According to Cupido 2016 Brazil was ranked 107th out of 144 nations with

According to cupido 2016 brazil was ranked 107th out

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According to Cupido (2016), Brazil was ranked 107th out of 144 nations with respect to infrastructural development. In the country, shipping occurs via land freight and is costly and the highly fragmented market exacerbates the problem. With regards to Amazon, the firm uses third parties to ship products around Brazil however, tax issues and tricky logistics makes its e-
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5 business unprofitable. By contrast, more than 90% of MercadoLibre’s shipments occur via Correios (Brazilian Post) but despite its affordability, it is inefficient. Other than shipping, distribution is problematic in Latin America. For instance, Argentina’s trucker unions are costly and cantankerous, which complicate fulfilments (Dixit 2016). In Chile, deliveries outside Santiago are expensive due to unavailability of back-haul opportunities. In Colombia, a fragmented market, scattered population, poor infrastructure, political instability, and multi- layered trucking industry combine to quadruple delivery costs compared to the US on a per-mile basis. The subsequent challenge facing e-retailers such as Amazon and MercadoLibre in Latin America is that of regulation. The region has more than six different regulatory landscapes, which retailers are required to comply with to navigate the various marketplaces. It is evident that cross-border customs and the related taxation and tariffs have affected the growth of e- commerce. Notably, the unavailability of uniform regulations across Latin America prohibit the sale of certain goods, which can be daunting for transnational e-commerce firms, especially for MercadoLibre and Amazon whose consumers often make purchases from their websites located far from the receiver’s country (Goyal, Sergi, and Esposito 2019). Therefore, a customer may pay for certain products and not realise that they are prohibited from their country. With such prohibitive laws, it is impossible for e-retailers to reach all customers with their various services and products that they stock, thereby affecting sales volumes and profit margins. In a study carried out by Suominen (2017), the author outlines that tariff barriers imposed on e-commerce stifle competition, impede innovation, and undermine efficiency. In view of the author, exorbitant taxes, tariffs, and bureaucracies make it costly and difficult to buy across borders in Latin America. Even though regulations, customs duties, and tariffs have been used to shelter
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6 local industries by making imports ridiculously expensive for most customers, they affect e- commerce firms operating in Latin America. Alexander et al. (2017) assert that lack of uniform standards and regulations make trans-border business difficult since they do not comply with the General Agreement on Tariffs and Trade and the WTO’s intellectual property provisions. Moreover, government interference, isolationist thinking, and institutionalised corruption hinder the businesses of Amazon and MercadoLibre in Latin America. Recent studies outline that almost all Latin American nations have a burgeoning and educated middle class, which, when
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  • Spring '20
  • Americas

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