Amazon Sees in Brazil Continent-Size Profits and Problems

SÃO PAULO, Brazil — Its market value briefly surpassed $1 trillion. It has transformed online shopping. And it has had North American cities holding out billions to deliver its new outposts to their doors.

Expansion south, into the nation where Amazon’s namesake river ends, may prove a little harder.

“Amazon is still kind of irrelevant here,” said Raul Prado, a vendor in the rural town of Guaipava, Brazil, who has relied on online retail sites to build up his business. Less than 1 percent of his sales are through Amazon.

Brazil, home to more than 200 million people and the world’s eighth-largest economy, is in many ways an obvious target for Amazon’s next major expansion. Google and Facebook have done well in Brazil, but their digital services — search, social media and advertising — do not have to overcome the hurdles of selling goods and making deliveries.

As a retail behemoth wading into the market, Amazon has found itself playing catch-up with local rivals that know how to navigate Brazil’s distinct challenges: a complicated tax structure, high import costs and the headache of moving goods across a continent-size country.

“Brazil is really kind of the natural next country in terms of sheer size,” said Cooper Smith, who was the director of Amazon research at Gartner L2, a business intelligence and research company, but has since left. “It’s a huge opportunity, and they are laying the groundwork for that today.”

Next year, he said, “Amazon is going to be all about Brazil.” His prediction came with a caveat: “But it’s no small undertaking.”

Amazon has been present in

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