E-commerce: Meet the Amazon of the Amazon rainforest

amazon e-commerce Ferry along the Paraná Madeirinha River transporting Bemol containers from Manaus to Autazes. Photo: Courtesy of Bemol

Doing business in Brazil involves truly continent-sized challenges, implanting a model that is successful from the high-flying Southeast to rural villages in the Center-West, and everywhere in between. Indeed, when it comes to e-commerce, the word “Amazon” conjures up an entirely different meaning in the farthest-flung regions of northern Brazil, the most sparsely populated area in Latin America’s biggest economy.

Despite taking its name from the imperious river that snakes across northern Brazil from east to west, the U.S. tech giant has almost zero presence in the Amazon basin. Instead, the vanguard of e-commerce in Brazil’s North is led by Bemol, a 78-year-old retail chain shipping electronics, domestic appliances, and furniture to some of Brazil’s most remote villages.

</p> <p>With a fleet of trucks, ferries, and boats, Bemel reaches more than 50 municipalities in the western Amazon, spanning the states of Amazonas, Roraima, Rondônia, and Acre. As <a href="">e-commerce boomed during the coronavirus pandemic</a>, Bemol saw its online sales to remote riverside communities increase tenfold by the end of 2020.</p> <p>Eighty percent of Bemol’s business comes from Amazonas, and until a few years ago it was almost completely concentrated in the state capital Manaus, home to half of the state&#8217;s population. In early 2019, 97 percent of sales in Amazonas were made in <a href="">brick-and-mortar stores</a>, as e-commerce was largely unheard of.</p> <p>In late March, all of the chain&#8217;s stores were forced to close, as the Manaus health system collapsed under the strain of the coronavirus pandemic. Businesses were thrust into uncertainty and Bemol faced two main challenges: how to sell their products, and how customers could pay for them.</p> <p>Outside the tech-savvy Southeast, major retailers in Brazil traditionally sell goods by way of a consumer credit system known as <em>crediário</em>, but these payments require customers to attend physical stores in order to finalize their purchases.</p> <h2>Business in the Amazon: Swimming against the Covid tide</h2> <p>“We created a crisis committee and defined three major strategies,&#8221; explains Bemol&#8217;s CFO, Marcelo Forma. &#8220;The first was to take care of our employees’ health and customers with a well-structured health protocol. The second strategy was to decide that we would not fire anyone and use all the government tools available to us. Even so, if it were not enough, we would ensure [the employment of] our entire sales force. The third strategy was to take care of the company’s financial health.” Combined with loans and negotiations with suppliers to postpone payment terms, the three strategies worked.</p> <p>With the sharp drop in physical sales, the company focused on e-commerce, improving user experience on its website, investing in promoting its online services, diversifying its offers, and reducing delivery times. “We started to understand needs that our customers had that went beyond our traditional selection and we were able to incorporate <a href="">food products</a>, as we saw that there was a great need for the population in the region. Nobody used to deliver basic food items through e-commerce,” Mr. Forma explains.</p> <figure class="wp-block-image size-large"><img loading="lazy" width="1024" height="486" src="" alt="Click and collect in the middle of the Amazon. Photo: Courtesy of Bemol" class="wp-image-55008" srcset=" 1024w, 300w, 768w, 1536w, 2048w, 600w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Click and collect in the middle of the Amazon. Photo: Courtesy of Bemol</figcaption></figure> <p>In the first month, 2,000 basic food items were sold through Bemol’s consumer credit system, and the company expanded into offering products from its chain of pharmacies.</p> <p>While Bemol stores remained closed, e-commerce accounted for half of the company’s total sales. The other 50 percent came by way of telesales and social selling, mainly via WhatsApp Messenger.</p> <p>The retailer also gave its customers a one month grace period to begin paying installments, in addition to creating two drive-thrus and providing couriers to physically collect payments at customers’ homes. “A 36-percent drop in sales in April turned to a smaller decrease of 9 percent in May. In June, as stores opened, sales rose 50 percent,” says Mr. Forma.</p> <h2>Bemol’s riverside e-commerce pilot project</h2> <p>Back in April 2019, Bemol already had its eyes on expanding its e-commerce platform to remote parts of Brazil&#8217;s North. The company set up a pilot project in the tiny municipality of Autazes, a town that is two boat rides and an additional 90-minute journey by road from Manaus. In the main square of Autazes, Bemol set up free Wi-Fi connections for customers to buy products at Manaus prices, typically 30 percent cheaper than elsewhere in the state. In addition, Bemol offered free shipping, three-day delivery, and allowed customers to pay in interest-free installments.</p> <p>&#8220;The results we projected to achieve within a year, we achieved in the first month,&#8221; explains Bemol&#8217;s CFO.</p> <p>In riverside villages, Bemol set up kiosks where customers could search for the products they bought online, access the internet, and sign up for the company&#8217;s loyalty program.</p> <p>In small municipalities, the retailer works with partner companies in order to carry out last-mile delivery. The logistical challenges of such an operation are significant, not least because the state is almost completely reliant on river transport. Indeed, waterway transit in the region is mainly passenger-based, and it is rare to see vessels that only transport cargo.</p> <p>With passenger traffic suspended due to the pandemic, boaters sought out commissions to transport goods to and from <a href="">Manaus</a>, with Bemol&#8217;s products filling an important gap.</p> <h2>Bemol expanding into financial services</h2> <p>Access to credit through financial institutions is far more complex in riverside communities, as very few citizens have bank accounts and branches are even more scarce. Furthermore, there is a persistent issue with cash transactions, as shopkeepers are rarely able to offer change. With this in mind, Bemol is seeking to expand its <em>crediário </em>system by creating its own free digital account for residents in remote riverside communities.&nbsp;</p> <p>“In January we are opening a smaller store in Autazes, where the second floor will double up as a warehouse to speed up delivery times and a base for us to offer the financial services that will be launched at the beginning of the year,” says Mr. Forma.</p> <p>Bemol’s digital account will include basic services such as bank transfers and payments, while also allowing for installment plans and personal loans, which are currently being trialed. Soon, the idea is for each of Bemol&#8217;s stores in Amazonas to serve as mini branches of the retailer&#8217;s own &#8220;bank.&#8221;</p> <p>“We are already on a journey of intense digital transformation. We saw that what brought us here, perhaps, would not be enough to lead us into the future. The pillar of digital transformation is a priority,” says the CFO, who adds that the transformation is, above all, cultural. “It&#8217;s no use just using technology, we have to change the company’s mindset.”</p> <p class="has-text-align-center"><a href="">This article was originally published on LABS – Latin America Business Stories, a news platform covering business, technology, and society in the region for an English-speaking audience.</a></p> <figure class="wp-block-image size-large"><a href=""><img loading="lazy" width="1024" height="124" src="" alt="" class="wp-image-41934" srcset=" 1024w, 300w, 768w, 610w, 1320w" sizes="(max-width: 1024px) 100vw, 1024px" /></a></figure> <p>

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Isabela Fleischmann do Amaral

Isabela Fleischmann do Amaral is a junior content analyst at LABS.

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