Brazilian retail behemoth Magalu launches its own 'social network'

It is the first major retailer in the country to go beyond live videos on YouTube or third-party social networks and have a social commerce app within its platform, with messages and group purchases.

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Magazine Luiza, or just Magalu, took another step in creating its digital commerce ecosystem. The company is the first major Brazilian retailer to go beyond lives on YouTube and launch a social commerce tool within its app.

Called Compra Junto (something like Buying Together), the app coupled with Magalu’s super app wannabe is a kind of social network in which customers get together in groups, sharing links of offers they are interested in with their contacts. If a specific volume of purchases of the same product is reached, buyers can get discounts of up to 55%.

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“The customer becomes a promoter of the offer so that the group is formed and the purchase is finalized,” said Vinícius Porto, director of customer experience at Magalu, in a press release. According to Porto, traditional e-commerces use search-oriented navigation – that is, consumers look for what they want to buy. However, in the social network format, the customer browses among the offers and is surprised by them. “It’s almost a hobby for the consumer; he or she becomes a bounty hunter.”

According to the company, the offers within the social commerce app have a defined period of exposure and a target of interested parties. A minimum number of items sold has to be reached to apply the discount. The system reserves the amount on each customer’s credit card until the group is formed. Payments are only finalized when the group is successfully closed, and the numbers of items are reached. If this goal is not matched, the amounts go back to the buyers’ credit card balances.

According to Porto, Compra Junto will offer all Magalu’s product categories and price ranges, ranging from grocery items to refrigerators, for example. There are currently more than 200 million items for sale in Magalu. And many of them have everything to do with social media. At the end of 2021, around 45% of the group’s online sales were in categories considered new, of products such as fashion and sports, beauty and video games, as a result of the acquisition of businesses such as Netshoes and KabuM!, in addition to the Época Cosméticos division.

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The products will be delivered throughout Brazil through the company’s logistics structure and can also be picked up at one of the nearly 1,500 stores in the physical network — the company opened 186 stores in 2021. In the future, the system will have geolocation, which will help reduce delivery time and cost.

For the company, the new sales modality seeks to increase the number of users and the frequency of use of the Magalu app and reduce investments in paid media for the dissemination of offers since the customer itself acts as a promoter.

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