Amazon is in talks with Brazilian airline Azul on shipping goods in the country, according to a Reuters report which quoted “two sources with knowledge of the matter.”
The talks with Azul, which serves over 50% more Brazilian airports than its nearest rival, are the strongest signal yet that Amazon is lining up distribution to sell products directly to consumers throughout Latin America’s largest economy it underlined.
It also shows that the US e-commerce company is serious about overcoming the nation’s notorious logistical challenges, including shoddy roads, security problems and a national territory greater than the continental United States, the report said.
Representatives for Azul declined to comment on the talks while Amazon said it did not comment on “rumors or speculation,” it added.
Reuters noted that the Seattle-based online retailer had so far waded slowly into Brazil’s highly competitive e-commerce market, starting with e-book sales in 2012, adding physical books two years later and offering third-party sales of electronics in October.
E-commerce accounts for around five percent of Brazil’s roughly $300 billion 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 pace in coming years.
Currently, Amazon relies on third-party vendors to ship their own goods sold on its Brazilian website, but that appears to be changing.
In February, Reuters reported that Amazon was looking to lease a 50,000 sqm warehouse just outside Sao Paulo, in a sign the retailer may bring storage and distribution in-house.
In March, it reported that the company met with an array of manufacturers in Sao Paulo to discuss plans to stock and sell products directly.
By partnering with Azul, Amazon would immediately gain access to a network of more than 100 airports 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 into second- and third-tier cities underserved by other carriers.
The report said that Azul’s cargo unit, Azul Cargo Express, takes advantage of excess cargo capacity on the airline's passenger flights to offer rapid delivery to locations ranging from far-flung Amazonian outposts to Brazil’s major metropolitan centers.
The unit offers shipping to more than 3,200 municipalities, as well as a specialized 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, the report said.
Earlier this month, Azul announced the lease of two used Boeing 737-400F to support the rapid growth of its cargo business unit, Azul Cargo Express.
Both aircraft are expected to be delivered during the second half of this year.
As a result, it said Azul Cargo Express will have additional capacity and greater flexibility to provide customized solutions for its growing customer base.
