France's Carrefour shuts down online shop in Brazil

Fri Dec 7, 2012 9:07am EST

* Restructuring plan to focus on wholesale, hypermarkets

* Online competition hurts profits in tempting Brazil market

SAO PAULO Dec 7 (Reuters) - French retail giant Carrefour SA said on Friday it was shuttering its e-commerce operations in Brazil as part of a restructuring plan in the country, highlighting the tough task of turning a profit in a promising new online retail market.

Stiff competition and aggressive promotions have led some Brazilian retailers to pile up losses in their online ventures, as rivals rush for a share of the fast-growing young market.

Amazon.com Inc and Google Inc both opened their digital bookstores in Brazil on Thursday, underlining the wide-open nature of Brazil's $12 billion e-commerce industry. Low internet penetration and a swelling middle class have spurred bets on strong growth for years to come.

Amazon's decision to hold back on physical deliveries, however, suggests a careful approach in a country with notorious infrastructure bottlenecks and a complex, costly tax system. A bigger retail launch would also have to ride out a downturn in Brazil's economy that threatens to cool consumer demand.

Carrefour's suspension of online sales was part of a two-year-long restructuring plan focused on improving its massive hypermarkets, wholesale stores and finance unit, the company's Brazilian unit said in a statement.

The company declined an interview request to discuss the decision.

Since Carrefour's Chief Executive Georges Plassat, known as "The Cleaner", took over six months ago, he has worked to clear out non-strategic businesses to raise cash and revive its struggling hypermarkets in key locations.

Falling interest rates and shifting strategies at Brazil's biggest banks have also begun to transform the local credit card industry and squeeze retailers' lucrative consumer finance operations.

Brazil's biggest publicly listed retailer focused entirely in online sales, B2W Cia Global do Varejo SA, has had to back off aggressive shipping and financing offers as part of a plan to turn around a string of net losses.