Business

The logistics behind the digital transformation strategy of Brazil's retail giant Via

With 100,000 sellers in its marketplace, a pilot project for managing warehouses in the cloud could be the turning point that Via was looking for to become a logistics operator that does not only serves itself

One of Via's 27 distribution centers in Brazil. Photo: Courtesy/
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With about 97 million customers, more than 1 million square meters of storage, and 1,000 stores spread across Brazil, Via (formerly Via Varejo) has one of the largest logistics networks in the country. The retail group that owns the chains Casas Bahia and Ponto makes two deliveries per second and has almost 9,000 pick-up points throughout the country.

“Via was basically an offline company before the pandemic, we sold 80% offline. Before this digital transformation, the company had 5,000 products and sold every day, around 1,100 items, with 200 SKUs [stock-keeping unit, which is a number or set of numbers given to each product in stock] making 80% of sales. It was easy for a distribution center operation manager to handle this”, comments Via’s logistics and supply executive director, Fernando Gasparini. “Look how easy our life was”, jokes the director.

Via’s logistics and supply executive director, Fernando Gasparini. Photo: Courtesy.

In 2020, even with the pandemic keeping 80% of stores closed for months, the company reached a net revenue of BRL 28.9 billion, a 12.7% growth compared to 2019, and saw its online sales increase from 23.9% to 48.5% of the gross merchandise value, the so-called GMV. In the second quarter of this year, another jump: digital sales reached a 65% share in GMV.

READ ALSO: Back to the future: Via’s innovation strategy is all about the company’s legacy

Also as part of its digital transformation, Via has opened up to third-party sellers. In a few months, the number of products offered on Via’s platforms jumped from 5,000 to an “infinity”, in Gasparini’s words (to be exact, there were 33 million SKUs in September).

Redesigning Via’s distribution centers management

Part of the company’s growth plan is to use its nationwide coverage as an advantage to be a logistic service provider to its sellers and even to competitors, optimizing its logistics to go beyond faster deliveries. To achieve this goal, the company needs to efficiently employ every square meter of its warehouses and stores.

In early September, the company reached the milestone of 100,000 active sellers performing their transactions through Via’s marketplace. With this, the company brought a much greater diversity of products to its consumers — and some challenges for the team responsible for supporting the process.

The idea of bringing in salespeople is a strategy to dilute costs. Why is this an advantage? Our competitors, to reach the number of square meters [in warehouses] that we have in Via, will have much more costs. We [on the other hand] are going to dilute the costs we already have; we’re just going to improve our results

Fernando Gasparini, logistics and supply executive director at VIa.

Gasparini says that the retail group took a “reality shock with the digital world”. This led to the demand for redesigning the management of distribution centers. “Via puts itself in a position of being a channel where Brazilian customers can buy whatever they want, whenever they want. Logistics must be agile to be able to support this movement,” says the director.

In this process, Via brought as a partner the solution of Manhattan Associates, a provider of supply chain solutions. Through this partner’s tool, it is possible to manage the supply chain in a unified way, combining demand, supply, labor, inventory, and automation.

READ ALSO: Brazilian retail giant Magalu announces digital payment tools for its more than 90,000 sellers

A pilot project is starting in the warehouse of the city of Contagem, in the state of Minas Gerais. The entire migration of Via’s 27 distribution centers to the new management tool is likely to be completed by the end of the next year.

For Manhattan Associates sales director in Brazil, Marco Beczkowski, the solution provides scalability and flexibility to support a large omnichannel business like Via. “It’s an ambitious plan. The same solution can serve both logistic operators and retailers. And also, as it is an omnichannel warehouse management tool, it does store supply, e-commerce, and logistics operations at the same time,” explains Beczkowski.

Another point that should accelerate Via’s “move to the cloud” is the possibility that the new tool offers to easily replicate the configurations of one distribution center in several others.

Brazil-based Via wants to offer logistics as a service

Via’s director explains that the group wants to go far beyond online sales and its marketplace. The idea is that, with a more digitalized operation, the company can take care of all stages of the process of selling third-party products, from delivery to reverse logistics demands.

Thus, the company can control the entire order journey and strengthen its brand with customers.

Via is debuting in this business a little later, but we are going down a different path than the competition. We want to be a logistics operator, we want to serve the seller not only through our channels, but also on Mercado Libre, Magalu, wherever they sell their products.

FERNANDO GASPARINI, LOGISTICS AND SUPPLY EXECUTIVE DIRECTOR AT VIA.

In addition, the executive explains that Via can use its scale to offer sellers advantages in freight prices, delivery speed, among others.

According to Gasparini, Via plans to offer this logistic service to its commercial partners and sellers from 2022 onwards.

Translated by Fabiane Ziolla Menezes

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