibaba BABA and Walmart WMT, which are also putting their best foot forward to bolster presence in the e-commerce space of Brazil.

Moreover, Amazon’s strengthening e-commerce capabilities are likely to pose a serious threat to the local retailers of Brazil.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Click to get this free report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report MercadoLibre, Inc. (MELI) : Free Stock Analysis Report Walmart Inc. (WMT) : Free Stock Analysis Report To read this article on Zacks.com click here.