The rise in interest rates, the increase in logistics costs and the need for companies to recover some profitability have led Brazilian online marketplaces to raise prices. On such e-commerce platforms, product or service information is provided by multiple third parties, and they charge for the services they offer. They have already reported there was a reduction in shipping subsidies, reflecting an increase in the value paid by sellers, and a raise in commission rates.
Interest-free installments have also been reduced, and charges for fees that were previously exempt are expected to begin in the coming months. Some of these announcements have been made to sellers in recent weeks, and the measures vary from company to company, but involve most of the major platforms — Mercado Libre, Via and Amazon —, retailers told Valor.
According to consultants, this may be a sign of greater rationality in business management, after companies have lost a lot of market capitalization and after strong competition has affected the margins of some companies.
Those measures may increase final prices at a time when the inflation in the digital environment already exceeds the official inflation. Sellers say they will have to raise prices. Online inflation was 18.8% from January to October, above the Brazil’s benchmark inflation index IPCA or the General Market Price Index (IGP-M).
Sources say that some platforms have been guiding retailers to “improve” their prices so to adapt to these increases. Online marketplaces do not interfere in the commercial policy of the stores, but there is constant contact between them.
The most important change is coming from Mercado Libre, which communicated the changes to its partners on December 9. When contacted, the company confirmed the decision. Among the main changes in the rules is a reduction in the interest-free installment plans, and a reduction or elimination (depending on the retailer) of the freight subsidy Mercado Livre used to give to those who chose the platform for its deliveries. It will also take longer for the retailer to receive the money for the sale.
In a change announced this month, purchases of up to R$299 can be financed in up to nine interest-free installments. Between R$300 and R$1,499, the installment plan applies in 10 interest-free installments. Previously, in both situations, there was no fee charged in up to 12 installments.
Mercado Libre will also keep the shopkeeper’s resources in cash for longer. As of February, retailers with a reputation already calculated by the platform will receive the purchase price within five working days after delivery by the group. Previously, this happened in 48 hours.
Also since this month, there was an average increase of 3% in shipping costs that the shopkeeper pays for the free service on products up to 30 kilos. The subsidies have also been changed: retailers who sell for delivery within 24 hours, and with a good reputation on the website (green rating), now have a 10% subsidy on the shipping rate in 2022 instead of 40% in 2021. This change applies to new items starting at $79.
If the merchant’s reputation is not good, the company will no longer give discounts on the free shipping rate. It is a way for the company, in addition to reducing costs, to encourage sellers to have better grades.
Finally, there was also a change in the policy regarding financial investments. After February, the accounts of companies will no longer generate yields paid by Mercado Pago, the company’s payments arm. Funds held in accounts offered yields above the savings account.
For the company, the changes reflect the worsening economic situation. “We are living a very challenging outlook, with very strong interest rates and inflation, and with increases in costs such as energy and fuel, which affect the business. We intend to continue investing, but we are not unscathed by all this, so we have made some adjustments,” said Julia Rueff, head of the Mercado Libre’s online marketplace for Brazil.
Ms. Rueff believes that the company continues to have a competitive set of conditions compared to its rivals and sees no risk of losing sellers. So far, only Magazine Luiza and Americanas have not reported changes in rules. “These are adjustments to preserve our value proposition, and everything we offer and have been improving. We are a technology company, which demands hiring, investments,” she said.
“And if you analyze it well, this 3% increase in shipping costs, for example, for a much higher fuel inflation, we pass it on much less. So it was something studied and passed on to the store owners in advance.” In 2021, the company announced R$10 billion in investments in the country, more than double that of 2020.
Also in late 2021, Via (Casas Bahia and Ponto) informed storeowners about the withdrawal of discounts on their commission rate and also unveiled increases. The company exempted new sellers to draw more retailers and reduced the rates for others.
According to sellers consulted, Via raised this rate by up to five points compared to 2020. “They reduced [the rates] in part of 2021 to 2%, 3% to even 5%, and that was up to 14% previously. But as of this year, the overall rate [for all segments] went to 21%. For our lines, the commission went up to 18% from 14% on average,” said Jefferson Oliveira, head of Viabem, a healthcare products store.
Another change was the reduction of the interests-free installment plan. “They used to sell an R$100 product in 10 installments of R$10, without interest. Now, depending on the price of the product, they do only up to three times without interest. In six installments, they are charging 0.99% per month, a rate that they did not have last year,” the executive said.
“The commission with which Via worked before lasted for a long time. It is not sustainable, so they went up about five points now,” said Roberto Wajnsztok, a consultant at Origin5, which provides services with tenants. “In addition, investments have skyrocketed for a sector with weaker sales. Just look at Mercado Libre’s spending. It is necessary to give an answer to the market in the next earnings report.”
Amazon begins, in March, to charge fees to collect parcels, and as of June the company will implement fees for storage of products in the company’s centers and for removal of inventory (when the retailer picks up their products back at Amazon’s centers). The information has been passed on to retailers for several months. The company maintains its fees of 8% to 16%.
For Mr. Oliveira, it will be necessary to pass on part of these hikes to customers. “Our internal costs have also gone up, and that adds up to these changes in the rules,” he said.
For Gabriel Lima, CEO of the consulting firm ENext, Amazon and Mercado Libre could even pass on more of the impacts on costs, especially in logistics, with the rise in fuel. “Either they can still move more, or they prefer to maintain a strategy still competitive against Magazine Luiza and Americanas, which can also make their hikes at some point.”
Magazine Luiza says it has not changed its contract conditions, with commission rate at 12.8%, which can reach 16% when there is a request for early payment. But it sees a normalization process in the market, after the phase of lower rates. The company declined to say whether it will make adjustments in the short term. “What we see is a normalization in the conditions facing a market more pressured by inflation and interest rates. The platform needs to be sustainable and the ‘seller’ needs to be able to manage these costs and have their margins positive. It has to work both ways,” said Leandro Soares, executive director of Magazine’s online marketplace.
Source: Valor international