The acquisition will add more than 300 products to L’Oreal’s lineup.
With sales that grew 14% in 2013 and $170 million in new investment money, Brazilian online sporting goods retailer Netshoes is targeting mobile commerce and other Latin America markets for growth.
The last year for online sales growth was good but not great for Netshoes.com, an online sporting goods retailer and one Brazil’s biggest web merchants. But that’s perfectly fine with Netshoes, which increased web sales 13.8% to $595.2 million in 2013 from $522.9 million in 2012.
Like a long-distance runner, Netshoes sees e-commerce development in Brazil as a more of a marathon than a sprint and is settling into a long-term strategy for growth, says chief marketing officer Juliano Tubino. And Netshoes, No. 4 in the 2013 Internet Retailer Latin America 400 has plenty of cash in the bank, having raised $170 million last month in a new funding round led by GIC, Singapore's sovereign wealth fund.
Now Netshoes is using the funding to grow its base in mobile commerce and develop other e-commerce opportunities in Argentina and elsewhere in Latin America. Already one of the biggest and oldest web merchants in Brazil—Netshoes has been selling online in Brazil since 2000—the e-retailer sees 2014 as a good time to build a lasting brand throughout the region, says Tubino.
Last year Netshoes only grew 50% as fast as all of e-commerce in Brazil, which eBit, a Brazilian e-commerce and information technology research firm, estimates grew 28% to $12.82 billion in 2013 from $10.02 billion in 2012. But Netshoes is as aiming for sustainable, long-term growth and, eventually, profitability, Tubino says. The company didn’t give a timetable or other specifics on when it expects to become profitable.
Netshoes plans to use the infusion of cash to diversify how and where it sells online in Latin America, beginning with mobile commerce. Today m-commerce represents about 10% of Netshoes’ sales compared with about 5% in 2012, the company says. Based on those metrics, Internet Retailer estimates that m-commerce sales for Netshoes grew 128% to $59.5 million in 2013 from $26.1 million in 2012.
Netshoes is preparing for the day when mobile retailing will account for an even bigger share of Brazil’s e-commerce market, Tubino says. M-commerce numbers are hard to come by in Brazil, but the country is seeing a groundswell of new smartphone use, especially among younger consumers, Tubino says.
Research firm eMarketer estimates there were nearly 40 million smartphone users in Brazil at the end of 2013, representing 26.8%, or 10.7 million, of the country’s mobile phone users and close to 20% of its total population. Many young adults age 18-34 also are using their mobile device as their main web access channel, according to eMarketer.
As more Brazilians access the web via mobile devices, Netshoes sees a prime opportunity to reach a bigger audience of younger shoppers. “We are building out our technology and marketing in ways that reflect a very good understanding of who our customer is now and will be in the future,” says Tubino. “That’s especially true with mobile, which is going mainstream with younger shoppers.”
Earlier this month Netshoes released an updated iPhone and iPad app with more advanced shopping features. The new apps enable shoppers with stored and current payment credit card or other payment information to buy products in just a few clicks. The updated app also includes a wish list that users can access from both their mobile and desktop computer, and lets shoppers receive new product notifications and promotions and track delivery. “One of the features with the app is the integration of mobile and desktop e-commerce,” says Netshoes’ director of strategy and business Rodrigo Nasser. “The decision of where and how to buy should be left up to the shopper.” Netshoes has yet to say if it will release an Android version of the app. The company launched its first Apple and Android shopping app in June 2013 that allowed users to purchase running shoes in just a few clicks.
In addition to growing its mobile commerce base, Netshoes also is busy building other aspects of its e-commerce business including developing business elsewhere in Latin America. Today Netshoes stocks products from about 100 brands including adidas, Nike, Umbro, and others. In order to expedite sales to Argentina, where Netshoes has been selling online since 2011, Netshoes this month opened a larger fulfillment center in that country. Netshoes won’t release specific numbers, but a bigger dedicated facility was needed in Argentina to keep pace with annual web sales that grew 122% in 2013, the company says.
Netshoes is no stranger to Argentina—the e-retailer first opened an Argentinian web store in October 2011. But with the number of visitors doubling in three years to about 3 million unique monthly visitors, Netshoes needed to expedite delivery. The new center located near Buenos Aires employs 70 full-time workers and stocks more than 100 brands across 21 different categories, ranging from sports apparel to sporting goods. The new replacement distribution center has four times the space as the company’s first Argentinian hub which has since been closed.
Even with all of its expansion, e-commerce growth of 14% in 2013 is a solid number for Netshoes, Tubino says. “We are mature and our e-commerce category is maturing,” he says. “We see significant opportunity throughout Latin America ahead and we are settling in to go after it.”