The Brazilian market has not seen an entry from Amazon so far, but that looks like it is about to change. It seems that the Kindle will be launched in Brazil by the holiday season, along with a store that they hope to full with at least 10,000 titles. Oddly, in what I believe is the only instance of such a thing happening so far, there will be no other Amazon services entering the market at the same time. That means that for the time being the eBook store will have to stand on its own.
While a full retail store is definitely in plans for Brazil, at the moment there are apparently too many potential dangers in the notoriously complex commercial markets there. By going entirely digital, many of the shortcomings in infrastructure and tax codes can be somewhat sidestepped. It’s interesting timing given the fact that Brazil’s consumer growth seems to be trailing off after a decade of impressive growth, but Amazon is far from the only company interested in cashing in on Latin America’s most prosperous economy.
The motivation behind this move is Amazon’s expectation that the Kindle could quickly come to dominate the eBook market. Apparently some research has indicated that a fairly large number of Brazilian readers already own imported eReaders, including the Kindle, and go out of their way to purchase and download books through stores that are not technically open to the country at this time. By moving the Kindle Store in, Amazon expects to immediately grab as much as 90% of the country’s eBook sales. The same source that released this information also mentioned that Amazon is hoping to expand eBook sales from 0.5% of the Brazilian publishing market to 15% within the first year of operations.
We can expect the basic Kindle model to be the first thing released through the new store. It will likely be selling for approximately 500 reais, equivalent to $239, which is obviously higher than many other markets are seeing but still cheaper than the competition currently available in Brazil. Naturally prices will drop as competition strengthens, but there has been some indication that even this high price is being subsidized by Amazon thanks to the added expense of doing business in this area.
There are already contracts in place with around 30 publishers as Amazon gets ready for the release. There is also word that there are still ongoing talks with several that are not included in that list. One publisher said that the current plan is to offer titles at 70% of their paperback price, allowing for a profit margin of 40-50%. That would not translate to much revenue for the wholesalers, in this case publishers, but they are still interested in signing up for the platform as a means to expand interest in their books.
This will probably end up being the slowest expansion that Amazon has undertaken to date. Entering into the Brazilian economy will be rather unpleasant for them and clearly they are aware of that. By leading with the Kindle not only will they avoid some of the headaches associated with local shipping and distribution of assorted retail products, they will also be putting the best foot forward by providing interested customers with one of the best products in production today for reading. It seems to be a smart choice.