Let’s face it, the year 2020 was not exactly as most humans expected and the change of direction threatened dreams, along with any planning for small, medium and large businesses. The biggest retail companies already present on the internet were affected with less intensity, but if there is a segment responsible for a revolution in e-commerce, it was the smaller stores, together.
Before the pandemic hit the entire planet, the store on your block sold its wares to local residents. At most, I would accept a call for someone to stop by and take what they chose over the phone – or by email. The same scenario exists for food, even during early access escalation with delivery apps like iFood, Rappi, Uber Eats and others.
As of March 2020, many of these stores closed, merchants saw their doors go down and billing could even hold the few days without the parish, but they turned into weeks, months and we’ve been without the same movement for over a year. It didn’t work for a large number of businesses, but others managed to look at the internet and found in the marketplace a way to have the entrance open once again, even going to a much larger market spread across the entire country.
Ebit/Nielsen noticed this movement as early as the first half of 2020, when more than seven million users made their first online retail purchase. Bringing it back to a previous moment, this amount of people shopping online is almost the sum of the entire 2019.
“The small retailer was taken by surprise (…), at a time of crisis where it was financially fragile. In a moment of despair, where its main channel ceases to exist, obviously the smallest (business) will look for the fastest and easiest link. That’s where the marketplace comes in, and that’s why most of them, in 2020, grew by more than 100%”, comments Felipe Dellacqua, partner and vice president of sales at VTEX, to Techblog
In some of these businesses, WhatsApp became a service tool, but not with the same effectiveness and reach as the marketplace offered by major players here, such as Magazine Luiza, Amazon, Via Varejo, B2W and Mercado Livre. For Gastão Mattos, adviser of the Brazilian Chamber of Digital Economy, these large groups also acted as promoters of the small store to other audiences.
Diaspora to the marketplace
The marketplace works as an outsourcing of the “I’ll sell on the internet” part, even integrating logistics solutions in a single platform. If you lived the moments before the internet in Brazil, this experience would be like an evolution for businesses with advertisements in newspapers in the neighborhood or even the city. The difference here is that this analogy newspaper also processes the payment and does part or all of the shipment, with some also working with the products within the distribution center itself.
This way, it is easier for the small business to enter a marketplace, even if it is a competitor of its own product, than trying to fight it when selling online. “In the past, there was no way you could sell a TV and fight with Magalu, or have a clothing store and compete for space with Dafiti or C&A”, comments Gastão Mattos.
Amazon expanded its business in Brazil initially betting only on this model, which became more appreciated by other competitors such as the B2W group, Via Varejo and more recently Magazine Luiza. Other more niched platforms have also noticed this growth, as is the case of Elo7, for artisans.
“You access a market that if you were in a physical market, you wouldn’t reach. Geographical boundaries are broken. The seller finds his place without compromising a fixed monthly cost”, says Carlos Curioni, CEO of Elo7.
During 2020, the large networks also noticed the growth of this market. This is the case of Via Varejo, which reported an increase of more than five times in the number of sellers registered on its platform. The group responsible for Casas Bahia, Extra and Ponto went from 5,000 stores on its marketplace platform at the end of 2019 to 26,000 in the first quarter of 2021.
The greater number of sellers within the platform did not mean saturation in supply, as demand followed in step and resulted in a 124% growth in total online sales between the first quarter of 2020 and the same period this year at Via Varejo. In the first half alone, the money circulating through marketplaces increased by 56%, to R$30 billion, when compared to the same period in 2019.
To the Techblog, Helisson Lemos, CDO of Via Varejo, points out: “Our marketplace has grown at a triple-digit level both in quality and quantity. Entrepreneurs from various segments, even offline retail, started selling in the marketplace to maintain their operations and go through this complicated phase”.
Elo7, despite being smaller, also saw its number of artisans rise during the pandemic. “In a few months we almost doubled the number of new sellers. The average growth was 40%, becoming a disproportionate growth comparing the period from May to May of the previous year”, says Carlos Curioni.
Both Carlos Curioni and Helisson Lemos believe that this growth will continue to exist in some form, even without the catalyst represented by the peaks of the COVID-19 pandemic. The convenience for the buyer, together with the low cost and greater possibility of selling to small and medium-sized businesses, are enough reasons for sales in the marketplace to continue to be present in these locations at a time when stores are reopened.
Hope to grow more in 2021
The year 2021 has started and, at least until the end of the second quarter, the situation in Brazil has not really improved, commerce has not reopened as it could and the internet continues to allow this advancement of the marketplace, but to what extent?
“We still don’t have a big dominating leader like Amazon in the United States (…) for the next five years, we will have some consolidation movement and joining these large groups from five (large marketplace groups) to three”, says Felipe Dellacqua , from VTEX.
The executive also believes that a next step in the marketplace is the insertion of everyday products, as a market for non-perishable items and pharmacies. The idea is to make the customer continue circulating within the platform for recurring purchases, mainly generating more traffic for the company.
In addition, a large part of consumers use the marketplace as a form of purchase to retrieve the product from the store. Dellacqua points to this movement as the future in a scenario without a pandemic, with large marketplace groups taking advantage of small businesses to increase in-store traffic, as Mercado Livre has been doing.
“This is a one-way street. Let’s say that COVID-19 ends, I think the physical channel will become important again, but part of its consumers will continue to perceive the convenience of buying on their cell phone or in an app. These things will come together more and more mixed up”, believes Gastão Mattos, from the Brazilian Chamber of Digital Economy.
The CEO of Elo7, on the other hand, bets on the sharing of experiences among users themselves to maintain the marketplace’s growth, even after the isolation period. “The more people numerically having this cool experience online, it ends up generating even greater growth when compared to what we had before [da pandemia]”, comments Curioni. . “The maturity of the people and the services of the companies, the capacity for volume, logistics with heavy investment in recent years, all of this helps for the buyer’s experience to be good for him to return to the channel”, he adds.
Some platforms use their own means to help this growth continue through 2021 and beyond. Elo7 bets on training sellers with more complex courses, evolving beyond the primers and ebooks already offered by the artisans platform. Via Varejo started to include its installment plan (the payment book) within this type of business, in addition to including bonuses to employees according to the volume of online sales.
If the marketplace was remembered as a way to save small and medium businesses, it is clear that its presence will be even more widespread within the more traditional storekeeper, whether through the use of so many square meters of addresses with a sort of system-wide inventory, or by the end of the division between the virtual and the physical part of the store itself.
This scenario looks very far ahead, but it is already in Via Varejo’s plans, which already plans to enter the marketplace merchant’s data into the system of the physical stores Casas Bahia and Ponto.
The marketplace made the big shopkeeper grow and the big one made the little one survive.