THE brazilian online retail underwent major changes in 2020 – something largely attributed to adjustments due to the COVID-19 pandemic. While several regions of the country entered a regime of social isolation, retailers and traders, from the largest to the smallest, find in e-commerce the only way to continue working and generating income during the country’s health and economic crisis.
I do not like to speak the term “beneficiaries” in the midst of a pandemic responsible for the death of so many people around the world, but it is undeniable that companies in some specific sectors have grown like never before in this period – we record the results of several of them here in Tecnoblog, in the last few months: food delivery, streaming of films and series, and the computer sector (driven by the increase in the sale of computers due to remote work) are some examples. And, unsurprisingly, e-commerce is part of that list.
According to the Brazilian Electronic Commerce Association (ABComm), digital retail grew 56.8% from January to August 2020, compared to the same period in 2019. The survey reveals that the average spend per order decreased by R $ 420, 78 to R $ 398.03, which is justified, since more essential products (less expensive) were being purchased. In the general balance, there were 65.7% more transactions.
In the first few months, the suffocation was great. We follow the difficulties closely, reporting on forecasts of late deliveries. Since then, the rush of e-commerce companies has been essentially to meet exponential demand, preventing the opportunity for growth to go down the drain.
The investments of the main players
Basically, every sector of a company undergoes changes when something so different happens. But we are going to focus specifically on the logistics area, which is quite complex and comprises much more than delivery to the final consumer.
If before the pandemic, the consumer was already looking for faster and faster deliveries, after it, with the need to obtain essential items for everyday life through e-commerce, there were even more challenges for electronic retail.
Thinking about deliveries the next day or the same day in a country the size of Brazil is not a simple task. Firstly because of the extension of our territory, and secondly because of the high distribution costs linked to road transport, which is our main logistical system – add the issues surrounding the infrastructure conditions of our roads. And, well, it’s not like drone delivery is a reality here.
From warehouses to airplanes
In 2020, e-commerce companies focused their investments to work around these problems and make deliveries faster. But for many of them, the pandemic was only the catalyst for a process that had been going on for a long time. Amazon was already planning warehouses to improve deliveries in the Northeast since 2019, and opened, in November 2020, three distribution centers (CDs) in Minas Gerais, Distrito Federal and Rio Grande do Sul, closing the year with eight warehouses in Brazil. .
Mercado Livre also inaugurated the first CD in the Northeast region (the company already had warehouses in Cajamar and Louveira, both in the state of São Paulo). The company surprised by announcing its own fleet of airplanes in Brazil, with four aircraft operated by different airlines – part of an investment plan of R $ 4 billion in the country in one year.
It is worth remembering that Amazon has a robust fleet of planes, but in the United States – there, the company still bought 11 aircraft in 2020 to guarantee fast deliveries.
The locker fever
Another logistical solution found to facilitate deliveries were lockers, smart cabinets positioned in strategic locations, such as subway stations, physical stores and gas stations, which allow you to pick up the products ordered for a specified period. B2W ended 2020 with 81 lockers installed for Submarino, Americanas, Shoptime and Sou Barato customers – but promised 300 in 2021.
Correios also invested in this strategy to improve its logistics network. The company opened the first locker in the Federal District in October last year, with plans to expand to the entire country in the coming years.
Fulfillment for whom?
Although large distribution centers are a successful strategy for larger cities, there are still limitations in the fulfillment system – a bet by ML, with Mercado Full, and Amazon, with FBA.
For Fabio Fialho, logistic director at ABComm and commercial director at Synapcom, “the creation of some CDs, such as Mercado Livre, is not sustainable or very scalable”.
Fialho says the difficulties are, basically, keeping several sellers of totally different products in distribution centers and getting small sellers to share their stocks.
“It is an opportunity, but climbing it is very complicated. I believe in this model, I do not stop believing in Full, but scaling this is not simple, so whoever is in the Full Market or Fulfillment by Amazon (FBA) has its advantages and its relevance. I think that sellers still have an opportunity to connect and invent themselves in their productivity and logistics with the Post Office and other carriers. ”
Pure players vs traditional stores
Of course, no one was expecting a year like 2020, but while some companies were already digital natives and were able to improve their operations to meet the high demand during the pandemic, others had to do more to target their technology and train their employees. in this new scenario.
For those less familiar with the topic, it is worth explaining: let’s think about pure players like these companies that have all their operations in digital, such as Mercado Livre and Amazon, for example. These platforms are different from traditional stores, which had physical establishments, although they also had sectors thinking about online sales – we can mention Casas Bahia and Lojas Americanas, which have extremely strong brands built since long before the explosion of e-commerce.
During the pandemic, many physical stores closed or had their movement significantly reduced due to the restriction measures applied in the country. However, large companies, such as Via Varejo (the group responsible for Casas Bahia and Pontofrio), transformed these establishments into distribution centers, in a strategic move to take advantage of inventories and deliver orders faster to customers.
But, from an operational point of view, who takes the lead in a scenario like the one we had in the last year? For Luiz Vergueiro, logistic director of ABComm and director of operations for Mercado Livre, traditional stores can have a huge advantage because they have stores in cities in the interior, being much closer to these buyers, but there are counterpoints.
“If you have, for example, a physical store in Sobral, Ceará, you will certainly arrive on the same day or the next day at the consumer’s home to buy a“ class A ”product in terms of sales volume. But if you need to buy a long-tail product, those that have a much lower turnover, certainly, that product will have to come out of a centralized stock. Most likely you will not have it in the store. ”
According to Fabio Fialho, there are advantages and disadvantages on both sides.
“I think there are two scenarios. Those who have a physical store do not necessarily have an advantage because they already have a physical store. There are costs for this physical store. Usually, who has [esses estabelecimentos], has in places of passage, then, are more expensive square meters.
When you are a pure player, you do not need to be in shopping malls or in transit centers. So, you can quickly create the dark stores, consolidation and distribution point, in much cheaper square meter locations. They are two different models, and even complementary. ”
Explosion of marketplaces
In the midst of all this, we cannot fail to address a very important point of online sales: marketplaces. According to data from Ebit / Nielsen, this type of commerce already represents 78% of Brazilian e-commerce.
In the first half of 2020 alone, marketplaces accounted for 30 billion reais in revenue, which represented growth of 56% compared to the same period in 2019.
This phenomenon doesn’t just come from the last year, of course. In 2018, Jeff Bezos published a letter reporting the booming sales growth made by independent third-party vendors. The figures revealed a share corresponding to 58% of gross physical sales within Amazon, the majority made by small and medium-sized companies.
It is not for nothing that large Brazilian companies started to bet on logistics also focused on the marketplace. Via Varejo announced a new logistics platform for these sellers, in a system similar to that of Amazon. Envvias allows shopkeepers using the Pontofrio, Casas Bahia and Extra marketplaces to take advantage of the group’s logistics network to deliver their products.
“The Marketplace today is an opportunity for the large retailer to be an infinite shelf. To be able to sell anything – you are not an expert in buying certain types of products, so, with the marketplace, you provide this catalog extended to your audience with all the benefits of being within the brand, having the service of the brand, conditions of installment payments, and everything else.
We are giving our logistics capacity and delivery times to the seller. Later on, we will offer the store as a drop off point, that is, the seller will be able to leave the product in the store; we will be able to have fast delivery for this seller – in two or three hours the product will be at the customer’s home. ”
Daniel Fernandes, logistics director of Via Varejo
According to Fabio Fialho, the distribution of platforms that offer a marketplace in Brazil facilitates the insertion of small sellers in the market.
“Brazil, unlike China and the USA, has a dispersion of its retail and marketplaces. In these countries, they basically depend on Alibaba and Amazon. We already have 15, 20, 30 possibilities for large marketplaces, not to mention small and medium. So, today everyone wants to be a marketplace. Banco Inter is already a marketplace, soon Itaú will be a marketplace, Mastercard will be a marketplace.
In Brazil we have multichannels, there are still regional ones. So, I see that these marketplaces come to help small salespeople to get on with their business. ”
Are we really that dependent on the post office yet?
If the pandemic had happened a decade ago, things would probably have been quite different. But in 2020, e-commerce operated with the help of several private delivery companies, partly reducing dependence on the Post Office.
The state-owned company, which borders on total privatization, had an increase of 514% in complaints between the months of March and July 2020, according to Procon-SP, despite having announced efforts to contain the impacts of the pandemic. Some giants have expressed interest in purchasing Correios during the past year, including Mercado Livre, Alibaba, Amazon, Magazine Luiza and FedEx.
In an interview with Tecnoblog, Via Varejo’s logistics director, Daniel Fernandes, says that the company is less and less dependent on the Post Office.
“We have practically all delivery models, but the Post Office has a small share. More and more retailers are leaving the post office, for reasons of cost and level of service, and the retailer is dominating this logistics chain. We use two models a lot: deliveries via direct carrier or following an uberization model, which we launched with ASAPLog. We have stores where small packages come out, and drivers who register on the app go there, take the order and deliver. Our largest share of deliveries is already ASAPLog, in the last mile ”.
However, for Fabio Fialho, the Post Office is still very important for electronic commerce in general, due to the capillarity achieved in the country.
“I believe that the performance of the Correios is super important. I think it is still the main player, or one of the main players. The Post Office has its virtue and its problems. They have to go for a public offering on the stock exchange. I think the company needs governance and it needs a lot more of an important corporate structure at the top. So a privatization does not necessarily have to be with a sale, it can be done with a governance structure, and with an IPO on the stock exchange.
Certainly, when we talk about local last miles, that is, inventory positioning, the company delivering that last mile, facilitates new delivery entrants to participate in the market. Then, the micro freight companies will actively participate in their region, they will be more regionalist. The Post Office contributes in a more national way.
You have a base of the pyramid, which is the small seller, depending a lot on the Post Office – which does not mean that it is bad. It is very good, because the Post Office has a much more ready capillarity, a much more efficient reverse logistics, which helps this small and medium entrepreneur. ”
It remains to be seen how long the capillarity advantage of Correios will be maintained. It is worth remembering that Amazon announced, at the end of last year, that it is bringing its own delivery service to Brazil, starting in São Paulo, Rio de Janeiro, Belo Horizonte and Brasília, but with expansion plans for the whole country.
Outlook for e-retail for 2021
In 2021, the unpredictability factor is considerably less. According to the World Health Organization (WHO), it is unrealistic to think about an end to the pandemic this year, but many people are already more adapted to the new reality – which includes online shopping, which tends to boost even more the sector.
For companies, the difference is that there is now more preparation. And the prospects, in general, are good.
“I only see growth, and with more and more opportunities for lead generation. I think who will win the game is whoever knows how to position himself in the stock and offer the consumer a portfolio opportunity. Today, we have several channels with opportunities for digital capture and sales. The consumer is increasingly digital – we saw 8 million entrants in 2020, who are new buyers.
Effectively, there is no way to sell less, only growth. Obviously, whoever follows this growth with a portfolio and inventory opportunity will win the game. ”