August 14, 2014, 10:40 AM

China-based LightInTheBox plans for local operations in Brazil

Yong Jiang, vice president of operations for LightInTheBox, discusses barriers to selling into Brazil at Ecommerce Brasil in Sao Paulo.

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São Paulo, Brazil—Shoppers in Brazil ordering products from China-based online retailer LightInTheBox need patience, and a lot of it.

It takes between 45 and 75 days on average for a package coming from LightInTheBox to reach a shopper in Brazil, Yong Jiang, vice president of operations for LightInTheBox said yesterday at Ecommerce Brazil 2014 in Sao Paulo.

That long shipping time is one reason the retailer, No. 32 in the Internet Retailer 2014 China 500, has plans to set up local operations in Brazil in the next few years, Jiang said.

LightInTheBox, which launched in 2007, sells a wide swath of products, but some of its top selling items include wedding dresses, consumer electronics, home and garden goods, and gadgets, Jiang said.

And it seeks to get those products to shoppers across the globe. LightInTheBox sells globally in 200 countries and now offers 1 million SKUs, Jiang said. “We may be a Chinese company but our business is cross-border trade,” he said. In fact, its home region of Asia only accounts for about 5% of sales, Jiang said.

LightInTheBox only recently began selling into Brazil and Russia, and Europe still accounts for most of its sales, capturing about 60% of revenue, Jiang said. North America follows with about 25%. Last year, LightInTheBox did $300 million in sales, Jiang said, and in July 2013 it went public on the New York Stock Exchange. The retailer’s total number of customers served grew 73.1% year over year in 2013 and mobile revenue grew more than five times faster than PC revenue, the retailer says.

Brazil is not an easy market to sell into without having operations on the ground, Jiang said. For example, 81% of all customer complaints from Brazil shoppers involve shipping issues with packages coming from out of the country. “So many shoppers say ‘Where is my package? Where is my package,’” Jiang said. The next biggest complaint is taxes and fees, which account for about 10% of complaints. Brazil charges notoriously high fees on imports coming into the country—oftentimes such fees reach or exceed the price of the item. Its top selling items in Brazil are accessories for Apple products, fashion and apparel-related items, and jewelry, Jiang said.

Another barrier to selling in Brazil is the fractured and poor logistics. “There is no express delivery service,” Jiang said. That, combined with the longer time it takes for products to clear customs means long wait times and higher shipping fees. Indeed, on its site, the delivery time for standard shipping for Latin America countries excluding Brazil is much faster, listed at seven to 15 days. Even retailers based in Brazil, such as Wine.com.br cite poor logistics and lack of roads as major issues. Wine.com.br, No. 46 in the Internet Retailer 2014 Latin America 500, contracts with three airlines including Brazil’s TAM airlines, to ship its wine. The retailer takes up space in flights that are not sold out says Ricardo Flores, director of marketing for Wine.com.br in an interview with Internet Retailer at Wine.com.br’s headquarters near Vitoria, Brazil. He says his company was the first online retailer in Brazil to take that approach but others in Brazil have followed suit since. Now all packages arrive in three days on average, Flores says.

Wine.com.br’s experience is a model for retailers like Light In The Box to follow.

“We need to have local operations in Brazil, Jiang says. “We plan to be local in the next few years.”

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