Nico Nuzzi, founder and CEO of Eli Z Group: Offering local payment methods is the first step for any online retailer to succeed in Latin America
Latin America is a natural spot for growth for any online retailer – just like it was for us at Eli Z Group. As a company present in more than 20 countries around the world, selling trendy and timeless fashion pieces to thousands of consumers every year, entering in one of the fastest-growing ecommerce markets in the world was a mandatory step not only for escalating our business, but also to truly become an international company.
This is what happened with Lola Moda Brasil, one of our brands, which is now deeply rooted in Brazil and that became an essential part of our business, representing about 15% of our global revenue.
Brazil, the largest economy in LATAM, with over 150 million potential online consumers, was our first choice to expand our activities to the region: at the beginning of 2018, when we still were named just Lola Moda Store, our English website was surprisingly getting a lot of traffic from Brazilian consumers, interested in our trendy fashion pieces.
With that in mind, in March 2018 we decided to launch a website in Portuguese, fitted to the Brazilian consumer. But, as we found out later, this was just the first step: in the beginning, about 40% to 50% of the transactions were denied. By that time, we were only accepting payments with international credit cards, and no installments – which we later realized to be crucial in the Brazilian market.
Local payment methods
Offering local payment methods is the first step for any online retailer to succeed in Latin America. In Brazil, for instance, international credit cards have low penetration among the population and, also, low approval rates among global acquirers, due to the lack of local consumer data. This is why our conversion rates were so low.
More than this, by that time we did not accept payments with installments, which are used by the majority of the Latin American population. According to recent research by EBANX, which interviewed more than 3,000 online consumers in Brazil, the more expensive the product, the higher the tendency to pay with installments. Almost 80% of the respondents said they would opt for installments in any purchase higher than USD 50.
Therefore, having a local partner to provide access to local payments is vital for any global ecommerce that wants to sell in LATAM. This is what we got with EBANX, which became our partner in July 2018. From that moment on, we started to accept installments and local payment methods such as boleto bancário and domestic credit cards. Not only our sales skyrocketed, but they doubled by the end of four months. Also, only 5% to 10% of our transactions are currently denied, sometimes less.
A go-to market
Nowadays, Brazil represents 15% of Eli Z Group business, a percentage that will probably increase: we expect it to double in the next few years, with new technologies in payments, which will soon become a reality in Brazil; tracking tools to improve our customer’s experience, like EBANX Track; and more investments in customer service.
We are already planning to expand our activities to other countries in LATAM in 2020, beginning with Mexico and Chile.
Of course, there are also challenges: the main one still is logistics. About 80% of the complaints we receive are related to delivery time. In continental countries such as Brazil and Mexico, postal services can be challenging, and parcels can be detained in customs for a long time. But there are always ways to improve it. In our experience, the most important thing is to be as transparent as possible, providing as much information as possible to the consumer.
Customer care is also mandatory, and our effort is to provide multiple ways for our clients to reach us, either via online chat, WhatsApp (highly used by Brazilians, for instance, as shown by this research conducted by EBANX), phone call or e-mail.
The “Latino way”
We also learned that, when engaging with Latin American consumers, it is important to act the “Latino way”: the more contact with the customer, the better. Brazilian buyers, for instance, don’t reach us only to get information on pricing or delivery time, but they also like to share details on their purchases, their previous experiences with online retailers, and their anxieties and expectations about our products. We see this as a valuable opportunity to develop a relationship with our clients and getting to know exactly what they are looking for.
Investing in creative and tailored-made ads for LATAM’s market is also strategical. At Lola Moda Brasil, we have a six-people team based in Brazil, capturing the latest trends, memes, and cultural references as this consumer. We also prioritize investments in technology, offering geobased and even weather-based recommendations to our clients. This not only helps us to boost our sales but also provides our customers with a much better, seamless shopping experience.
In summary, what we recommend to any global retailer company that wants to grow its business in LATAM is to first and foremost invest in local payment methods. This is the only way to reach the whole potential of this market, lowering the barriers and increasing the Total Addressable Market. Finding a good local partner with the right connections is fundamental in this process. I would also recommend investing hard in shipping and logistics, and creating marketing campaigns fitted to the Latin American consumer.
About Nico Nuzzi
With extensive knowledge in digital marketing acquired through over ten years of experience, Nico Nuzzi is the founder and CEO at Eli Z Group. During the years, Nico designed the structure and all the core platforms that have helped the company to grow and become highly competitive on the market.
About Eli Z Group
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now