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WebShoppers 27th Edition - English Version

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WebShoppers 27th Edition - English Version

  1. 1. Table of Contents WebShoppers................................................................................................. 03 e-bit............................................................................................................ 04 e-bit products................................................................................................ 06 Report methodology......................................................................................... 07 Executive Summary......................................................................................... 08 Report Structure………....................................................................................... 10 Chapter I - 2012 conclusion and segment expectations for 2013……............................. 11 Chapter II – Digital Commerce............................................................................. 21 Chapter III – Payment Methods….......................................................................... 24 Chapter IV – Buscapé/FIPE Index.......................................................................... 33 Major e-bit clients…………….................................................................................. 38 About e.net-chamber........................................................................................ 39 Press information……………................................................................................... 40 Contact information.......................................................................................... 41 2 Copyright e-bit – All Rights Reserved
  2. 2. WebShoppers Created by e-bit, WebShoppers aims at disseminating key information regarding electronic commerce in Brazil Published semi-annually, the report assesses e-commerce progress, trends and estimates, consumer preferences and behavior changes, in order to identify trends and thus contribute to the segment’s development. 3 Copyright e-bit – All Rights Reserved
  3. 3. Operating in the Brazilian market since January 2000, e-bit has been monitoring the development of Brazilian digital retail from its very beginning, and has become a major reference in the segment. Through its sophisticated system, which gathers data directly from online buyers, e-bit generates detailed e-commerce information on a daily basis. The e-bit website provides essential information for the consumer decision-making process (www.ebit.com.br), in addition to offering services and products to retailers. The e-bit retailer certification helps leverage consumers’ confidence in online purchase transactions. The medal-rating system (Diamond, Gold, Silver and Bronze) certifies the quality of services offered by retailers, and assists consumers in the purchase decision process. For executives and retailers, e-bit serves as a source of knowledge regarding e-commerce in e-bit the purchase decision process. For executives and retailers, e-bit serves as a source of knowledge regarding e-commerce in Brazil, and contributes to the development of businesses and the segment in general. Published semi-annually, the report assesses e-commerce progress, trends and estimates, as well as consumer preferences and behavior changes, identifying trends and contributing to the segment’s development. Learn more about e-bit and its main products below. 4 Copyright e-bit – All Rights Reserved
  4. 4. e-bit products e-bit Certification – A pioneer virtual store rating service in Latin America, and a major reference for electronic commerce in Brazil. e-bit covers over 8,000 virtual stores, whose consumers are asked to complete a survey upon concluding online acquisitions. The survey encompasses three stages: the first stage comes immediately after the effective purchase; the second takes place a few days later, in order to assess delivery quality; and the third stage evaluates product usability. The entire process is automatic and simple, carried out entirely online. e-bit Help – An exclusive service, free of charge, which helps consumers contact virtual stores. e-bit Help aims at reducing difficulties and the time spent by consumers attempting to contact stores, whenever products are not delivered. Electronic Commerce Information – Questionnaires completed on a daily basis by consumers, regarding the quality of services rendered by virtual stores, which are stored in e-bit’s database. By cross-referencing such data, e-bit generates reports that identify online consumer profiles – gender, age, income, educational background, habits – and offer comparative assessments of services provided by virtual stores, payment methods, invoicing, etc. Among the main reportscomparative assessments of services provided by virtual stores, payment methods, invoicing, etc. Among the main reports are: e-Dashboard – A cutting-edge tool that provides daily-updated information based on virtual store and market development, presenting data such as: number of orders, invoicing, average ticket, number of single consumers, geographical region share, category market share (computers, electronic products, etc.), purchase motivators, delivery status, payment methods used, among others. E-commerce Overview and Forecast Report: Provides market development data since 2000, including projections towards 2020. 5 Copyright e-bit – All Rights Reserved
  5. 5. e-bit products Price Monitor – In addition to reports that monitor Brazilian e-commerce transactions, e-bit also provides a monitoring service that collects information regarding price, competitiveness and virtual consumer purchase intent. The Price Monitor provides nearly real-time monitoring of product prices in virtual stores, in addition to rating categories, products and brands that are most sought-after by consumers when buying online, as well as product purchase intent and shipping prices. TOP HITS – Lists the most sought-after products by Brazilian e-consumers, detailing each category and sub-category’s share, based on Buscapé network data. Survey Panel - e-bit relies on a highly-qualified panel of survey respondents comprised of over 1.3 million virtual consumers. Respondents are invited to participate in quantitative and qualitative online surveys, for which they are granted coupons to compete for rewards. Survey respondent samples may be pre-selected based on gender, age, income, educational background, geographic location, and topics of interest.income, educational background, geographic location, and topics of interest. Behavioral Analysis Report: Provides executive information regarding the level of satisfaction with services rendered and the profile of virtual stores’ consumers, compared to the e-commerce market in general. Additionally, users can choose to receive comments from unsatisfied customers in real time, along with the respective order number. This allows immediately detecting eventual issues and adopting measures to solve problems and retain clients, promoting customer loyalty. Learn more about e-bit products at negocios@ebit.com.br. 6 Copyright e-bit – All Rights Reserved
  6. 6. The 27th edition of the WebShoppers report is based on information from surveys conducted by e-bit, encompassing over 8,000 virtual stores, and its consumer panel, in addition to ad hoc surveys and external data. e-bit Certification Survey Since January 2000, e-bit has gathered over 15 million surveys completed after online purchase transactions, and 250,000 new surveys are added to this total every month. e-bit data is also collected from online buyers, immediately after the acquisition. In addition to rating the virtual store and purchase experience, the e-bit certification service also allows buyers to rate post-sale services, customer services, probability of recurring purchases and store recommendation to friends and relatives, known as NPS (Net Promoter Score). Report methodology Such compiled information generates monthly Market Intelligence reports that establish social-demographic profiles of e- consumers, in addition to identifying the most sold products, most used payment methods, and repurchase indicators, among others. With the latest edition of WebShoppers, e-bit hopes to carry on contributing to the constant development of the Internet and electronic commerce in Brazil. Enjoy! e-bit staff 7 Copyright e-bit – All Rights Reserved
  7. 7. Executive Summary The segment ended 2012 with R$ 22.5 billion in earnings, an increase of 20% compared to 2011, when a total of R$ 18.7 billion was recorded in consumer goods sales. Balance sheets were compensated in the second half of the year due to the slight average ticket increase over the 2nd semester: R$ 338 X R$ 346. A total of 66.7 million orders were placed in 2012, a 24.2% increase compared to the previous year. The rising demand was accompanied by an increase in the number of virtual consumers (10.3 million new consumers). Currently, over 42.2 million people have performed at least one online purchase in Brazil. In 2012, 46% of those who made their first online purchase had a family income between R$ 1,000.00 and R$ 3,000.00 (Class C range). Categories with most orders were defined as follows: ‘Home Appliances’ in first place, with 12.4%, followed by ‘Fashion and Accessories’, increasingly consolidated, with 12.2%. In third place, ‘Health, beauty and medications’ with 12%. ‘Computer Products’ and ‘House and Decoration’ completed the ranking with 9.1% and 7.9%, respectively. 54% of orders placed included free shipping, which generated “savings” of R$ 1.09 billion to Brazilian consumers - a higher figure if compared to total shipping expenses in Brazil in 2012. The 46% remaining orders generated additional costs totaling R$ 932.1 million. In 2012, the Group Buying segment earned R$ 1.65 billion, an increase of 8% compared to 2011. However, the number of offers acquired recorded a much higher growth, totaling 25.3 million orders, which represents a 30% increase compared to 2011. In January 2012, the M-Commerce transaction volume share was 0.8%. In June, the index was 1.3% and, in January 2013, it reached 2.5%. Brazilian electronic commerce figures will continue to rise in 2013. According to the projections of e-bit, a specialized company in the segment, B2C e-commerce should present a rated increase of 25%, reaching R$ 28 billion in earnings by 2013. 8 Copyright e-bit – All Rights Reserved
  8. 8. Executive Summary According to such data, estimated B2C Digital Commerce earnings in Brazil in 2012 totaled R$ 49.7 billion (including R$ 22.5 billion earned by the virtual retail segment in consumer goods). The estimated B2C Digital Commerce market growth in 2013 is 19.8%, reaching total earnings of R$ 59.5 billion. An ad hoc survey conducted by e-bit indicates that debit cards were mostly used by women. According to annual data, 54% of e-consumers who use such payment method are women. The number of women who use this payment method is even higher among new e-consumers: 57%. The survey indicated that most consumers (19%) who used credit cards chose to settle the debt in a single installment. With the use of debit cards becoming increasingly popular in the market, this payment method is likely to gain increasing acceptance and rank amongst top e-consumer payment options. In February 2013, the Buscapé/FIPE Index, a report that analyzes the prices of over 1.3 million products in the Brazilian B2C e-commerce segment on a monthly basis, recorded an average price drop of -0.42%. Such decrease further consolidates the recent deflationary trend, interrupted in January 2012 (0.90%) and January 2013 (2.39%), whichconsolidates the recent deflationary trend, interrupted in January 2012 (0.90%) and January 2013 (2.39%), which potentially reflects a seasonal behavior of e-commerce prices. During a twelve-month period (Feb13/Feb12) the Buscapé/FIPE Index recorded a drop of -6.13%, with 9 out of 10 groups reducing prices and significant variations between product groups within the index. According to a survey conducted by FIPE, gains totaling R$ 5.8 billion stem from the fact that prices are 10% cheaper online, compared to the physical market, and gains totaling R$ 3.6 billion result from consumers’ access to price comparison tools, generating total savings of R$ 9.4 billion for Brazilian e-consumers. 9 Copyright e-bit – All Rights Reserved
  9. 9. Report structure CHAPTER I CHAPTER II CHAPTER III CHAPTER IV 2012 conclusion and segment expectations for 2013 Digital Commerce Payment Methods Buscapé/FIPE Index 10 Copyright e-bit – All Rights Reserved
  10. 10. CHAPTER I 2012 conclusion and Report structure 2012 conclusion and segment expectations for 2013 11 Copyright e-bit – All Rights Reserved
  11. 11. Chapter I Closing the 2012 books The year of 2012 ended with positive figures for Brazilian B2C e-commerce. The segment ended the year with R$ 22.5 billion in earnings, an increase of 20% compared to 2011, when a total of R$ 18.7 billion was recorded in consumer goods sales. Such figures confirm e-bit’s electronic commerce projections, provided in the last edition of the WebShoppers report. After the subpar performance during the 1st half of 2012, mainly due to the government’s difficulty in stimulating the economy, the segment caught second wind in the second half, compensating balance sheets mainly due to the slight average ticket increase in the 2nd semester: R$ 338 X R$ 346. The 2012 average ticket closed at R$ 342. One of the factors behind such increase is the higher number of seasonal dates in the 2nd half of the year, including Christmas. In addition to Father’s Day and Children’s Day, by the end of the year, Christmas was once again the most relevant seasonal date, recording the highest sales volume: R$ 3.06 billion. 12 Copyright e-bit – All Rights Reserved
  12. 12. Chapter I Additionally, Black Friday was permanently consolidated as a new seasonal date in Brazil, establishing record figures. On November 23, a total of R$ 243.8 million was recorded in online consumer goods sales, in only 24 hours; this represents an increase of 143.8% compared to 2011, which totaled R$ 100 million. A total of 66.7 million orders were placed in 2012, a 24.2% increase compared to the previous year. The rising demand was accompanied by an increase in the number of virtual consumers (10.3 million new consumers). Currently, over 42.2 million people have performed at least one online purchase in Brazil. 13 Copyright e-bit – All Rights Reserved
  13. 13. Chapter I An important factor is e-consumers’ satisfaction with B2C online retail; a positive sign for the segment, which continues to meet expectations, even with more deliveries and consumers to handle. According to data gathered by e-bit in partnership with the Movimento Internet Segura [Secure Internet Movement] (MIS), Brazilian Electronic Commerce Chamber committee (e.net-chamber), an average of 86.1% of Brazilian consumers were satisfied with B2C virtual retail in 2012, based on an excellence cutoff score of 85%. e-consumer profile The virtual consumer profile indicates that men and women are virtually tied, with a slight majority of females: 50.1% X 49.9% of males. Regarding new e-consumers, however, the difference is greater: 56.7% women X 43.3% men. Regarding age ranges, both new and “old” consumers share equal positions: 38% are between the ages of 35 and 49. 14 Copyright e-bit – All Rights Reserved
  14. 14. Chapter I An intriguing difference lies in educational background. Most new consumers (38%) currently attend High School, while consumers attending College (29%) represent the majority of more “experienced” consumers. Regarding income, the segment remains significantly supplied by the constant entrance of Class C members. Most e-consumers (37%) belong to this social class. The most relevant figure, however, refers to new consumers. In 2012, 46% of people who performed their first online purchase had a family income between R$ 1,000.00 and R$ 3,000.00 (Class C range). Most sold categories In 2012, categories with most orders were defined as follows: ‘Home Appliances’ in first place, with 12.4%, followed by ‘Fashion and Accessories’, increasingly consolidated, with 12.2%. In third place, ‘Health, beauty and medications’ with 12%. ‘Computer Products’ and ‘House and Decoration’ completed the ranking with 9.1% and 7.9%, respectively. 15 Copyright e-bit – All Rights Reserved
  15. 15. Chapter I Shipping: Expenses and savings According to e-bit data, 54% of orders placed included free shipping, which generated “savings” of R$ 1.09 billion to Brazilian consumers - a higher figure if compared to total shipping expenses in Brazil in 2012. The 46% remaining orders generated additional costs totaling R$ 932.1 million. Group Buying The 27th edition of the WebShoppers also provided new figures and data regarding the Brazilian Group Buying segment. In 2012, the segment earned R$ 1.65 billion, an increase of 8% compared to 2011. However, the number of offers acquired recorded a much higher growth, totaling 25.3 million orders, which represents a 30% increase compared to 2011. The average ticket dropped 17% between 2011 and 2012, ending the year at R$ 65.40. Such decrease may be explained by increased sales of Bars and Restaurants offers, which present lower average ticket compared to other categories of the segment, such as Tourism and Traveling.Bars and Restaurants offers, which present lower average ticket compared to other categories of the segment, such as Tourism and Traveling. 16 Copyright e-bit – All Rights Reserved
  16. 16. Chapter I According to the survey, 61% of e-consumers are still women and 39% are men, based on an average age of 39. Regarding educational background, 54% are graduates and have an average family income of R$ 4,144.00. Offer recommendation Of all consumers who acquired offers during 2012, 55% stated that they did not recommend the offer to friends or relatives, while the remaining 45% recommended offers. Among recommending consumers, 38% did so via email; 30% personally; 14% via telephone; and 12% via Facebook, which indicates that social networks are expected to gain more space in social-commerce and recommendation of products and services in the near future. However, when consumers were asked if they actually intended to recommend offers, responses varied slightly in each of the categories: 43% stated they intended to recommend via email; 33% personally; 8% via telephone; and 11% via Facebook. 17 Copyright e-bit – All Rights Reserved
  17. 17. Chapter I Mobile Commerce More than just a trend; a reality. That is how Mobile Commerce is interpreted within the digital market. The channel’s exponential growth clearly supports such statement. In January 2012, the M-Commerce transaction volume share was 0.8%. In June, it was1.3% and in January it reached 2.5%. With new applications and technologies focused on this type of commerce, progress will persist throughout the next few years. The Omnichannel and the ability to compare prices at physical stores are consumers’ main allies in this segment. 18 Copyright e-bit – All Rights Reserved
  18. 18. Chapter I 2013: what lies ahead? Brazilian electronic commerce figures will continue to rise in 2013. According to the projections of e-bit, a specialized company in the segment, B2C e-commerce should present a rated increase of 25%, reaching R$ 28 billion in earnings by 2013. Better results are expected, compared to 2012, due to the returning economic development and increased sales of mobile devices such as tablets and smartphones. Another element that indicates such growth is the constant entrance of Class C and D members into the market. Approximately 56% of new consumers belong to these classes, despite current signs of indebtedness which could eventually slow down consumption. In November, for example, 59% of consumers stated they had outstanding debts, 6.8% of whichslow down consumption. In November, for example, 59% of consumers stated they had outstanding debts, 6.8% of which stated they were unable to settle such debts, which invariably affects B2C e-commerce. If such indebtedness rate was lower, B2C e-commerce would grow even more. 19 Copyright e-bit – All Rights Reserved
  19. 19. Chapter I In 2013, the demand for TV sets is also expected to increase, since a significant number of Electronics was sold in 2010, especially LED and flat-screen TV sets, encouraged by the upcoming World Cup. In 2013, Brazil will host the Confederations Cup, which may anticipate the replacement of such products for the 2014 World Cup. 20 Copyright e-bit – All Rights Reserved
  20. 20. CHAPTER II Digital Commerce Report structure 21 Copyright e-bit – All Rights Reserved
  21. 21. Chapter II B2C Digital Commerce Estimates Much more than simply understanding the ‘traditional’ online retail segment, e-bit strives to understand the digital market as a whole. Based on this premise, the company conducted a survey that will be updated annually, revealing how other areas of the digital segment operate and generate revenue, covering Market Places, online ticket sales, airline and traveling tickets and packages, as well as group buying. Such segments are currently not covered by e-bit’s traditional survey collection methodology, and will be monitored with the aid of other statistical methods and processes. Such monitoring activity offers even more benefits for the digital market, since figures cover not only online retail history, monitored by e-bit since 2001, but also all operating fronts of the digital segment, virtually encompassing the entirety of B2C Digital Commerce, except for digital content sales, such as books, songs, apps and games. The methodology behind such estimates includes assessing internal data, public company information, market analyses, ad hoc surveys, audience ratings tools and market news. Numbers on the table According to data obtained from such assessment, 2012 B2C Digital Commerce earnings in Brazil are estimated at R$ 49.7 billion (including R$ 22.5 billion earned by the consumer goods virtual retail segment.) Such assessment indicates that Market Places accounted for a GMV (Gross Merchandise Volume) of R$ 6.5 billion in 2012, representing 13.2% of the B2C Digital Commerce total. Airline tickets, tourism and Ticket segments, in turn, represented a significant share of this total, accounting for 38.1%. Such relevance is attributed to the increased percentage of airline tickets and traveling packages sold online, with a growth rate above the GDP in the last few years. e-bit added the Group Buying segment’s 2012 earnings, totaling R$ 1.655 billion, to the B2C Digital Commerce total, as specified in the first chapter of this report. Finally, we also added online Consumer Goods sales in 2012, totaling R$ 22.5 billion, known as online retail or B2C e-commerce earnings, traditionally assessed by e-bit since 2001. This segment accounted for 45.3% of the B2C Digital Commerce segment in 2012. 22 Copyright e-bit – All Rights Reserved
  22. 22. Chapter II B2C Digital Commerce 2013 growth projections The B2C Digital Commerce market is expected to grow by 19.8% in 2013, reaching total earnings of R$ 59.5 billion. 23 Copyright e-bit – All Rights Reserved
  23. 23. CHAPTER III Payment methods Report structure 24 Copyright e-bit – All Rights Reserved
  24. 24. Chapter III Payment methods In the current WebShoppers edition, e-bit attempted to better understand how consumers relate to different payment methods, specifically with online debit payment. In 2012, 47% of e-consumers who used “Debit Cards” were performing their first online purchase. This indicates that, due to the segment’s maturity, newcomers are more confident and face less difficulties in using such payment method. Men or women? Debit cards are mostly used by women. According to annual data, 54% of e-consumers who used such payment method were women. The number of women using debit cards is even higher among new e-consumers: 57%. 25 Copyright e-bit – All Rights Reserved
  25. 25. Chapter III Consumer debit card satisfaction rates are also higher when compared to credit cards and payment slips. This is mainly attributed to the fact that debit cards provide fast-validating transactions, which expedites the logistics and product shipment processes and, as a result, increases online consumer satisfaction. Payment terms and installments are the main concerns of most consumers, right? Well, not quite. The survey indicated that most consumers (19%) who used credit cards chose to settle the debt in a single installment. With the use of debit cards becoming increasingly popular in the market, this payment method is likely to gain increasing acceptance and rank amongst top e-consumer payment options. 26 Copyright e-bit – All Rights Reserved
  26. 26. Chapter III 27 Copyright e-bit – All Rights Reserved
  27. 27. Chapter III B2C e-commerce market and electronic payment methods The Internet constantly expands around the world, as it grows into the most important and easy purchase and sale channel. Under the goal of understanding the needs and expectations of virtual consumers, as well as their consumption habits, Visa, a global payment technology company, studied such factors thoroughly. Results indicated a significant increase in the number of B2C e-commerce sales due to enhanced bandwidth access, greater use of banking services and security, as well as government reforms that stimulate the segment. Surveys indicate that Brazil presents a significant increase in the adoption of B2C commerce as a sale and purchase platform, revealing that the segment grew 43% between 2010 and 2011. The rise of B2C e-commerce consolidated Brazil as the top Latin American country in which online sales reached 1% of the country’s Gross Domestic Product (GDP). Among Latin America and Caribbean countries presenting the highest accrued electronic commerce purchases, in percentage order, Brazil leads the ranking with 59.1%, followed by Mexico (14.2%), Caribbean (6.4%), Argentina (6.2%), Chile (3.5%), Venezuela (3.3%), Central America (2.4%), Colombia (2%) and Peru (1.4%). The survey also indicates that Latin America is expected to reach a growth rate of 28.5% by late 2013. 28 Copyright e-bit – All Rights Reserved
  28. 28. Chapter III Another survey assessed countries’ ability and readiness to transform the Internet into a sales channel effectively capable of reaching consumers. The indicator showed that Brazil’s ability grew 31% between 2010 and 2011, compared among 18 countries throughout Latin America. Key points assessed to determine such positive results were market volume, technology infrastructure, banking services coverage, adoption of new technologies by consumers, and local offer potential. Based on such data, it is possible to infer that the reasons behind this segment’s development are not restricted to B2C e- commerce incentive, or even consumers’ confidence when performing online purchases. The positive scenario and perspectives regarding electronic commerce can also be explained by the increased use of electronic payment methods, such as credit and debit cards, which are replacing bank transfers and payment slips. According to e-bit data, for example, credit cards are the main choice of online consumers, accounting for 73% of all payments (mainly due to the possibility of payment in installments), followed by bank payment slips (18%) and others (8%). Such figures illustrate that onlinepayment in installments), followed by bank payment slips (18%) and others (8%). Such figures illustrate that online consumers prefer electronic payment methods, and such trend may potentially increase even more, since such methods are perceived as practical, convenient and, particularly, as secure purchasing methods. The use of electronic payment methods in B2C e-commerce does not benefit consumers exclusively. This payment method benefits all stakeholders, such as establishments, financial institutions and governments, positively affecting the country’s economy in general. Such statement is supported by the results of a survey regarding the impact of electronic payment methods on the economy, which indicated that the use of credit and debit cards added US$ 51.3 billion to Brazil’s Gross Domestic Product GDP) between 2008 and 2012. 29 Copyright e-bit – All Rights Reserved
  29. 29. Chapter III The presence of electronic payment methods in e-commerce will surely stimulate the economy and retail activities further – as can be concluded from the debit card use survey. The percentage of people who owned debit cards in 2011 increased from 63% to 72%, while the number of people who use debit cards for purchases rose from 67% in 2010 to 81% in the following year. These results indicate that this purchase method is now virtually as popular as credit cards. As debit cards become widely accepted on the Internet, electronic commerce is expected to grow proportionally. Percentage of people who own debit cards: 63% [2010] [2011] Percentage of people who use debit cards for purchases: 67% [2010] 81% [2011] The increase in debit card use is partially attributed to the new Class C, whose members typically did not have credit and relied on payment slips, and are now able to make purchases with debit cards. In 2012, for example, this group covered 54% of Brazilian citizens and presented a consumption potential of over R$ 1 trillion, equivalent to 51% of all family incomes. In the same year, 9 million Brazilians made their first purchases, totaling R$ 24.12 billion in transactions. In several cases, purchases are usually initiated with low ticket items, such as stores and services focused on low-value sales, including group buying, mobile recharging, song and movie downloads, etc. Some discounts are offered in case of cash, slip and especially debit payments. 30 Copyright e-bit – All Rights Reserved Source: America Economia Intelligence 2012
  30. 30. Chapter III Debit card benefits With a total of 42.2 million e-consumers, B2C e-commerce’s excellent projections are evident in Brazil. The Internet has been increasingly used as a strategic purchase channel for both new establishments and those that are already consolidated in the market. Despite the fact that Brazilians still use cash, checks and payment slips, the potential of electronic payment methods is huge. According to a survey conducted by ABECS (Associação Brasileira das Empresas de Cartões de Créditos e Serviços [Brazilian Association of Credit Card and Service Companies]), only 27% of the country’s payments are effected via credit, debit or prepaid cards. Compared to other payment methods, credit cards generate several benefits for consumers and retailers. PaymentCompared to other payment methods, credit cards generate several benefits for consumers and retailers. Payment confirmation of a purchase made with debit card, for example, occurs at the time of purchase, while confirmation of payments via payment slips occur at least two business days later. The effective receipt of purchases made with debit cards occurs in D+1 (purchase date plus one business day); that is, payments are received one day after the effective sale. In case of payment slips, values effectively paid are only transferred to retailers in an average D+3 (three business days), subject to clearance from banking institutions. 31 Copyright e-bit – All Rights Reserved
  31. 31. Chapter III The conversion rate between debit and payment slip sales is an additional highlight. With debit, purchases are authenticated and confirmed within seconds, while Visa do Brasil surveys indicate that 30% to 50% of bank payment slips issued at the time of purchase are never effectively paid. Purchase abandonments generate losses to retailers and affect businesses, since the product is reserved and cannot be sold to other consumers. Another benefit generated by debit cards is security. Financial institutions that issue such cards provide solutions that authenticate cardholders at the time of online purchase, verifying data known only by the cardholder and the bank. The debit card issuing bank is responsible for validating cardholders, thereby ensuring safety in online transactions. This technology, widely known as Verified by Visa (VbV) is based on a 3-D Secure protocol, which is standard in the electronic payment method market, and is required for all online transactions performed with Visa Electron debit cards. The VbV system boosts the volume of online card purchases, since several credit card clients refrain from making purchases at virtual stores due to lack of trust in providing card information to online stores. Debit card and payment methods data:: e-bit VISA survey sources: comScore. Câmara Brasileira de Comércio Eletrônico [Brazilian Electronic Commerce Chamber] – e.net-chamber. ABComm (Associação Brasileira de Comércio Eletrônico [Brazilian Electronic Commerce Association]) America Economía- eCommerce LAC study- Part I 2012 3D-Secure Protocol – Security protocol developed and owned by Visa, applied in purchases based on the non-present card modality (B2C e-commerce) AmericaEconomia Intelligence Moody’s Analytics Kitelab 32 Copyright e-bit – All Rights Reserved
  32. 32. CHAPTER IV Buscapé/FIPE Index Report structure 33 Copyright e-bit – All Rights Reserved
  33. 33. Chapter IV In February 2013, the Buscapé/FIPE Index, a report that analyzes the prices of over 1.3 million products in the Brazilian B2C e-commerce segment on a monthly basis, recorded an average price drop of -0.42%. Such decrease further consolidates the recent deflationary trend, interrupted in January 2012 (0.90%) and January 2013 (2.39%), which potentially reflects a seasonal behavior of e-commerce prices. During a twelve-month period (Feb13/Feb12) the Buscapé/FIPE Index recorded a drop of -6.13%, with 9 out of 10 groups reducing prices and significant variations between product groups within the index. Despite price variations in different products, a generalized and expressive price decrease trend is observed, since out of 151 product categories assessed, 110 (73% of the total) presented an average price decrease of -7.46%, and only 41 presented an average price increase of 3.51% within a 12-month period. 34 Copyright e-bit – All Rights Reserved
  34. 34. Chapter IV The category with most significant decrease was Electronics (-14.51%), followed by Fashion and Accessories (-12.75%), Photography (-10.86%) and Telephony (-9.32%). The leading Home Appliances category was the only one to record a price increase of 0.11% in the Feb13/Feb12 period, sustaining a series of annual drops for twelve consecutive months as of January 2013. Brazilian B2C E-commerce Price Search Value (FIPE Survey) The Brazilian B2C e-commerce segment accounted for R$ 22.5 billion in 2012. One of the segment’s development factors is the “long-tail” effect, which allows wider product offers focused on B2C e-commerce niches rather than the physical market, which entails a much greater inventory of virtual stores compared to physical stores – surveys held in other countries, for example, indicate that online stores’ inventories are 6 to 23 times larger than those of physical stores. 35 Copyright e-bit – All Rights Reserved
  35. 35. Chapter IV For consumers, the “long-tail” effect translates into a wider range of products and stores to choose from. Preliminary surveys conducted in the U.S., France and India indicate that online store prices are, on average, 10% lower than offline stores. Assuming that such figure also applies to Brazil – which remains to be confirmed -, and based on the B2C e-commerce segment’s earnings of R$ 22.5 billion in 2012, the average gain for Brazilian consumers who shop online would be R$ 2.5 billion this year. Considering that the benefits of price transparency, provided by online search engines, directly and significantly reflect over the offline retail segment, also through a process named “ROPO” (Research Online/Purchase Offline); that is, clients that search for products online, but actually acquire the products in physical stores. A McKinsey survey indicated that the ROPO rate in Brazil was 1.3 in 2009; in other words, for each Real spent in B2C e-commerce, 1.3 Reais were spent in the physical retail segment, after prior Internet search. Assuming such proportion for 2012, the physical retail segment wouldphysical retail segment, after prior Internet search. Assuming such proportion for 2012, the physical retail segment would present earnings of R$ 29.3 billion directly related to prior online searches in that year. Such figure would incorporate price transparency gains generated by online searches, approximately 10% (R$ 3.3 billion). Therefore, we estimate that price- comparison tools in B2C e-commerce should generate direct savings of approximately R$ 5.8 billion for Brazilian consumers in 2012, based on an average price 10% lower than that reflected on online and offline purchases. 36 Copyright e-bit – All Rights Reserved
  36. 36. Chapter IV Considering the prices of products encompassed by the Buscapé/FIPE Index in May/12, the average difference between the lowest average price in B2C e-commerce (R$ 1,429.37) is 14% lower than the average price (R$ 1,660.86), which is where the potential additional gain based on price-comparison searches is located. Hypothetically, if such difference between the lowest and highest prices is cut in half, for example, (7%), B2C e-commerce consumers would save R$ 1.6 billion in 2012, in addition to its effect on physical purchases (RAPA effect), which would total R$ 2.0 billion, generating additional gains of R$ 3.6 billion. Considering the aforementioned actual gains of approximately R$ 5.8 billion, potential gains of R$ 9.4 billion are directly related to transparency and competition stimulation resulting from online price-comparison tools. In summary, gains of R$ 5.8 billion stem from the fact that prices are 10% lower online, compared to the physical market, and an additional R$ 3.6 billion results from access to price-comparison tools by consumers, generating total savings of R$and an additional R$ 3.6 billion results from access to price-comparison tools by consumers, generating total savings of R$ 9.4 billion for Brazilian e-consumers. Such figures further stress the fact that e-commerce, supported by price-comparison and search engines, generates significant economic efficiency savings that directly translate into consumer cash and time savings, which explains the segment’s significant sustainable development. *The methodology to calculate the FIPE BuscaPe Index is a responsibility of Fundação Instituto de Pesquisas Econômicas, represented by teacher Sergio Crispim, Telephone Number: (+55 11 3767-1700 / 1701) 37 Copyright e-bit – All Rights Reserved
  37. 37. Major clients 38 Copyright e-bit – All Rights Reserved
  38. 38. Credits / About e.net-chamber The Brazilian Electronic Commerce Chamber (e.net-chamber), established on May 7, 2001, is the main multi-segment Digital Economy entity in Brazil and Latin America, focused on electronic businesses as strategic sustainable and economic development factors in the 21st century. Its mission is to qualify individuals and organizations to safely conduct electronic businesses, by developing and disseminating cutting-edge knowledge, as well as defending consensus positions along with leading agents (public and private, domestic and foreign), who are connected with the promotion of communication and information technologies. One of the chamber’s top priorities is devising and proposing public, regulatory and market policies, encouraging the production and spreading of communication and information technology benefits. The entity’s 100 partners represent leading companies within chief economic segments in Brazil and around the world. Visit the website at www.camara-e.net. 39 Copyright e-bit – All Rights Reserved
  39. 39. Press information E-bit data disclosure e-bit must be indicated as the information source in any academic study, press release, op-ed articles, or newspaper articles mentioning the data collected in the former’s surveys regarding the Brazilian e-commerce market, particularly the WebShoppers report. We hereby emphasize that the data provided herein is owned by e-bit and, therefore, those who use such data must inform the source, in order to ensure credibility and prevent data disclosed by the company from being attributed to other sources. 40 Copyright e-bit – All Rights Reserved
  40. 40. Pedro Guasti Buscapé Intelligence Marketing VP e-bit General Director Cris Rother e-bit Business Director negocios@ebit.com.br +55 11 3848-8730 Pedro Guasti Buscapé Intelligence Marketing VP e-bit General Director Cris Rother e-bit Business Director negocios@ebit.com.br +55 11 3848-8730

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