Amazon Is Working on Brazil Logistics Pilot Project
(Bloomberg) -- Amazon.com Inc. is working on a pilot logistics project in Brazil with Goldman Sachs-backed CargoX, a person familiar said.
The e-commerce giant is partnering with the trucking start-up to use bulletproof trucks for the delivery of high-value goods, including electronics. Because the heavy-duty trucks are slower and tend to reduce the pace of deliveries, predictive data and other technology will be used to speed things up, the person said, asking not to be named because the talks are private. Amazon said in an email it doesn’t comment on rumors or speculation. CargoX declined to comment.
Amazon is playing a game of catch-up in Brazil. After selling just books there for five years, the Seattle-based internet giant launched an electronics and household appliances marketplace in Brazil a year ago, a somewhat leisurely approach for a company known for “high-velocity decision-making.”
MercadoLibre Inc. now dominates the e-commerce landscape in Brazil, according to Portal E-Commerce Brasil, a project supported by companies in the industry. Meanwhile, Amazon.com.br places at the No. 11 spot for online shopping websites, behind companies including B2W Cia Digital, Magazine Luiza SA and Alibaba Group Holding’s Aliexpress, according to the portal.
Despite being local leaders in the business, those Brazilian competitors dropped after a report last year about Amazon’s hiring and expansion plans.
The outlook for online retail is bright in Brazil. E-commerce sales there are expected to increase by 12 percent to 53.5 billion reais ($13.7 billion) this year, according to e-commerce researcher Ebit. That compares to growth of 7.5 percent in 2017.
All e-commerce companies in Brazil struggle with logistics. Delivery is almost exclusively done by trucks in a country that’s about the size of the continental U.S. and where many roads remain unpaved. The outsize influence of the trucking industry made itself known in May, when drivers went on strike, massively disrupting the economy. In addition, safety is a major concern, with road robberies so frequent they rarely make headlines anymore.
CargoX is an Uber-style enterprise that links truckers and companies requiring their services. Among its top backers are Goldman Sachs and George Soros, and its clients include Unilever NV and Ambev SA. As of June, it had about 7,000 drivers registered.
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