WAL-MART
Retailer setting up base for online business in Latin America
doubles e-commerce staff in Brazil.
Wal-Mart Stores Inc. is doubling e-commerce staff in Brazil as it seeks to displace B2W Cia Digital as the top online seller in Latin America’s largest economy.
The world’s largest retailer is setting up headquarters for its Latin American online business in suburban Sao Paulo with perks such as a nap room and videogame center more typical of Silicon Valley. By the end of the year, about 900 employees will be working at the unit, and there are plans to boost headcount to 2,000 next year, according to Flavio Dias, the vice president for Wal-Mart’s Brazilian online sales.
Wal-Mart’s Web-based sales are growing twice as fast as the industry average in the country as online competitors struggle to meet guarantees for on-time deliveries. The retailer, based in Bentonville, is planning to build additional distribution centers to get products to customers faster and will start importing items unavailable in Brazil, such as Graco Inc. baby strollers and coolers from Newell Rubbermaid Inc.
“We can create a portfolio of exclusive new products that will be unique in the Brazilian market,” Dias said in a telephone interview from Sao Paulo. “The potential for growth in e-commerce in Brazil is very big.”
Online sales in Brazil rose 24 percent in the first half to $5.3 billion, and this year’s total will probably reach $12 billion, according to E-bit, a Sao Paulo-based research company. Wal-Mart’s Web sales in Brazil, one of four priority e-commerce markets for the U.S. retailer globally, are growing at a rate of more than 50 percent, Dias said.
He declined to say how much Wal-Mart is investing as it ramps up online operations in Brazil or discuss whether the company is currently making a profit in the country. Wal-Mart doesn’t disclose how much revenue it gets from Brazil.
In the U.S., Wal-Mart faces competition from Amazon. com Inc. More than 12 years after opening its Web store, Wal-Mart generates about $5.15 billion, or 2 percent, of its total annual sales online, according to research and consulting firm Kantar Retail, which is based in London. Amazon’s North American sales last year totaled $34.8 billion.
B2W is Brazil’s biggest online retailer, followed by Cia Brasileira de Distribuicao Grupo Pao de Acucar’s Nova Pontocom unit, said Alan Cardoso, an analyst at Banco Safra de Investimento SA in Sao Paulo who covers the companies. Amazon.com, the world’s largest online retailer, sells only e-books in Brazil. Because of different calculation methods, it isn’t possible to say how much of the online market the companies control, he said.
B2W declined to comment through a press official at In Press Porter Novelli, an outside agency that represents the company.
Wal-Mart will open its first distribution center in Sao Paulo this year after relying on warehouses owned by third parties, Dias said.
“We can deliver faster and at a lower cost by being closer to consumers,” Dias said. Brazil’s southeast region, which includes Rio de Janeiro and Sao Paulo, generates 65 percent of Brazil’s online sales, according to E-bit.
Logistics and on-time delivery have been challenges for online retailers in Brazil, and Wal-Mart is working to overcome the obstacles, Dias said. Rio de Janeiro-based B2W, which was 2011’s worst performer on the Ibovespa index after failing to deliver goods during the Christmas season in 2010, is investing about $425 million in 10 distribution centers.