Amazon in talks to buy Brazilian retail rival: Finally, a way in?

Summary:Retail giant Amazon could be about to break into the Amazon -- literally -- with eyes to snap up a Brazilian competitor. Acquire, absorb, and attack the market: something the developing nation needs.

Reports suggest Amazon could be ready to make a push into the Brazilian market through a major rival acquisition, a crucial economy to crack and soon-to-be powerhouse of the Latin American market.

The retail giant is looking to acquire Sao Paulo-based electronics and bookseller Saraiva, according to sources speaking to Bloomberg. But the deal could become much more as the retail giant turned tablet maker could be realigning its bid to move towards the lucrative Brazilian market as other hardware manufacturers are realizing the potential in the emerging economy. 

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Credit: CNET

Saraiva is a perfect pitch for Amazon to go for -- even if it's not entirely clear what Amazon wants out of the potential acquisition. It's a near-identical clone of Amazon's front-facing online retail business, and resembles a similar business model to the retail giant five years ago. While Saraiva doesn't have a cloud infrastructure or e-book-to-tablet back-end service, what the Brazilian giant has is customers and corporate dominance, and a way in to a lucrative market. 

For Amazon at least -- the name perhaps an ironic coincidence, as Brazil is home to the world's largest namesake river -- it would be an all-but-necessary push to enter the continent with products of low price, particularly the Kindle tablet, which has all but negligible profit margins. 

Above all else, while Amazon has previously struggled to enter the country -- the firm already has an Amazon Web Services office in the region -- snapping up Saraiva would be a whole dose of medicine for a headache the firm faces against the Brazilian tax system, the Financial Times of London understands.

Equally, the move would wipe out its main competitor in the region by absorbing it under the Amazon name. 

Brazil is set to become a powerhouse for the world's technology industry in the coming years, just as China remains the manufacturing center for the world's electronics, and both China and India takes the lead as the world as the 

These so-called BRIC nations (Brazil, Russia, India, China) are on the brink of becoming mature markets from their current developing--emerging status. It's thought that in two decades from now, the four BRIC nations will take the lead as the largest collective global economies that could even outrun the existing seven G7 states. 

Lenovo, for example, the world's largest PC maker by shipments according to Gartner figures -- despite similar yet disputed figures by research firm IDC -- recently eyed up a series of Brazilian acquisitions in order to sap the market for its potential worth. Lenovo ultimately made good on its promise, buying both electronics giants CCE and Digibras  in a short space of each other.

Why? Because Lenovo's base in China serves a few hundred million, but building an PC manufacturing and operations center across the other side of the world in order to build low-cost PCs and electronics for a developing market, while at the same time supplying thousands of jobs in region for the national economy. It's a cash cow in the waiting.

Once Brazil is up to speed, it could within years become a Latin American dominant power in the continent -- like China is to Asia. 

Topics: Amazon, Tech Industry

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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