Amazon Expands Business In Brazil As E-Commerce Surges During COVID-19

Online retailer Amazon is expanding business in Brazil on the back of a surge in e-commerce due to the coronavirus pandemic.

The company announced on Monday the opening of three more logistic centers in South America’s largest economy, pushing the total number of centers in the country to eight. The new units in Minas Gerais, Rio Grande do Sul and Brasilia are already in operation.

This is Amazon’s biggest expansion in the market since it set up shop in Brazil in 2012, adding 75,000 square meters of distribution space, Reuters reported. The company said this will create 1,500 direct jobs.

With the new centers in place, Amazon will be able to increase the number of cities where Amazon Prime services, like two-day delivery, are available. The Prime loyalty program was launched in Brazil in 2019.

"Brazil is the country with the fastest growth in Amazon Prime subscriptions," Alex Szapiro, Amazon’s chief executive in Brazil, told Reuters.

As a result of social distancing and lockdowns prompted by the pandemic, scores of businesses have gone online. Companies like MercadoLibre (MELI), Via Varejo, GPA and Magazine Luiza are expanding to benefit from the e-commerce boom in the country.

Customers are also switching to online shopping in the wake of COVID-19. This is reflected in the Q3 results of MercadoLibre, Latin America’s e-commerce leader. In Latin America, the company’s net revenue increased by approximately 150% in the third quarter, while its operation in Brazil, one of its most important markets, more than doubled.

The pandemic has been a profitable period for big tech e-commerce companies as brick-and-mortar shops remained closed and people turned to online shopping. In its third quarter, Amazon tripled its profits from a year ago, from $2.1 billion to $6.3 billion, due to strong retail sales and an increase in cloud computing.

The company said its cloud division Amazon Web Services saw revenue growth of 28% in the quarter to $11.6 billion. It expects net sales for the key year-end shopping season to be between $112 billion and $121 billion, growing 28 to 38%.