Cross-border sales to Brazil can be a lucrative opportunity for international businesses looking to expand their reach into Latin America’s largest economy. However, there are several issues that companies should be aware of before diving into this market. In this article, we have listed 6 of them as you can see bellow:
Brazil´s Tax System
Brazil has a very complex tax system, with high import taxes and fees that can significantly increase the cost of goods. With the crossborder dropshipping courier method, taxes to be paid by the customers are 60% to 95,6% on the CIF value. This can make it difficult for businesses to price their products competitively in the Brazilian market. Especially the tax being calculated under the CIF base, it means that the taxes are also paid on the international freight.
Individual cross border dropshipping shipment costs are much higher than bulk shipment and therefore, not optimizing the international freight may turned foreign sellers uncompetitive.
Delivery time can be very uncertain when it comes to international freight due to several factors, including: the origin of the product, the shipping method used and the time taken at IRS (Receita Federal Brasileira or just RFB). In general, delivery times can range from a few days to several weeks or even months.
One of the main factors affecting delivery time is the customs clearance process. All products entering Brazil from other countries must go through customs, which can add significant delays to delivery times. Besides, the customer is not able to track his product, leaving them bling as to the progress of the clearance.
Overall, businesses looking to sell cross-border products in Brazil should be aware of the potential for longer delivery times and plan accordingly. It´s important to choose a reliable shipping method and allow for extra time in order to ensure that products arrive at their destination in a timely manner.
Brazil has a wide range of payment methods available for dropshipping businesses, including both traditional and digital payment options. Some of the most common payment methods used in the country are: credit cards – preferably with installments options -, boleto bancário, which is popular specially for those who do not have credit card, PIX, a payment system that doesn´t charge any taxes and is made by a real time transference between bank accounts and online systems, such as Paypal, Mercado Pago, etc.
With such long time delivery and other issues on the logistics, cross border sales can be prejudicial to your brand reputation and offer a bad shopping experience to your customers. Brazilians are very active on social media and on complaints websites, such as Reclame Aqui. Having a good review on this channels is crucial to generate credibility and reputation for your brand.
Cross border sales can be a bad option when it comes to brand image and customer success. That is why you should look for other alternatives when selling into the country.
Advertise the final price to your customers
Foreign sellers will not be able to inform the total final price to their Brazilian customers, because they cannot include the import taxes.
By law, the final customer is responsible for the collection of taxes, while the international seller is prohibited to pay these taxes on behalf of them. This can make your brand less competitive when it comes to product´s price.
With long delivery times and additional taxes, many buyers will ask for cancellation of the purchase. Foreign sellers face a high rate of chargebacks with big issues to get back their products.
Overall, while cross-border sales to Brazil offer many opportunities for businesses, it’s important to understand and address these issues to succeed in this market. That is why we have developed a methodology for companies that want to expand in Brazil but don´t want to face all these issues and bureaucracy.
Do you want to import in Brazil and explore a new market? We can help you with a low cost, low risk and quick solution.