By Ingrid Lunden
Amazon (AMZN) is continuing its global march by making a big move into the country that could rightfully lay claim to being responsible for Amazon’s name: Today the online book and retail marketplace announced it would be launching its Kindle Store in Brazil. A move to Brazil with an e-bookstore-only operation has been on the cards since earlier this year; now the main site is opened with access to Amazon's Kindle e-book store from today, with Kindle devices going on sale in "the coming weeks," priced at 299 Brazilian reals (US$143).
This is a significant launch for Amazon for a couple of reasons.
For one, it's Amazon’s first attempt to go into a new market with an e-book-only operation. According to a Reuters article from back in June, this is partly because it was too complicated to sort out the logistics for a larger operation similar to those that Amazon has in other countries such as its home market of the U.S., Europe, Japan and elsewhere, where the company also sells physical books, consumer electronics, household goods, and much more -- often from a selection of third-party retailers as well as itself.
Amazon has always been super cagey about just how well its Kindle operation does -- it never reveals sales figures for the e-book devices, or for how many actual e-books it sells. What it does note are relative momentum figures such as these from last month, when it noted that the first traditional sales weekend of the holiday period -- kicked off by Black Friday -- saw it sell the most Kindle devices ever. What the Brazil move seems to suggest, though, is that Kindle and the ebook business is strong enough to lead the company's expansion strategy.
This move in Brazil is also important because it's Amazon's next step in worldwide domination.
The company has been relatively good, if somewhat slow, in rolling out services into Europe (it took two years from Kindle's launch for the first Kindle to come to Europe; and one year for the Kindle Fire to make its way here) and other markets. Today it has operations in the U.S., UK, Germany, Japan, France, Canada, China, Italy, and Spain.
But in emerging economies, others have been stealing a march. There are local competitors, such as Saraiva, which like Amazon.com sells books, electronics, and much more. Other international players have been eyeing up where Amazon is not, and building out accordingly. Perhaps the most notable example here is the Sawmer Brothers' Rocket Internet, which has been sprouting e-commerce operations from Russia to South East Asia and South America -- one of which, the Asian Amazon clone Lazada, picked up another €20 million in funding just yesterday. In Brazil, Rocket has 13 startups on the go at the moment, including Etsy-like Airu; homewares site Mobly; Square-like Payleven; Fab-like Westwing; and online fashion store Dafiti. Nothing in e-books specifically, however, in Brazil.
Ironically, Saraiva is rumored to be in talks with Amazon to sell its e-commerce operation, which would give Amazon a tremendous instant boost in the region. Equally, Rocket Internet has had many a successful exit in the past to U.S. giants looking for global expansion (eBay and Groupon are notable buyers), so that could present another interesting opportunity.
But while it is focusing just on the Kindle and e-books business first, Amazon is looking to do this in a comprehensive way. Amazon's Kindle store will come with 1.4 million books, with 13,000 in Portuguese, 1,500 free, and as with Amazon's other products these will be usable on Android, iOS, Mac, and PC devices.
To beef up that operation it is, from day one, also opening its Kindle store to self-published authors and independent publishers, via its Kindle Direct Publishing platform, which lets them price the books as they want, keep control of the copyright and content, and pay a commission to Amazon in the process. This not only lets those individuals publish to the Kindle store in Brazil, but also potentially to the rest of the world where Kindle products are available by way of apps, 175 countries in all.
One of the keys with this launch, too, is that it is geared to the local market. That covers not just local books, but local currency. "We are excited to launch this new Kindle Store for Brazilian customers, offering the most popular best-selling books from many great Brazilian authors, all priced in reals," said Alexandre Szapiro, VP of Kindle, Amazon.com.br in a statement.
More generally, Brazil, like other emerging markets, are the big hope for companies that work in the world of wireless/mobile goods and services, Amazon included. Unlike economies like the U.S. and much of Europe, where smartphone usage has been maturing and growth slowing down, emerging markets still have relatively low smartphone penetration. They also have rising middle classes that are still at the early stages of giving over ever-larger shares of their monthly budgets to things like fancy electronics and fun things to consume on them.
Figures from IDC (via RCR Wireless) note that in the first six months of 2012, smartphone shipments grew by 77% in Brazil, while feature phones declined by 29%. Right now smartphones account for about 26% of shipments and won’t reach a tipping point until 2015. Tablets and e-readers will be significantly behind that (= more growth opportunity).
All these reasons make Brazil and countries like it important targets. That;s something that has also caught the attention of companies like Apple (AAPL), which has in the last year also reportedly ramped up its operations in the country.