Alibaba and Brazil’s Correios form closer e-commerce ties

Alibaba and Brazil’s state postal service company, Correios, have formed a partnership to boost bilateral trade between the two countries. Alibaba will leverage Correios’ local delivery network, warehouse and customs clearance capabilities and will help Brazilian small businesses to sell their product to Chinese buyers through its B2B website and its online payment system.

Brazilian e-commerce is increasing due to the growing number of consumers buying online. For 2013 online retail sales were estimated at US$13.3bn, up 28.0% over 2012 according to e-bits, a Brazilian market research company.

According to Correios, its e-Sedex was launched in 2000 as an express delivery service for the e-commerce market. It is available in 290 cities and served more than 5,000 stores in 2012 and delivered 21.1m orders, 19.0% over 2011. Its other postal services include Sedex (Express Post) and CAP (economic orders). Earlier in July, in an agreement with Neopost ID and Packcity, Correios installed six Packcity parcel lockers in select post offices, metro stations and shopping malls.

The Alibaba and Correios agreement comes as Alibaba established similar agreements with postal services in Australia, France, Italy and Singapore which it took a 10% financial stake in Singapore Post.

The partnership could prove beneficial for Brazilian small-to-medium size businesses looking to sale goods on Alibaba’s marketplaces. However, according to a DHL eCommerce Shop the World study, 57% of Brazilian online shoppers shop on manufacturer’s or specialized dealer’s online store in comparison to shoppers on a global scale preference towards online marketplaces such as Alibaba’s Tmall or Taobao. This preference may likely change over time as more companies enter Brazil’s e-commerce market – and it may actually come soon. For example, is expanding quickly in Brazil and currently has three distribution centers with plans for three e-commerce fulfilment centers to open this year and next year. It is also adding inventory to its online website to take advantage of its global supply chain in order to bring in more well-known consumer brands from the US and elsewhere. According to President Flavio Dias, “We intend to double the marketplace. The sale of the imported items on the site has grown by more than 400%.”

As online retailers such as Alibaba’s websites and Walmart expand further into the Brazilian e-commerce market, they will be met with logistical challenges including last mile delivery, payments and adequate warehousing and fulfilment networks. However, with the likes of DHL emphasizing e-commerce cross-border logistics particularly in emerging markets such as Brazil along with FedEx and UPS expanding their domestic capabilities within the country, these challenges are likely to be met with creative solutions thus allowing Brazil’s e-commerce market to grow an estimated 11.7% for 2014 according to eMarketer.