New E-Commerce Rules Impact Small Businesses, Logistics in Brazil

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Earlier in the year, Brazil announced new rules and regulations for the players in its growing e-commerce industry. Aimed at protecting consumers and reigning in a largely unregulated sector, the legislation – Federal Decree 7.962/13 – focuses on information availability and consumer rights.

Under new regulations, e-commerce sites must be entirely forthcoming, maximizing consumers’ knowledge of their rights and keeping them fully informed of all data and factors that could influence their purchasing decisions. Basic information, like addresses, phone number and company registration numbers, have to be highly visible, as do channels for questions, concerns and complaints.

Retailers must provide efficient tools to identify and correct any possible errors prior to check-out and immediately confirm receipt of orders. Cancellation tools have to be readily available as well.

The regulations also encompass group buying sites, which must inform customers of minimum sales requirements for products and services to be redeemed. Consumers must be informed of deadlines and vendor ID, too.

Brazil’s new e-commerce rules have made quite an impact across the board. Two Brazilian e-commerce professionals – Adriano Caetano of e-commerce platform developer Nixus, and Leandro Baptista of logistics startup Axado – reflected on the implications of these changes.

Caetano stressed the impact on small businesses:

I think the main element of surprise was for small businesses and informal vendors without a national juridical person registration number, or those unwilling to disclose a physical address. Across the board, the change is relevant for everyone, from the retailer, who must be more transparent with the public, to the client, who has a new way to learn about the status of the store and to file complaints. What’s more, consumers also have a reference for physical location and contact phone numbers to help solve potential problems.

Caetano said that all of Nixus’ 70 virtual stores are complying with new regulations. They have leaned on e-commerce logistics solutions provider Axado for support as well. Baptista added:

Online retailers are constantly being asked to offer higher quality services. The e-commerce consumer community increases each year, as do the requirements. The same happens with shipping. Offering a complete system for sending goods is vital for those wanting to sell online, and having access to the best delivery practices is essential for success.

Logistics in Brazil, Rocky Terrain

Shippers and logistics companies have definitely felt the impact of this e-commerce legislation, which poses both challenges and potential benefits for the industry.

Brazil’s logistics sector isn’t particularly known for being easy to navigate. Baptista discussed the challenges at hand:

Brazil, despite being a country that has different modes of freight transport, is predominantly road. To get an idea, more than 60% of cargo is handled on the road. What’s more, Brazil’s streets and highways are of poor quality, negatively affecting the maintenance of the load and the truck. The biggest challenges faced by the industry are relieving road transport and facilitating tax issues between states.

Despite the obstacles, Brazil’s logistics market is going strong and moving towards express deliveries. While federal post office services still lead the market, local companies like Gollog and Azul Cargo are challenging it, as are international corporations such as UPS and DHL.

Another shift on the horizon will be the move to the online world. With the rise of online retailers and the e-commerce boom, the logistics industry has to ride the technology wave – something that, according to Baptista, is no easy task:

The hardest thing in this industry is to convince carriers that the online market is what’s happening, even in cargo transportation. We still have a lot to gain. At Axado, we had to first specialize in how carriers operate, and then offer to the general public.

Perhaps this new government legislation will be the final push needed to convince Brazil’s shippers that online business and e-commerce opportunities are here to stay.