Since its launch 13 years ago, Brazil’s Netshoes has become one of Latin America’s leading e-commerce companies in leisurewear and sporting goods.
It commenced international expansion in 2011, landing in Argentina (with an initial investment of US$17 million) and Mexico (US$22 million). Last year, Netshoes closed a funding round worth US$68 million from Singapore-based Temasek, adding onto the backing received from Tiger Global Management in 2009.
This year, Fast Company named Netshoes to its list of most innovative companies. In fact, it was the only Brazilian technology endeavor in the South American top 10, selected because of its overall performance and the impact of its innovations on its sector and on culture in general.
During the first half of 2013, Netshoes’ sales took off in Argentina, reporting strong numbers in comparison to the year before. With respect to revenues, the company experienced an increase of 155%, and the number of operations carried out increased 90%. It’s worth noting that during Netshoes’ first year in Argentina, sales increased 1,280%, reaching a record 1.5 million monthly visits to its website. Today, it averages 2.5 million visits each month, up 85% in all visits and 55% in unique visits.
Netshoes has also increased its product offer by 150%. Currently, the platform has 21 categories that feature over 5,000 products. Items in the categories of soccer, running and fashion represent 50% of sales.
Alberto Calvo, General Manager of Netshoes LatAm, leads the company outside of Brazil. We caught up with him to find out more about Netshoes’ strategy in leading the region’s three largest markets.
Clarisa Herrera: Netshoes’ numbers in Argentina are particularly explosive. To what do you contribute that growth?
Alberto Calvo: The greatest brand recognition Netshoes has is in Argentina, which is one factor. On the other hand, you’ve got the growth of e-commerce over the last year, estimated at 47%. As broadband penetration increases, people access e-commerce at higher rates. According to CACE, around 10 million people have already made a purchase online.
CH: What are the pillars of a business model based on e-commerce?
AC: E-commerce is about trust. Anyone looking to buy online has a ton of doubts. Are they going to deliver what I’m buying? Is the item actually like what I’m seeing on my screen? Who am I giving my credit card information to? Our mission is to foster an excellent first buying experience, because we know the first time is key.
CH: In your opinion, in what phase of online retail are Latin Americans?
AC: When people get past their reservations and really find great satisfaction with the buying experience, not only do they buy repeatedly, but they become the best ambassadors, disseminating confidence. We’re in that phase. That’s why it’s important for all players to foster the same sentiment. We have the opportunity to achieve his quickly, but it can also be destroyed. One bad experience means that the consumer won’t purchase again or recommend that others do so.
CH: What do you consider the essential parts of a good online buying circuit?
AC: Short delivery times, multiple payment methods, a well-oiled logistics setup to fulfill that promise you’re making. To achieve that, we’ve got a risk and fraud analysis area to resolve each order to its own logistics system – another major factor.
Locally, we’ve achieved partnerships with leading brands, such as Nike, Adidas and Puma, as well as with transportation operators like Andreani, OCA and Correo Argentino in Argentina. This allows us to get to anywhere in the country in the shortest amount of time possible and for a reasonable price. Part of our service, our differentiator, is delivering our products for free. If you buy in a physical store and don’t have to pay, but with us you do, that’s a barrier. People recognize the advantage of buying from the comfort of their own homes, but they don’t want to pay.
CH: How do you deal with obstacles like trying out and returning products?
AC: We have a call center with about 20 employees dedicated to helping and supporting the buying process for all of our customers. In the phase we’re in, it’s common for customers to make the purchase online and automatically call or send an e-mail saying they’ve done all they were supposed to do and asking what happens next, what to do, when they’ll receive their orders. Just 15 minutes later. There’s a gap, and they need that support, which is what our operators are trained to provide.
Consumers can track where their orders are at online. If the experience isn’t good, and they’re not happy, it doesn’t work. The first exchange is free – we pick up the item at their homes and replace it with another product. Customers can return products and get their money back, meaning there’s no risk. There was an initial preconception with Netshoes in Brazil that everything needed to be tried on before buying. The truth is that it works. For each clothing item, we check the measurements and provide them with the product description so consumers can ensure they order the right size. For shoes, weight isn’t standard, so we provide that information.
CH: Are you considering any other markets in the region?
AC: Part of my responsibility is to cover the entire Latin American region. The plan is to solidify in Mexico and Argentina first. They’re our first experiences outside of Brazil, and we’re figuring out how to advance in other markets. We don’t know when, but it’s part of our expansion plan.