Amazon Is Coming to the Amazon, Shaking Brazil Retailer Stocks

  • B2W, Magazine Luiza slump on internet giant’s expansion
  • It’s a new paradigm for Brazilian e-commerce, BTG says

How Jeff Bezos Became the King of E-Commerce Inc. is pushing into Brazil in earnest, sending a shudder through local retail stocks.

After selling just books for a couple of years, Amazon is signaling it will expand in Latin America’s largest market, recruiting for several positions in Brazil, Bloomberg reported this week. Newspaper Valor said Amazon will begin selling electronics as soon as next week, because they’re in high demand and are easy to transport, and add additional products by year’s end.

Shares of Brazilian retailers continued to slump Friday after a BTG analyst said Amazon has substantial market share in e-commerce already just by selling books and operating a marketplace in Brazil. E-commerce outfit B2W Cia. Digital sank as much as 15 percent, while its parent company, Lojas Americanas SA, lost as much as 4.8 percent. Casino Guichard-Perrachon SA’s Via Varejo SA dropped as much as 12 percent, and market darling Magazine Luiza SA as much as 11 percent.

MercadoLibre Inc., the Buenos Aires-based online marketplace with major operations in Brazil, rebounded as much as 2 percent on Friday in New York trading after sliding 10 percent on Thursday.

Amazon had gross merchandise volume in Brazil of 200 million reais ($63.4 million) in 2016, up 65 percent from 2015, BTG analyst Fabio Monteiro said. The Seattle-based company has roughly 20 percent of traffic that B2W’s has, and half the traffic of the other large e-commerce companies, which is an important competitive advantage, he said.

The market is overreacting, JPMorgan Chase & Co. said.

“This move by Amazon should not be market disruptive, particularly when thinking about the short/mid-term as the company may face some challenges to expand in the country,” analysts led by Joseph Giordano wrote in a note. “It may take time to establish the company in Brazil to become a major market contender.”

Still, BTG sees a major change on the horizon. This a “new paradigm for Brazilian e-commerce,” Monteiro said in a note.

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