Local Ecommerce Players Around the World Are Giving Amazon and Walmart a Run for Their Money

ECOMMERCE

Local Ecommerce Players Around the World Are
Giving Amazon and Walmart a Run for Their
Money
Platforms in Brazil, China, the Netherlands and Nigeria thrive by
focusing on regional preferences and needs
By Lisa Lacy

|

2 days ago

      Customer service isn't the same as the Amazon or Walmart model in all international markets.
                                                                            Source: Getty Images

    Sometimes it feels like Amazon is taking over the world—or, at the very
    least, the world of retail. In providing fast, free shipping, operating from a

customer-centric philosophy and swallowing up specialized retailers,
Amazon has, by some estimates,put itself on track to capture 49 percent of
the U.S. ecommerce market this year.

But Amazon’s seemingly airtight strategy doesn’t always translate
overseas. The same is true of its nearest competitor, Walmart, which is
America’s biggest physical retailer. In some markets, it’s local players
rather than these two retail behemoths that have the advantage, due to
factors ranging from cultural nuances to the lack of credit card use.

Magazine Luiza, or Magalu, is a 61-year-old retailer based in São Paulo,
Brazil, that began as a purveyor of color TVs and has since expanded to
sectors like furniture, smartphones, housewares, tools and toys. In 2000,
Magalu launched its ecommerce business. According to analytics firm
comScore, it was Brazil’s sixth most visited retail site in August 2018.
Amazon, which didn’t arrive in Brazil until 2012, ranked No. 7—and Prime
still isn’t available.

As smartphone adoption grows in Brazil, so too does Magalu’s ecommerce
business—it had $4 billion in 2017 revenue and ecommerce accounted for
about one-third. That’s up from 24 percent in 2016.

Walmart has a majority stake in African retailer Massmart.

Magalu succeeded in part by developing its own delivery network—out of
sheer necessity. “When you look at Brazil, we don’t have anything as well
developed as UPS or FedEx. Even Brazilian mail is not as good as the
United States Postal Service,” explains Frederico Trajano, chief executive
of Magalu. “It’s complex and expensive and [doesn’t have] reliable
delivery.”

This past May, in a move straight out of Amazon’s playbook, Magalu
bought logistics service platform Logbee to cut down delivery times from a
week or more.

Like Magalu, Jumia in Lagos, Nigeria, is thriving because it’s solved
delivery issues specific to its customers. Sacha Poignonnec, co-founder

and co-CEO of Jumia, says the postal system is underdeveloped in many
countries in Africa and there is almost no address system. So Jumia
created a logistics platform that works with local companies familiar with
its customers’ cities, streets and neighborhoods.

The ecommerce marketplace, which launched in 2012 in Nigeria, Morocco,
South Africa and Egypt, today sells 6 million products in categories like
fashion, electronics and beauty from more than 50,000 brands in 14
African countries.

                                               China's JD.com works with Walmart.

Jumia also has 500 pickup stations where customers can retrieve
products. When the company found consumers arrived expecting to shop,
Jumia began experimenting with adding physical retail to pickup stations
in cities like Accra, Lagos and Nairobi.

“Obviously, for a lot of consumers, it is reassuring to see a physical
presence,” Poignonnec says.

The payment process is another factor giving local ecommerce players an
edge over Amazon and Walmart. While one- or no-click payments may be
the norm for American consumers, that isn’t the case in other parts of the
world.

Credit card usage has historically been lower in Brazil than the U.S., says
Trajano, prompting Magalu to establish its own credit card. There are now
4 million Luiza cardholders—and the company issues 200,000 new cards
a month.

                                          Magalu in Brazil ranks ahead of Amazon.

“In order to buy a smart TV or a big appliance, [Brazilian consumers]
generally need to buy on installments,” Trajano says. “It’s important to
have your own credit card so you make it available for low-income
[shoppers] to pursue their dreams. Fifty percent of everything we sell, we
sell on credit.”

Poignonnec says Jumia allows customers to transact and settle in cash, as
many consumers in Africa don’t have bank accounts or credit/debit
cards—or, if they do, they don’t want to use them online.

In 2018, Jumia launched a payment platform in Nigeria called JumiaPay,
which is now in the Ivory Coast and Ghana as well—and coming to Egypt
and Morocco.

Poignonnec likens JumiaPay to online payment system PayPal and says
consumers who use it are able to access additional services. Since the vast
majority of mobile accounts in Africa are prepaid, for example, JumiaPay
enables users to buy airtime digitally rather than relying on scratch cards.
(While Poignonnec calls JumiaPay “extremely successful,” he did not
disclose usage figures.)

Sometimes it’s a matter of pride that inspires customers to choose local
ecommerce options. Utrecht-based consultancy IG&H found consumers in
the Netherlands were more likely to recommend Dutch ecommerce site
Bol.com than Amazon or Alibaba’s ecommerce platform AliExpress.

Dutch locals prefer Bol.com.

For its part, Bol is trying to hang on to that lead for as long as possible. The
company recently opened a new fulfillment center in Waalwijk that is the
size of eight soccer fields and has room for 7 million items, with an eye on
dominating in the Netherlands and Belgium.

Bol also offers evening and Sunday deliveries, as well as delivery within a
few hours. In addition, it recently teamed with the Dutch postal service to
offer two-hour delivery on electric carrier bikes.

“We want the customer to be able to choose when, what and where to have
a delivery,” a rep says.

Digital marketing consultant Bas van den Beld, who lives near the Hague,
says Bol has been around for quite a while and people in the Netherlands
are used to it. He likes to shop there because it offers more choice than the
Dutch version of Amazon.

“Bol also has a high service level,” says van den Beld. “They work together
with big shops to arrange pickup points, for example. They have a 24/7
customer service and delivery is free with products from over 20 euros.”

Jumia operates in 14 countries in Africa.

Putting the customer first is hardly a new concept. But in some markets,
customer service is defined differently from the Amazon or Walmart
paradigm.

“In the U.S., you and most of the consumers use online platforms because
you want to have a very convenient experience. And you define
convenience as contactless—you click and then everything happens in the
background and you don’t see any of that,” Poignonnec says. “In Africa, it’s
very different—when they click, the first thing they expect is a phone call …
[Americans] would not like it if Amazon was sending a lot of emails at
every step—and you’d be surprised if Uber called to make sure your ride is
going as it should. In Africa, in many countries, it’s reassuring and even
necessary sometimes. The touch points are very different.”

Perhaps the differences in customer behavior can be traced to a lack of
practice. Citing data from research firm PlanetRetail, Poignonnec says
Africa has 450 million online consumers, but almost no retail. In terms of
distribution, for every one physical store in Africa, there are 60,000
people. In the U.S., each store serves about 300 people.

“They really have a shortage of distribution and retail. We are really
providing a solution for many to shop in Africa,” says Poignonnec. “It’s
difficult—they have to travel, go through different stores, there are very
expensive prices. We offer a huge difference between offline retail and
online retail. In the U.S., ecommerce came as extra, so it’s not like you
needed it. It was convenient and a different way of shopping, but you could
always go to Walmart.”

                                              Amazon acquired Souq.com in 2017.

Naturally, Amazon and Walmart are not going to give up on these and
other overseas markets. Walmart has held a majority stake in African
retailer Massmart since 2010. It has worked with Chinese ecommerce
platform JD.com since 2016 and owns a 10 percent stake in JD, which
comScore says was the second most visited retail site in China in August
2018, behind online marketplace Alibaba. (Amazon comes in at No. 16 on
that list.)

Walmart recently partnered with online marketplace Rakuten on a
grocery-delivery service in Japan, and its 2018 annual reportnoted it offers
grocery delivery in less than an hour in over 160 stores in China. It has
also operated in Mexico—its first international market—since 1991 and
recently acquired Cornershop, a marketplace for on-demand delivery from
supermarkets, pharmacies and specialty-food retailers in Mexico and
Chile. (Walmart has held an interest in a Chilean food retailer since 2009.)

A Walmart rep says customers around the world value quality, price and
convenience but added that the retailer partners with local companies to
better address regional disparities and logistical issues.

“We are focused on making life easier for customers and associates by
building strong local businesses, powered by Walmart,” the rep says.

Meanwhile, Amazon performs well in markets like the U.K., Germany and
Japan—and it recently expanded to Southeast Asia and the Middle
East. (Amazon declined to comment on its global operations.)

But as regional players continue to thrive, it may be a sign that despite
globalization, there’s still a benefit to local know-how—at least for now.