Mexican businessman and e-commerce entrepreneur Roberto Rodarte is on a mission to convince Mexican consumers to pay full price for products. That means touting the advantages his full-priced apparel and footwear site Gaudena.com offers over his flash-sale competitors that bombard shoppers with discount offers.
Five years ago two of the earliest online retailers in the emerging Mexico online sales market were flash-sale retailers, Rodate says. One such e-commerce site, a private sales site called Brands Club, was run by Rodarte in Mexico. That site, which launched first in Brazil, and then expanded to Mexico in 2009, and another popular members-only sales site called Privalia based in Spain, were among the first major online shopping sites in the country, Rodate says. And that meant deep discounts were the norm for Mexico online shoppers, he says.
“Customers were just expecting low prices, Rodarte says. “70% off a Coach bag was common and there wasn’t much else to compare it to online,” Rodarte says.
When Brands Club owners in Brazil decided to shutter the site’s Mexican operations, Rodarte had a decision to make—buy the assets and try to continue the members-only model on his own, or walk away. Rodarte chose the latter and in 2011 launched a full-price shoe e-commerce site called Gaudena.com.
“We decided not to compete on price and instead offer excellent customer service, current season fashions and fast delivery,” Rodarte says.
The company, which added apparel to its offerings this year, has raised $6 million from investors, is growing 15% to 20% each month and processes between 6,000 and 7,000 orders monthly. It operates a warehouse in Mexico and for now only sells online to shoppers in that country, Rodarte says.
Rodarte says Gaudena.com, which delivers to 95% of Mexico, offers shoppers several advantages over flash-sale sites that sell fashion apparel. For example, Brands Club often got its product from manufacturers trying to move inventory left over from last season or even a few seasons’ past. Also, Rodarte says it often took as long as 15-20 days to get goods to shoppers, inventory was limited and inventory numbers were sometimes inaccurate as the retailer didn’t own the product.
“At Brands Club we only were actually able to fulfill about 80% of orders,” Rodarte says. For example, a brand might say tell the e-retailer it had 1,000 pairs of a style of shoes available, but when a three-day flash sale ends Brands Club would discover the manufacturer had sold some of those shoes in a factory store and could deliver only 700 pairs.
Getting goods to Brands Club shoppers often also took two weeks or longer. That’s because if the site was running a sale for four days, Brands Club didn’t request the product from the manufacturer until that sale was over, Rodarte says. The manufacturer then shipped the goods to Brands Club, which then sent the order on to the shopper.
Because Gaudena.com owns its own inventory, it can ship products right away and get them to most shoppers by the next day, Rodarte says. It also has deeper inventory, meaning shoppers don’t have to make immediate decisions. “Flash sales are about impulse buys, if you don’t buy the item right then, it might not be there when you come back,” he says. “But with us you can think about it, come back the next day and the product will probably still be there.”
Gaudena.com charges $5 for shipping for orders totaling less than 700 pesos, or around $55. About 50% of the retailer’s shoppers live in Mexico City and Rodarte says about 60% of online shoppers pay via cash on delivery, which the retailer offers through FedEx. FedEx two months ago launched its cash on delivery service throughout all of Mexico, and Rodarte says the service has helped Gaudena.com reach new shoppers who don’t have access to credit or debit cards or don’t trust paying with a card online. Before using the FedEx service, Gaudena.com offered its own cash on delivery service for only part of the country.
Retailers that want to tap into online sales in Mexico, a market that grew about 30% last year according to Forrester Research Inc. from $1.7 billion in 2012 to $2.2 billion, would be wise to let consumers pay in cash when they receive their goods, Rodarte says.
“If you want to come to Mexico you have to have cash on delivery as a payment option,” Rodarte says. “For us the sales are incremental sales. It’s not that not that the customers who paid with credit cards switched. These were new people who never bought from us before.”