Alibaba’s AliExpress partners with Brazilian retailer Magalu

AliExpress, the cross-border platform owned by Chinese giant Alibaba, has partnered with Magazine Luiza, also known as Magalu, Brazil’s third-largest retailer in sales. Through the agreement announced today, AliExpress will become a Magalu seller and vice versa. 

The partnership comes at a controversial time, to say the least. Domestic companies in the sector have just won a battle in Congress to seek tax equality with international e-commerce platforms, especially Asian ones such as Shein, Shopee … and AliExpress.

In a securities filing, Magalu said AliExpress’s offer will complement the mix of products offered in the company’s marketplace, including items like fashion and home accessories. At the same time, Magalu will bring its offers of durable goods, such as household appliances and electronics, to Brazilian AliExpress customers, a category in which Magalu is the market leader in the country.

In a conversation with a journalist this morning, Magalu’s chief executive, Frederico Trajano, said this is a “win-win partnership.” In addition to allowing the two platforms to expand their offerings considerably, it will also boost their sources of revenue: a take rate will be charged for every AliExpress product sold on Magalu’s marketplaces; the same goes for what Magalu sells on AliExpress. 

The companies did not provide details, however, on how much this take rate would be.

Together, the two marketplaces have more than 700 million monthly visits and more than 60 million active customers. The partnership should go live in the third quarter.

To journalists, Mr. Trajano said there was no contradiction in the partnership, as Magalu has always defended tax equality but has never been against international competitors. 

As we have reported, the Brazilian Senate passed a bill slapping a 20 percent tax on low-value international purchases of up to USD 50 — a response fueled by national retailers against the rise of Asian competitors in the country despite their still low penetration in Brazil’s e-commerce and retail as a whole. 

According to consultancy firm Payments & Commerce Market Intelligence (PCMI), domestic players make up 94 percent of total e-commerce sales in the country, which includes retail, travel, ride-hailing, digital goods, and services. This dominance was one of the arguments retailers used against Congress’s impetus in taxing cross-border purchases. 

Another study by the consulting firm Tendências, commissioned by AliExpress’s parent company Alibaba, estimates that international online purchases represent 6.4 percent of e-commerce and 0.5 percent of retail sales. National retailers contest the data, pointing to a 2.2 percent share rate of import sales in the total Brazilian retail market. 

Regardless of the source, there’s significant room for international platforms to grow in Brazil.

AliExpress has made Brazil one of its top five markets and adjusted its logistic operations accordingly. During the Covid pandemic and e-commerce boom in 2021, AliExpress had five weekly flights to Brazil, increasing to eight a year later. 

It maintains this frequency, except for special sale dates, allowing delivery times to range from 7 to 12 days. Selling its product on Magalu’s marketplace is another step towards expanding its reach to Brazilian consumers. 

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