It is a team that is winning move by move, yes you heard right. This was the spirit that made the founders of UseGiraffe decide to bet on a new business model within a segment already well-known among Brazilians: Online shopping for Chinese products.
China’s buying culture is well-established in Brazil. Among the 10 international e-commerce companies that Brazilians bought from the most in 2018, 6 are Chinese, according to data from the latest Webshoppers report. Giants AliExpress and Wish dominate the top two positions, but even with their entire global structure, these companies face logistical and cultural obstacles on a daily basis.
While many people might find the mission of improving Brazilians’ access to Chinese products impossible, the founders of UseGiraffe decided to use the experience they already had as consumers to offer their consumers a new solution.
“We entered this market because we understand the Latin American public, we are from here, we know how to advertise, tailor the product and especially the service and payment methods facilitated for them,” said Kunta Romero, UseGiraffe’s CPO.
End to end solution
When it comes to the challenges of cross-border e-commerce in Latin America, two issues are unanimous: logistics and customer service. UseGiraffe was not unscathed by these issues, but knew how to turn these obstacles into a competitive advantage.
“Brazilian consumers are demanding, they want to buy, but it has to be something of quality, cheap, and fast. This is Brazilian,” explained Frederico Matos, the responsible from UseGiraffe’s technology information department, who underscores the achievement of credibility among the Brazilian public as one of the biggest difficulties encountered when entering the market. Mission complicated, but not impossible.
In addition to the team abroad, the brand has a complete team of professionals in Brazil. Its goal is to offer consumers the opportunity to make international purchases with support and the same sense of security from domestic suppliers. “The core of our company is to solve the purchase path, not only sell, but follow the whole journey,” says Frederico Matos.
We did not find a customer for our product, but a product for our customerKunta Romero, UseGiraffe’s CPO
This team acts directly in customer service, offering support in Portuguese and Brazilian local time, as well as a website and communication that is not simply translated, but rather designed according to Brazilian buying behavior. This was the solution found by the brand to reduce noise and make the whole process cleaner for the consumer, including limitations. For example, if a user is making a purchase that is too close to a seasonal date, the brand reinforces lead time communication to reduce potential frustrations that could hurt the company’s reputation.
Despite all the advances in communication and relationship, UseGiraffe had to go further to reach another level of satisfaction among Brazilian customers. A complete new product quality control system was developed that led to the creation of a brand with its own parts production.
“At first, the idea was to be a cross-border working with various manufacturers and suppliers and as the company grew we noticed that the brand stopped being cross-border with several products and started to be a strong brand within e-commerce,” underscores Romero that bet on a formula involving constant testing in China, rigorous control of materials and its own manufacturing to scale results and increase satisfaction levels. “We have created a new kind of service within our cross-border, a new brand that we are cultivating and we have noticed that it has created more credibility.“
Turning obstacles into growth
In 2018, the recoup of Brazilian e-commerce with a growth of 12%, according to the Webshoppers report, came as a relief to national and international brands operating in the country. After about two years of instability, the market has gained momentum again and is growing significantly.
But while other brands decided to just dip their toes in the Brazilian market, UseGiraffe adopted the opposite strategy, diving headfirst into Brazil. Turning challenges into opportunities, they exceeded their expectations in the first year.
“We took a lot of risks, we didn’t like to wait for it to happen and when we started the company in 2 months we had already sold what we believed we would sell in 1 year,” says Matos.
But despite exponential growth early on, the company has invested in a business model poised to become sustainable in emerging markets such as Latin America.
The company started in years of crisis, heavy years, and as we kept growing, we knew we were on the right track.Kunta Romero, UseGiraffe’s CPO.
The focus was not on sustaining growth rates at such aggressive levels, but on keeping up with market movements. Thus, to control currency instability, UseGiraffe bet on a pricing model based on reais, not on dollars, and assumed a risk margin so that in times of high value of the US dollar, the value for the Brazilian would not be impacted significantly. This allowed e-commerce to keep pace with Brazil’s purchasing power and maintain values consistent with what the public was willing to pay at the time, maintaining a healthy sales rate, even during the most difficult periods for the cross-border market in Brazil.
This led to the company gaining market share month by month, achieving a balanced level of growth which, according to the company’s CTO, was the initial strategy, as too big a jump could also result in an equally significant drop in any market movement. The company has always remained on the sidelines of major swings and has achieved steady growth month by month, balancing the market and consumer needs. “We always think of growing with quality,” says Kunta Romero.
Swimming against the tide in a blue ocean
“A gigantic blue ocean,” this is how UseGiraffe’s CTO refers to the potential of the Latin American market and Frederico Matos adds that “this is the best market to grow.“
In a market apparently dominated by big global players, UseGiraffe has proven that Latin America is far from a saturated market, but you have to know all the rules of the game to win in the region. “We saw the big players achieving success in Brazil, always facing big challenges and we knew we could do something different,” said Kunta Romero.
That’s why the company was born with Latin America in its DNA, and contrary to what many local entrepreneurs imagine, it was precisely the power to adapt to an emerging market that is touted as the reason for the brand’s success. “It is much easier to grow in Brazil than to enter a market like the US where the market is already very big in e-commerce, so you will be just one more in there and for you to stand out, you need something. And if you don’t have help and support, the big players can swallow you,” says Frederico.
And against the tide of seasonality and big trends on the global market, UseGiraffe has grown its portfolio by betting on building a strong private label with products that can be offered year-round and not subject to sudden price changes due to currency fluctuations.
Brazil is still very small compared to the proportion it can reachKunta Romero, UseGiraffe’s CTO
UseGiraffe has proven that it is possible to innovate even in segments that seem more consolidated. Exploiting the well-known Brazilian habit of buying Chinese products, the brand has built a model that offers the cost-benefit of international products adapted to local consumer behavior. The result could not be different. UseGiraffe pioneered the Latin American market by finding opportunities that competitors did not see and seized the Brazilian market.
The future is still an empty highway up ahead for the company, but one thing is clear: the path to success is on that same highway.