Amazon embarks on data-driven logistics pilot in Brazil using bullet-proof trucks
Here are three important points about Brazil: first, the country’s ecommerce market is substantial and fast growing. Second, logistics is a major difficulty, as the country is huge but many roads are unpaved and road robberies are frequent. And third – Amazon is a relatively minor player in the country’s online retail scene. However, a new logistics pilot looks to change that last fact.
Amazon’s share price has risen by 64% so far this year
SOURCE: Yahoo Finance
Brazil has an ecommerce scene that would be worth anyone’s time. Online sales in the country are expected to rise 12% this year to a not-insignificant $13.7 billion. In 2017, they grew by a still impressive 7.5%. However, if the prize is worth winning, the competition is hard.
Ecommerce players in the country aren’t just competing against themselves – they’re competing against problematic external factors. For one thing, Brazil is a huge country (about the size of the continental U.S.) – but many of its roads are unpaved, which presents transportation problems. Further to this, roadside robbery is so commonplace that news outlets barely bother to report it anymore. These logistics challenges mean that trucks are responsible for most of the moving of products around the country.
For whatever reason, Amazon hasn’t rushed to conquer Brazil’s ecommerce market. A year ago, the company started selling electronics and household appliances. For the preceding five years, it only sold books. As a result, it’s way down on the market-share list. In fact, it’s just the eleventh largest ecommerce operation in Brazil.
The company is partnering with Cargo X – an “Uber-style” business that connects truckers to companies requiring their service. Cargo X will be using bullet-proof trucks to mediate the dangers of roadside crime when delivering expensive goods, but these armoured vehicles will be slower than their more fragile peers. Amazon is hoping that predictive data and other tech can help close the speed-of-delivery gap.
Time will tell whether Amazon can disrupt the incumbent ecommerce powerhouses in the country – but the simple news that Amazon is making a push into their market has already disrupted their share prices.
Dominion holds Amazon in its Global Trends Ecommerce Fund.
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