article

A Conversation with New Global Partner Afilio: Part 2

Jan 24, 2018
Written by CJ

Below, we continue from A Conversation with New Global Partner Afilio: Part 1, our interview with founder Julien Turri, to gain some insight into how brands can successfully tap into these emerging Latin American markets.

CJ: What are the characteristics of the consumer in your market? What are their buying habits?

Julien: There are two things that I think are very specific to the region, especially to Brazil, that are very different than what you see in the US, and they involve the way people pay for stuff online.

In Brazil, on average, only 60% of transactions are paid by credit card. The other 40% is paid with a financial instrument called Boleto Bancario, which is basically an invoice. In that case, there’s a process involving the user, the retailer, and the bank. The problem with this is about 50% of these invoice transactions aren't completed (because of attrition). Many Brazilian consumers don't have a credit card, or don't have enough limit on the credit card, so they'd rather pay for products on a Boleto. In addition, because the retailers pay big fees to credit card companies in Brazil--it's much more expensive in the US—they usually offer strong discounts when customers pay with a Boleto (Pay $100 with a credit card or pay $90 with a Boleto.) International retailers interested in this market, either need to be hooked up to the Brazilian bank system (to accept Boleto) or have a local subsidiary.

The other interesting thing is Brazilian users love to get installments, which is usually done via credit card. However, in that case the consumer pays more in interest—and interest rates are very expensive in Brazil. Brazilian users are interested in understanding the difference between paying instantly versus using installments to make sure they are getting the most cost savings in the long run. International retailers should consider offering installments as a payment option.

It’s also important to mention that overall, about 8%-10% of a company’s sales are from affiliate consumers.  

 

CJ: How would you characterize the audience segments of the market? For online penetration, does it skew young, old, college educated, etc.?

Julien: Until 1988-89, there were no imports of computers at all in Brazil because the military regime at the time didn't want any imports of sensitive technology. That has since changed. Brazilian online buyers are about 50% female and 50% male. Most of the users are between 18 and 50. These consumers are usually college educated and have disposable income. Just like in the US, the wealthiest people have nearly 100% internet penetration. People with more money in Brazil have always been really connected to the internet.

That said, we're seeing growth across all income levels. There's growth with people who understand buying online can be cheaper, more convenient, offer more choices, offer installments, etc. Now that most have inexpensive smartphones and cheap data plans, they can make a lot of transactions. Because of that, we're seeing a lot of growth in brands that traditionally were not online.

 

CJ: What else should we know about Brazilian online behavior?

Julien: Black Friday didn't exist previously in Brazil. But lately it has become huge, as a direct influence from the US. Now, all the retailers prepare for it and offer deals. It's now the largest week of sales of the year for all the retailers.

 

CJ: How do the import taxes impact penetration opportunity for a retailer selling products to Brazil?

Julien: When it comes to online retailing, apparel, electronics, and other goods over $50, there's going to be anywhere from a 50% to 100% import tax. There are exceptions like books and some cultural products that are not taxed at all.

We have clients that sell internationally, who have done all the calculations door-to-door. In that case the total cost, including import taxes, freight, etc., is all included in the listed price. We're seeing growth in that area. It offers the user a choice so they don’t have to guess, “How much is that going to cost at the end?” If it's a $40 Polo shirt in the US, they know upfront they are going to pay $80 total for it to be delivered to their door. But we are also seeing businesses opening up subsidiaries in Brazil to ease that situation.

 

CJ: From an infrastructure standpoint, who is responsible for increasing the scale of internet adoption in Brazil?

Julien: We have two initiatives in Brazil: one public, one private. There are regulations about what the telecoms can or can't do. There's been a lot of talk in Brasilia, the capital, about helping private companies build more infrastructure, especially in the poorer parts of the country. There are plans for wiring a huge part of Brazil with broadband.

4G has been growing, and getting a lot cheaper as well. We have 200 million people, 220-240 million cell phones and about 80% of their plans are prepaid. But now, for example, a lot of the telecoms are offering unlimited internet usage for 1 Real (about 30 cents) a day. Also, retailers or banks will offer WiFi when you use their apps or shop on their web sites. It's definitely going in the right direction.

 

CJ: Are travel, retail, and finance verticals all seeing the same activity?

Julien: Finance, or the non-ecommerce as we call them, is small at the moment. They're slowly getting into performance marketing. Even the telecoms, which are selling cell phones and plans by the millions, don't quite understand online performance just yet. I think there was so much unmet demand for a while that everything was easy to sell. And now that the market is getting closer to saturation, they’re more concerned about share online.

Retail is still number one, but travel is an interesting segment and growing like crazy. Travel is really strong for us.

 

CJ: What would you say affiliate is getting right as a channel in your market? And where is there room for improvement?

Julien: There is room to improve affiliate acquisition strategies so they match the branding strategies of the big retailers. Sometimes, there is a big disconnect between branding campaigns, and the needs for sales campaigns. And it's not always obvious (for clients), what strategy and what kind of support they should give their affiliate business.

On the other hand, affiliate is driving interesting, and valuable, traffic through a lot of different distribution methods that advertisers wouldn't otherwise touch, such as smaller websites, content websites, coupon websites, email marketing, etc. When it comes to leveraging these formats they're slow to adopt. At Afilio, we help them by, facilitating at scale. You’ll have one contact, one tag, and one report to handle many publishers. Our goal is to make marketing easy.

 

Share
   
Junction Newsletter

Get industry best practices and thought leadership delivered straight to your inbox.

Advertisers & Agencies
Expand Your Brand’s Reach

Achieve sustained growth and reach your target audience. Work with world-class publishers and influencers to successfully promote brand products and services.

Publishers & Influencers
Partner with the World’s Best Brands

Earn seamlessly by partnering with the world’s most widely recognized brands, promoting products and services your audience enjoy. Engage with brands you know and love all in one place.