In its second-largest acquisition, Amazon buys the company for $970 million.
Dafiti Group, which launched in January in 2011 in Brazil as a shoe retailer, has been feverishly raising money and expanding throughout Latin America over the past three years, co-founder Malte Huffmann tells Internet Retailer.
E-commerce is growing in Brazil and The Dafiti Group is steadily tapping into that online sales growth. According to Brazilian e-commerce and information technology research firm eBit, Brazil’s e-commerce market is expected to grow by 25% in 2014, reaching $28.5 billion reais ($38.75 billion).
The Dafiti Group, which launched in January 2011 in Brazil as a shoe retailer, has been feverishly raising money and expanding throughout Latin America over the past three years to capitalize on the growth of e-commerce in Brazil and other emerging e-commerce markets nearby, co-founder Malte Huffmann tells Internet Retailer. It has raised more than $275 million from investors including e-commerce incubator Rocket Internet and now sells online in Argentina, Brazil, Chile, Colombia and Mexico. It also now markets more than 125,000 apparel, accessories and footwear itemsfrom more than 2,000 brands. In Brazil alone it sells more than 100,000 products across 900 brands and has 1,500 employees. Dafiti is No. 31 in the Internet Retailer 2013 Latin America 400.
Last year the retailer grew sales by around 100%, Huffmann says, and its e-commerce sites now attract 25 million unique visitors per month on average. To achieve this rate, Dafiti has had to overcome logistical issues and convince consumers new to online shopping to trust its brand.
“In the beginning we would get lots of calls into our call center just to see if someone would answer and that that we were actually there,” Huffmann says. “There were real trust issues, but the doubts are diminishing and we are breaking through some of those barriers.” To build consumer confidence the retailer offers free shipping and returns to alleviate the fears of first-time web shoppers concerned that they will be stuck with shoes or apparel that don’t fit. And in Brazil, it accepts returns for 30 days even though it is only required by law to accept returns for one week.
Dafiti also has overcome infrastructure problems, especially delivery hurdles outside of major cities in its core market of Brazil. The merchant operates its own logistics and fulfillment network and can deliver many packages the same day to major cities like São Paulo if ordered by noon, and the next day in most cases to more remote locations. It also accepts cash on delivery for online orders, which is a popular payment method in Colombia and Mexico, Huffmann says.
Because many new web shoppers in Latin America first access the Internet from a smartphone, Dafiti also has invested in mobile commerce, offering a mobile site for each country it serves as well as apps for Apple Inc.’s iOS and Google Inc.’s Android operating systems. 16% of total traffic stems from mobile, Huffmann says, and the retailer’s apps have been downloaded more than 1 million times. The retailer, which says it has found that television advertising campaigns work well to build consumer trust in emerging e-commerce markets, says it notices an uptick in mobile visitors just after one of its commercials airs. “When we run a television campaign, mobile visits go up and the majority are first-time visitors,” Huffmann says.
While sales are growing at a fast clip, Dafiti still has work to do, Huffmann says, particularity in markets like Colombia and Mexico.
“In Mexico the biggest challenge is convincing shoppers of the value and benefit of shopping online,” Huffmann says. “They don’t see online shopping as convenient.” Dafiti is steadily gaining traction in those markets, though, Huffmann says, by consistently delivering on its promises with on-time deliveries and by keeping products and brands in stock. The goal is to help consumers understand that through Dafiti they can access and purchase thousands of brands and products that aren’t available at their local stores. “We want to be seen as the fashion authority and the company with the biggest variety,” Huffmann says. “We want to be seen as the destination for shoppers to check out and buy new trends.”