Coronavirus exposes rich e-commerce seams to mine in Chile
Contagion control measures in Chile – such as mall closures and lockdowns in parts of capital Santiago – have dented sales of brick and mortar retailers.
E-commerce, a multibillion-dollar business in the country, has stepped into the breach. The food and drink segments have never been busier and the crisis has spurred traditional players – that until now have resisted digital – to take the plunge and embrace the channel.
The crisis has also illustrated the opportunities in other retail segments currently behind the curve and demonstrated the versatility and limits of logistics teams facing an unprecedented deluge of online orders.
Indeed, the boom has placed stress on logistics operations, which are today adapting while learning to manage with fewer staff.
To find out more, BNamericas spoke with Lucas Goycoolea, sales development manager of VTEX Chile.
Founded in 1999 and present in Chile since 2013, Brazil-headquartered e-commerce giant VTEX offers a cloud-based e-commerce platform that can be used by any industry or business model.
BNamericas: How is VTEX being impacted in Chile by the health crisis, in operational and sales terms, etc?
Goycoolea: Given the crisis, e-commerce is shifting, from being a convenience to a necessity, mainly amid efforts to support the supply chain and encourage people to stay at home and avoid going out on to the streets and joining long lineups at the shops.
Given that, many clients who use VTEX are increasing their sales considerably, some of them have reported an increase of up to 450% compared with an ordinary day, mainly driven by food and alcoholic beverages. At the other extreme, sales of non-essential items have fallen up to 50%, but we expect that this trend will reverse as physical stores close for quarantine, leaving e-commerce as the only available sales channel.
BNamericas: What kinds of things are businesses doing to mitigate the closure of shopping malls?
Goycoolea: The vast majority of businesses that already have an e-commerce option are starting to bet practically 100% on this channel, empowering as much as possible the teams in charge of digital channels and helping get the whole company behind them.
Today, a lot of effort is being made to make their online stores as visible as possible, focusing marketing investments in the digital world, promoting ‘stay at home’ and home delivery campaigns. What should begin to happen is that stores that cannot serve the public become ‘dark-stores’ and take advantage of the inventory currently immobilized in these stores, increasing the variety and depth of products available via e-commerce channels.
BNamericas: Surely the logistics segment (delivery companies, etc) is busier than ever.
Goycoolea: We have indeed noticed that our logistics operator partners are working at a 1,000% pace, since despite continuing to dispatch, they have still had to reduce the size of their teams for obvious reasons.
We have many clients and partner companies that have had to closely monitor delivery timetables and their capacity to handle orders or packages, as there is strong demand for home delivery, which means extending windows. Nevertheless, this has not stopped clients from placing new orders and they continue being generated every day, for which reason logistics companies are adapting.
BNamericas: Are companies adapting well to this new scenario?
Goycoolea: Probably very few companies, whatever the field, have had to adapt to such a sudden change as this. There are brands that have sold more than during a cyber event, and did not expect to have such a high level off traffic. Logistics companies have had to deal with a drop in staff numbers. Despite everything, it has been noted that many have managed to cope well, have reinforced the safety of their company, have significantly improved sanitation measures, so that in this way everyone is as protected as much as possible. The same goes for the packages that are sent and for route optimization. Given the curfew and quarantine, they have had to adapt to working with special permits, passes, etc.
Interesting categories are products geared to home-based activities, such as technology, home office products like chairs, desks and screens as well as machines or equipment for doing sports at home such as treadmills, exercise bikes, yoga mats. And of course, basic necessities such as food and cleaning supplies.
BNamericas: Do you think that what we are experiencing will promote e-commerce overall in Chile and in the rest of the region?
Goycoolea: Yes, definitely. We believe that this has finally been an opportunity for many companies to realize that they really need to embrace the digital channel. For example VTEX, as an e-commerce platform, has secured in recent days new customers who want to start their online sales as quickly as possible, have their store up and running in 10 days given the current situation.
For example, we note that there are many opportunities in the pet products category. The pet care market is growing by leaps and bounds worldwide, and amid lockdowns, animals must continue to eat like we do, making it a great opportunity for these types of companies to start digitizing at a faster pace.
In the case of pharmacies, the example is extremely clear. Hygiene these days is on everyone's minds; people are desperately looking for hygiene-related products, since they cannot find them anywhere, making it an opportunity for companies in this area, which must start going digital even more, since this is not something transitory. Some people must also take medicines through their life, so being able to buy these online is very relevant.
BNamericas: So you think segments that, until now have resisted digital changes in the retail world, are going to board train?
Goycoolea: For sure. We believe that many companies that currently only have physical stores, or an under-optimized digital solution, have, or have had, to board the train in a practically obligatory way, leaving aside the pretexts that they had, in order to advance digitally as fast as possible.
Many times, there are obstacles created to hamper the embrace of digital, when it is really just a case of simply taking the plunge. We have seen this effect today, in the area of work. Many companies are making major efforts to implement teleworking solutions, video conferencing tools and others in order to collaborate online.
E-commerce itself is not the most complicated thing in the world. Of course, you need to know how to carry a project out, but everyone can get on the train, since growth in this channel can be in stages.
Many times, brands commence with a proof of concept, where they start with the project to verify whether it really works, and at least until now, all customers in Chile who have decided to start in this way have kept the projects running.
Along with this, there are also other ways to test this channel, such as starting the project with the internal team, using a closed e-commerce model where only the company's collaborators, or their family and friends, can buy. This concept is often called “friends & family" as they are B2E (business to employee) projects, and with this, they manage to show the value proposition of digital. And with this type of test, they can make tweaks, understand the work that is needed to start selling online, since creativity is born out of necessity. Finally, an area where much focus is also needed and could be somewhat more difficult, is education, or rather, the changes that need to be made in the organizational culture regarding this transformation.
Many times, companies believe that technology is the problem, but it is not. The technology already exists and adapts, so it is fully available for different solutions…
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