Local Talent

In Some Parts Of The World, Regional Ecommerce Players Have Found Ways To Edge Out Amazon And Walmart.

- Lisa Lacy

Sometimes it feels like Amazon is taking over the world—or, at the very least, the world of retail. In providing fast, free shipping, operating from a customer-centric philosophy and swallowing up specialized retailers, Amazon has, by some estimates, put itself on track to capture 49 percent of the U.S. e-commerce market this year.

But Amazon’s seemingly airtight strategy doesn’t always translate overseas. The same is true of its nearest competitor, Walmart, which is America’s biggest physical retailer. In some markets, it’s local players rather than these two retail behemoths that have the advantage, due to factors ranging from cultural nuances to the lack of credit card use.

Magazine Luiza, or Magalu, is a 61-year-old retailer based in São Paulo, Brazil, that began as a purveyor of color TVs and has since expanded to sectors like furniture, smartphones, housewares, tools and toys. In 2000, Magalu launched its e-commerce business. According to analytics firm comScore, it was Brazil’s sixth most visited retail site in August 2018. Amazon, which didn’t arrive in Brazil until 2012, ranked No. 7—and Prime still isn’t available.

As smartphone adoption grows in Brazil, so too does Magalu’s e-commerce business—it had $4 billion in 2017 revenue and e-commerce accounted for about one-third. That’s up from 24 percent in 2016.

Magalu succeeded in part by developing its own delivery network— out of sheer necessity. “When you look at Brazil, we don’t have anything as well developed as UPS or FedEx. Even Brazilian mail is not as good as the United States Postal Service,” explains Frederico Trajano, chief executive of Magalu. “It’s complex and expensive and [doesn’t have] reliable delivery.”