Subscription-based business in Brazil
Subscription-based business in Brazil

From Streaming to SaaS: Why Subscription Payment Model is Set to Skyrocket in Brazil

The recurring payment model may have lagged in Brazil and Latin America in general if compared to Europe and North America, but now, we’re playing catch-up. The business model rose nearly 170% in the last few years and is set to grow. 

The subscription-based model grew by 167% during the last four years in the country, according to the E-commerce Brazilian Association (Associação Brasileira de Comércio Eletrônico, ABComm). 

With global retraction in many sectors using subscription payment models due to a so-called “subscription fatigue,” Brazil is heading in the opposite direction, and the number of businesses turning to subscription-based services is only set to rise further within the next few years. 

Subscription-based payment in Brazil
Source: Pexel

The pandemic encouraged shoppers to move from brick-and-mortar shops to digital, thus increasing the subscription model tendency, resulting in a billionaire market in Brazil. In 2021, the e-commerce in the country registered R$260 billion in sales (equivalent today to US$51 billion). 

While the Covid-19 pandemic served as a catalyst to the country’s large adoption of subscriptions and digitalization of many physical businesses, the foundations are now laid for the upcoming increase and success of recurring payment in Brazil. 

Read more: 2022 Top Trends in the FinTech Industry

Digital subscription and SaaS payment give the opportunity to many successful business models and niches in the country to increase revenue, retain customers, deepen relationships with clients, and so on. 

 

The Brazilian way – against the current

Recurring billing isn’t something new, and it’s been around for decades. Throughout this time, the model has grown in popularity – according to McKinsey & Company, 60% of women in the US have at least one subscription, while the average subscriber – regardless of sex – has two subscriptions, and almost 35% have three or more.

However, despite the momentum, the market is also showing signs of decay and higher churn rates due to so-called subscription fatigue. At the same time, other industries won’t be affected by this phenomenon, such as SaaS, which has been reaping tremendous benefits from recurring payments. 

Read more: The Future of the Payment Industry in Brazil is Digital

Subscription fatigue means that a customer who had previously signed up for several subscription services feels overwhelmed, and suddenly, they decide to cancel everything. While this may be a concern for various countries, niches, and business models, it’s believed that recurring payment will only increase in Brazil. 

The subscription-based model persists here and is set to boom – a trend that has continued as social digital services became ubiquitous all over the national territory. 

Besides that, Brazilians enjoy having several subscription accounts rolling over – whether it be to receive their favorite products at their front door or to have access to the premium features of the app of their choice. We sit right behind the US market when it comes to streaming services: 

Streaming platforms in the world

Now, if you are a cross-border merchant wondering whether you should expand your business into Brazil, you might be thinking– should churn rates be a concern for a digital business operating in the country? The short answer is no, because this business model offers four things that the Brazilian market loves: discounts, advantages, exclusivity, and convenience.

Beyond streaming 

The largest and most successful industries in the country have found fertile ground in recurring payment models. Also, digital entrepreneurs are on the rise in Brazil and so are the “signature clubs” (a free translation from the phenomenon called clube de assinaturas in Portuguese). The biggest ones are:

  • Food and beverage (subscription brands of premium beers, high-quality wine, and coffee)
  • Health and nutrition (teletherapy; subscription of supplements, vitamins, as well as teletherapy) 
  • Books 
  • Makeup and beauty products 
  • Pet-related 
  • SaaS
  • E-learning. 

One of the most popular signature clubs in Brazil is coffee. Clients can choose what type of grain, origin, brewing, bean, package size, and so on they want to purchase. Two established brands took Brazilian’s love for coffee to the next level, and transformed it into an exclusive and convenient way for them to drink their favorite coffee every morning: Coffee++ and Black Tucano delivery by the front door.

A case of success: Coffee++ 

The coffee brand Coffee++, which works with the highest quality coffee producers and received the 2018 award for the best coffee in the country, the Cup of Excellence, decided to reactivate their subscription-based model and partnered up with PagBrasil to offer their customers the most complete service of subscription, PagStream®.

According to the e-commerce director at Coffee++, Tiago Alvisi, this move was part of the company’s strategy to scale its business to the next level. Their vision is to strengthen the relationship with their customer:

“We aim to provide convenience for those customers who have already felt that they will consume our coffee every month. But we know that e-commerce makes personal and physical contact with the customer unfeasible, so the subscription is also a way to create proximity to the consumer.”

Read more: 5 reasons that made Black Tucano choose PagBrasil for subscription management

Other than that, what made Alvisi and his partners choose PagBrasil was the possibility to provide a discount to the consumer, something the Brazilian shopper appreciates: “One of the main points that made us choose PagBrasil,” says the e-commerce director, “was the freedom to provide promotions and discounts for acquisition.”

Freedom to the customer also means managing and personalizing their subscription the way they want – from flexible billing to how many products they’d like to incorporate into their signature. 

PagStream® supports any monetization strategy and is perfectly adaptable for business models that work with recurring payments. Whether you are a streaming platform, SaaS, e-learning website, subscription club, or something else, your business can benefit from our comprehensive payment solution. If you wish to learn more, contact one of our team members!

Camila Santiago

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