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Amazon (AMZN) Selling Electronics in Brazil Via Third Parties

Amazon.com, Inc.AMZN has started selling electronics through third parties in Brazil.

The company will reportedly allow customers to pay as many as 10 monthly installments without interest. It will pay sellers upfront, deducting a 10% commission and fees of $6 (19 reais) per month or 63 cents (2 reais) per item.

The company is not developing its own logistics and relying on third parties for distribution. It may add other commodities in the remainder of the year.

Amazon's country manager in Brazil, Alex Szapiro stated that "Brazilians are passionate about technology." "The same way they're passionate about reading. But in both cases, it's a matter of price, of how easy and convenient it is to shop" he added.

Speculations regarding the move have been doing the rounds since last week, sending shares of local players down. Bloomberg reported about Amazon's hiring plans in Brazil, hinting on a possible expansion.

Amazon shares have gained 33% year to date, underperforming the 52.7% rally of the industry it belongs to.

E-commerce Prospects in Brazil

Brazil is currently Latin America's largest economy and a fiercely competitive e-commerce market. Per the Brazil e-commerce guide from Export.gov, an U.S. government agency for helping American companies, the average e-commerce purchase in Brazil was $126.3 in 2016, up 8% from the previous year. It is anticipated to reach $137 in 2017.

The e-commerce guide further estimates the number of purchases to be up 3.5% in 2017 to reach a total of 110 million online purchases. Also, 2017 e-commerce sales are expected to account for roughly 4.3% of retail sales in the country compared with 3.8% in 2016.

Further, according to the e-commerce guide, in Brazil, the transition from offline to online retail will continue, leading to enhanced sales going forward. So, opportunities for an e-commerce expert like Amazon looks bright in this country.

International Expansion Gaining Significance

We believe the move is Amazon's latest bid to expand internationally. Among other efforts, the company is expanding in a big way in India and has committed a $5 billion investment. Last year, it launched Prime Video in India, and recently, Prime membership in Mexico, Prime Now in Singapore and AmazonFresh in Germany.

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. Revenue (TTM) | Amazon.com, Inc. Quote

Amazon took over Souq.com to strengthen its foothold in the Middle East. The deal should help it to establish a presence in countries like Egypt, Saudi Arabia, and the UAE.

Additionally, from winning distribution rights to adding advantages to Prime subscribers in international markets, Amazon is leaving no stone unturned to boost its digital media sales across the globe.

So, if Amazon repeats its domestic success internationally, it could see far more growth.

Zacks Rank and Stocks to Consider

Amazon has a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the broader technology sector include Micron Technology, Inc. MU , Facebook, Inc. FB and Jabil Inc. JBL , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

The long-term earnings per share growth rate for Micron, Facebook and Jabil is projected to be 10%, 24.5% and 12%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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