SAO PAULO: Amazon.com Inc is in talks with the Brazilian airline Azul SA on shipping goods in the country, two sources with knowledge of the matter told Reuters, in the latest sign of the retailer's big plans in Latin America's largest economy.
The talks with Azul, which serves over 50% more Brazilian rivals, its the nearest rival, are the strongest signal yet that Amazon is lining up distribution to sell products.
It also shows that the US is notorious for logistical challenges, including shoddy roads, security problems and a national territory greater than the continental United States.
Representatives for Azul declined to comment on the talks.
Amazon said it did not comment on “rumors or speculation”.
The Seattle-based online retailer has so far waded slowly into Brazil's highly competitive e-commerce market, starting with e-book sales in 2012.
E-commerce accounts for around 5% of Brazil's roughly US $ 300bil (RM1.16tril) retail market, about half its share in the United States. Yet Brazil's online sales have doubled in four years and are expected to grow at a double digit rate in coming years.
Currently, Amazon relies on third-party vendors to ship their own merchandise sold on its Brazilian website, but that appears to be changing.
In February, Reuters reported that the Amazon was looking to lease a 50,000-square-meter warehouse just outside of Sao Paulo.
In March, Reuters reported that the company in Sao Paulo to discuss plans to stock and sell products directly.
Both developments drove down shares in Brazilian e-commerce competitors, such as Magazine Luiza SA and B2W Companhia Digital SA. MercadoLibre Inc has also fought Amazon tooth-and-nail in Mexico and Brazil.
By partnering with Azul, Amazon would immediately gain access to a network of more than 100 in Brazil, implying its ambitions. Go far beyond metropolitan Sao Paulo.
Azul has built up an 18% share of Brazil's domestic air travel market over the past decade by flying regional jets and turboprop planes in second- and third-tier cities underserved by other carriers.
Azul's cargo unit, Azul Cargo Express, takes advantage of the increased freight capacity in its passenger flights to the Amazonian outposts to Brazil's major metropolitan centers.
The company offers shipping to more than 3,200 municipalities, as well as a special e-commerce service known as Azul Cargo E-Commerce. Azul's hub, Viracopos International Airport, is about a 45-minute drive from the warehouse Amazon has been eyeing northwest of Sao Paulo.
The sources, who requested anonymity as the negotiations are confidential, did not specify how advanced conversations were, nor did they say if the retailer has also engaged Azul's rivals.
Competing airlines with Brazilian cargo operations include Latam Airlines Group SA and Gol Linhas Aereas Inteligentes SA. Neither responded immediately to requests for comment.
Last week, Azul announced it has leased two Boeing Co freight aircraft to support the rapid growth of its cargo business unit. “- Reuters