Even with a 60% drop in sales in the first months of social isolation in Latin America, the Dafiti Group, which presents itself as a leader in the region’s fashion and lifestyle e-commerce, managed to overcome the production and distribution problems of the textile chain and grew 52% in the third quarter of 2020 compared to the same period in 2019. The company, which has operations in four countries (Brazil, Argentina, Colombia, and Chile), reached a Net Merchandise Value (NMV) of R$ 1 billion.
“The fashion sector was severely impacted by the COVID-19 pandemic, precisely because it depends on external impulses such as a party or a meeting with friends. Besides, the closing of factories and the dependence on imports affected the entire product mix”, explained Philipp Povel, investor, co-founder, and CEO of the Dafiti Group, in an interview with LABS.
Among the marketplace’s strategies (and most of the industry’s competitors), the first step was to adapt the mix of products offered to customers. As people spent more time at home, they started to look for more comfortable and basic clothes and items, which they needed to be highlighted in the company’s sales channels. Another important point, says the CEO, was to offer special conditions so that small and medium brands, which still did not operate in the online market, could enter the sales platform.
Other actions taken by Dafiti to face the crisis are the inclusion of new brands on the site (only this year, 500 were added to the platform), the launch of its own credit card, and investment in the development of its mobile channels and apps (the group owns three apps: Dafiti, Kanui, and Tricae). “Our organizational culture values the great autonomy of our teams, with processes that offer more agility and allow us to react in an agile way in these times of change,” emphasizes Malte Huffman, co-founder and managing director of Dafiti.
Facilitating product exchanges and returns also helped improve the consumers’ journey so that they wouldn’t have to leave home in the midst of the pandemic. “Clothing is something individual. When it doesn’t look good, you want to return it. For this reason, we decided to offer a pickup service at home for exchanges or returns, a novelty we intend to keep in the future,” emphasizes Povel.
Another post-purchase convenience that has already been successfully implemented in Chile (a country that, according to the CEO, was the one that reacted best in the resumption of sales), and that began to be tested in Brazil, more precisely, in some neighborhoods of the city of São Paulo, is a bicycle delivery service.
The customer receives the product on the same day of purchase, a dynamic that is only possible because the company already has five distribution centers to serve the four markets in which it operates in Latin America.
“Even with the negative impacts of the macroeconomic situation, consumers have migrated online, and this has been reflected in our numbers of active customers,” says Huffman.
It’s how much Dafiti’s customer base has jumped in 2020, reaching 7.3 million customers in the four Latin American countries where the company operates.
The crisis in the Brazilian textile sector and the Chinese competition
Growing not only in the midst of the crisis generated by COVID-19 but also in the midst of the textile sector’s difficulties in Brazil is quite an achievement. According to the Brazilian Association of the Textile and Clothing Industry (Abit), the sector’s domestic sales dropped 19% in the first half of 2020.
Even with the growth of online shopping – 13 million people in Latin America bought something on the Internet for the first time in 2020, according to a survey by Visa Consulting & Analytics –, the fashion sector suffered a lot because it depends on social coexistence outside home as one of the main motivations for consumption.
Moreover, the sector depends heavily on imports of raw materials from China, while facing increasing competition from Asia-based fashion e-commerce platforms, not only in Brazil but throughout Latin America.
In 2020, Shein, a Chinese giant of the sector, fell in love with Brazilian YouTubers and influencers. The website, which has a wide range of clothing types and is full of trends, already has a Portuguese version and the possibility of buying in Real, with items that cost less than the local market average.
But Povel does not see the Chinese competition as a threat to the Dafiti Group. “Our value proposition is based on pillars such as convenience, simple and fast payment, relevant portfolio, fair price, and inspiration”, he stresses.
Translated by Jennifer Koppe