Brazilian eCommerce Solves Consumer Pain Points (Ground Floor Opportunities on Converging Secular Trends)
I’m an American who has been living in Brazil for 3 years. I’ve been able to analyze the consumer processes by buying products on and offline. My wife sells clothing online via several of the companies listed below.
Buying products in physical stores in Brazil is a painful experience.
- You have to wait in long lines.
- You have to go through a long process with multiple employees and desks just to purchase a product and arrange shipment of appliances.
- There is a lot of paperwork and they place a lot of value on the papers that they require you to present in a physical form for returns and guarantees.
- Returning a product is very difficult.
- Brick and Mortar products are also more expensive!
Online stores are cheaper, easier, frictionless, faster, less bureaucratic, and allow more payment options.
The question becomes…why would anyone buy anything in a physical store anymore? Well, many Brazilians don’t have a bank account and only use cash. One reason to bet on the two companies mentioned below that operate both online and offline.
The Amazon of Brazil is Mercado Livre.
and they have a new SPAC that I think might include online payments/crypto as the founder started the most disruptive Bank in Brazil: NuBank https://contxto.com/en/news/mercado-libre-kaszek-ventures-adquirir-empresa-en-latam-via-spac/
Brazil is set to make Bitcoin legal tender, following in the footsteps of El Salvador.
Other notable companies that sell things online are Casas Bahia and Americanas that have brick and mortar stores that are similar to mini Walmarts.
Americanas S.A. (BVMF:AMER3) Is About To Turn The Corner
Americanas S.A. ( BVMF:AMER3 ) is possibly approaching a major achievement in its business, so we would like to shine…
Casas Bahia: https://macroops.substack.com/p/via-varejo-vvar3
Since the pandemic, people are buying things online more. Since Mercado Livre (Libre is Spanish, Livre is Portuguese) Company is Argentinian.
If you add the fact that more Brazilians are getting connected to the internet and getting comfortable with buying things online, its a great combo for investment.
Mercado Livre already is the market leader and since the pandemic they have gotten even better at the logistics aspect, making same day deliveries like Amazon. They are ahead of all competition on the logistics.
OLX is another great online retailer similar to Ebay and Craigslist. But you have to invest in their parent company https://www.stash.com/investments/stocks/prosus-nv-prosy/
Singapore based Shopee has really disrupted Brazilian eCommerce lately. They are temporarily subsidizing shipping to get people to join the platform.
https://www.sea.com/investor is the company that owns them.
I really like how foreign companies like Mercado Livre and Shopee have disrupted the stale practices of domestic industry. Brazilian business culture is ripe for disruption!
Get Ninjas is an interesting one. They are like the thumbtack of Brazil. Brazil really needs a way of hiring people independently due to the strict labor laws here. Its even more of a value prop than in the USA where Thumbtack has solved a lot of problems. https://labsnews.com/en/news/business/with-ipo-below-forecast-getninjas-will-debut-on-brazilian-stock-market-on-monday/
Secular Trends That Favor Growth In All Companies Listed Above
- More People Buying Online
- More Brazilians Getting Internet Access and Computers/Smartphones
- Brazilian Economic Growth as an Emerging Market
- Online Payment Disruption via Crypto and other technologies
- More Brazilian making money and getting bank accounts/credit cards to buy things online.
Other tailwind factors
- Favorable Crypto Governance in Brazil
- Complex Labor Laws Ripe For Disruption for services like GetNinjas
- Logistics Improving in Brazil For Same Day or Next Day Shipping
Even though this angle of combining technology, crypto, an emerging market, and disruptive practices looks like a recipe for super success, you can’t underestimate the Brazilian government’s ability to mess things up or an overall economic depression that could tank these stock prices for awhile. Buy the dip!
The cool thing here is that we are at the beginning. The beginning of Crypto in Brazil. The beginning of this SPAC offering. The Beginning of GetNinjas going public. And if you want to spread your risk across different geographic locations, you could invest in the parent companies of Shopee, OLX, or Mercado Libre.
Disclaimer: I am not a financial advisor and I don’t give financial advice.
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