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Global Marketing

Postmates Considers Entering Brazil

Postmates was founded by Sean Plaice, Bastian, and Sam Street on 1 May 2011 after realizing they could not order hot dogs for delivery. Postmates is a mobile application that delivers products to customers within a few hours of ordering through its wide network of delivery partners. Postmates is a demand service providing company that has its headquarters in San Francisco, California. Postmates serve the cities of the United States and Mexico with efficient food, grocery, and alcohol delivery services. Now Postmates is considering entering Brazil.

According to Google mobility report and Elluminati Brazilians have visited pharmacies and grocery stores 35% less and they also avoid going to the food stores. Instead, Brazilians prefer to order food online. Brazil with a population of 210 million in 2018, the revenue of the food market is rapidly increasing. Brazil was among the ten highest-grossing globally with revenue of around $150 billion. Revenue through food and beverage companies in South America has doubled since 2010.

In Brazil, food delivery apps are in great demand. Brazil is experiencing fast growth in technology penetration. According to Statista in 2019, 65% of the Brazilian population preferred to use smartphones and it was forecasted that it would increase to 75% by 2025. The number of smart devices users will increase from 136.5 million to 157.9 million during the same period. As there is an increase in the smartphone adoption rate, the food ordering and delivery market in Brazil is in high demand.

Historically speaking, Brazil has been slowly growing into a more developed country and will continue to economically grow and play a significant role in representing South America to the world. Brazil is considered to be somewhat of a closed economy that restricts trade with other countries. In recent years, there has been a corruption scandal that has caused a significant risk to new and old investors looking to enter the country. The scandal has also resulted in less trust when conducting business with the Brazilian Government and also has caused the Brazilian Real to devalue over recent years. With unemployment increasing significantly, Postmates would potentially offer jobs to the unemployed and at a cheaper labor wage in comparison to the United States of America.

In assessing Brazil's governance measures, it ranks on the lower end in comparison to political stability largely in part due to the recent corruption scandal. Brazil reflects a society that believes hierarchy should be respected and inequalities amongst people are acceptable.

While there is plenty of doubt to entering the Brazilian market, it is important to consider the fact that Brazil is an indulgent society and its people are willing to realize their desires in regards to enjoying life and having fun, which is something Postmates could potentially capitalize on.

Postmates needs to really do its due diligence prior to entering the country and if entering into any joint venture partnerships with the government to ensure that the company maintains its image and does not get caught up in any corruption scandal or take any bribes.