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What: Chilean bricks-and-mortar retailer Falabella purchases Latin America online retailer Linio for US $137 million.
Why it matters: Online sales in Latin America will double to US $118 billion by 2021 and Falabella is preparing to be a major player, using its physical stores to key advantage.

Chilean bricks-and-mortar retailer Falabella is determined to be a major e-commerce player, and will likely use its physical stores to key advantage as it ramps up to compete with Amazon and MercadoLibre for online sales in Latin America. That’s how industry and regional experts explain Falabella’s recently announced purchase of online retailer Linio for US $137 million.

The word analysts keep repeating is “omnichannel.”

Omnichannel refers to the ability of bricks-and-mortar retailers to offer in-store pickup of goods ordered online.

It could become a key competitive edge for Falabella.

“This is congruent with a trend we are seeing of retailers getting smarter about e-commerce,” Lindsay Lehr, a senior director at the consultancy Americas Market Intelligence tells Portada.

One of the big stumbling blocks to e-commerce in Latin America is the inability of people to receive packages in their homes, which is why omnichannel purchasing is increasingly important, Lehr said.

The word analysts keep repeating is ‘omnichannel’.

Leveraging Stores to Boost Online Sales

Headquartered in Santiago, Falabella operates department stores, supermarkets, home improvement centers, malls and financial services in Argentina, Brazil, Chile, Colombia, Peru and Uruguay.

With the Linio purchase, Falabella’s online footprint expands to cover Mexico, Colombia, Venezuela, Ecuador and Panama.

The acquisition boosts Falabella to the #2 e-commerce spot in its home markets and begins the process of positioning it to take on MercadoLibre and the expansion of Amazon (Amazon Mexico’s Guillermo Rivera recently joined Portada’s Council System) in the region, Lehr says.

“They are getting prepared for what’s ahead.”

Betting on E-commerce

“The company is betting on e-commerce,” analyst and retailing expert Jorge Lizan tells Portada.

Even though online sales now only make up 14-15 percent of its business, Falabella is spending 80 percent of its development budget on the online channel.

Falabella will mine Linio’s database and leverage its e-tailing expertise to position Falabella to take on MercadoLibre and Amazon, Lizan says.

“Linio is very small. They didn’t acquire Linio for the size of the company or to be a big part of Falabella’s business. What Falabella is looking for in this acquisition is to get the infrastructure and expertise,” Lizan says.

Falabella will mine Linio’s database and leverage its e-tailing expertise to position Falabella to take on MercadoLibre and Amazon.

Getting ready to face Amazon

The Linio purchase is about protecting future market share from online competitors MercadoLibre, Amazon, Wal-Mart, and even Alibaba.

MercadoLibre is the undisputed leader in e-commerce in Latin America.

Amazon has taken second place in Mexico and reportedly has plans to expand its operations in Brazil. Its web services division has expressed a long-term interest in investing in Chile.

Wal-Mart is heavily invested in online sales in Mexico and Central America, according to Lizan.

Growing Digital to Offer More Products

With the permission of its shareholders, Falabella plans to raise US $800 million in capital to ramp up its efforts to go digital in Latin America.

“This increase in capital will allow us to accelerate our digitalization and grow regional services for our clients, offering our products across a diversity of channels,” President of SACI Falabella Carlo Solari said in an announcement of the Linio purchase.

“With this acquisition, the company advances its goal of being a leader in electronic commerce in the region,” said Falabella’s general manager Gaston Bottazzini.

Expanding product lines online

The Linio purchase gives Falabella something more than just an online presence. Online translates into the capability to offer customers a broader selection of products beyond the brands Falabella sells in its physical stores.

“They can have limitless numbers of brands which is something they can’t do in their bricks and mortar stores,” Lizan tells Portada.

Moreover, Falabella wants their stores to become fulfillment centers for online sales.

“The name of the game is omnichannel and will increasingly be in the future. Falabella’s brick and mortar presence will definitely give it an edge vs. MercadoLibre,” Lizan comments.

The name of the game is omnichannel and will increasingly be in the future.

Seeing a big online future

E-commerce in Latin America is expected to grow by 19% in the next five years – well above the global average of 11%.

Online sales in Latin America will double to $118 billion by 2021. And according to Lizan, retailing in Latin America is still under developed and under penetrated.

Falabella has the largest retail customer database in the industry; dominates its markets in key offerings such as grocery, home improvement and home and décor; and recently announced a partnership with IKEA in Chile, Colombia and Peru.

From 36,000 feet, the Linio purchase is “very small,” Lizan said. But the advantages on the ground are strategic.

“It’s a benefit for Falabella to have an e-tailer in their portfolio because they will learn from them and the learning curve will be shorter.”

“It is a very strong statement by Falabella.”

What: We looked at the top 15 online retail sites by visitors in the US in June of this year and how they scored in number of visitors.
Why it matters: Visitors to Macy’s website fell slightly in June, putting it in the last place according to comScore’s latest ranking of the top 15 e-commerce websites in the US for June of this year. Kohl’s surged ahead two spots, nipping on the heels of Best Buy. Target continues to have the largest online following of customers among traditional and off-price department stores, as well as ranking ahead of the home improvement big-box chains The Home Depot and Lowes.

Number of visitors to the Top 15 e-commerce sites in the US, June 2018
Total Audience, Home and Work, PC/Laptop949,169
SiteTotal Unique Visitors (000)
Amazon sites202054
Wal-Mart114807
eBay104604
Apple.com Worldwide sites65560
Target Corporation59509
The Home Depot47879
ETSY.com44058
Samsung Group40666
WISH.com40500
Ticketmaster36296
LOWES.com35757
Best Buy sites33513
Kohl’s Corporation32658
Wayfair32074
Macy’s Inc.31636

(Source: comScore)

  • Amazon, Wal-Mart, eBay, Apple.com and Target held on to their positions as the top five online retail sites in number of visitors in June.
  • com saw a slight decrease in visits from 67,102 in May to 65,560 in June.
  • Macy’s slipped to last place in the June ranking, with just 3.4 percent of all visits compared to 3.7 percent in May.
  • Lowe’s managed to move up from last position in May to 11th place in June, but it, too, saw a decrease in visitors from 38,635 in May compared to 35,757 in June.
  • Online visits decreased slightly in June compared to May for all of the sites ranked, except for eBay which saw a very slight increase.
  • The Home Depot made a big move up in rankings compared to May, surging ahead to sixth place, ahead of Etsy.com, Samsung Group, and WISH.com
  • Home Depot’s online sales continue to outpace Lowes.
  • Amazon continues to overwhelm the entire field of competitors ranked, with more than 21 percent of all online visitors measured in June and May by comScore.

What: We looked at the top 15 online retail sites visited by shoppers in the US and how they scored in number of visitors in May 2018.
Why it matters: Wal-Mart’s hard-fought effort to build an online presence has put it ahead of eBay in the number of online visitors. The Bentonville, Arkansas brick-and-mortar retailer surged ahead of eBay by nearly 5,000 visitors in May, 2018. But the e-commerce behemoth Amazon still leads by nearly double the number of monthly online visitors compared to traditional retailer Wal-Mart.

Number of visitors to the Top 15 e-commerce sites in the US, May 2018
Total Audience, Home and Work, PC/Laptop949,169
SiteTotal Unique Visitors
Amazon sites204,743
Wal-Mart119,117
eBay104,619
Apple.com Worldwide sites67,102
Target Corporation61,115
The Home Depot49,499
ETSY.com46,891
Samsung Group42,078
WISH.com39,585
Lowes.com38,635
Ticketmaster37,395
Macy’s Inc35,511
Wayfair35,102
Best Buy sites34,142
Kohls Corporation33,372

[Source: comScore]

Key Insights

  • Amazon led the field with 21.5% of all online visitors in May
  • Wal-Mart (12.5% of all online visitors) and eBay (11%) are competing neck-in-neck to be Amazon’s closest online competitor
  • eBay dropped behind Wal-Mart by just under 5,000 visitors for a second-place finish
  • Apple took fourth place with 7% of all online visitors for the month
  • After Apple, Target took 5th place with 6.4% of all visits in May
  • Big-box Target has nearly double the visitors of Macy’s
  • Home Depot has powered ahead of Lowe’s by more than 10,000 monthly visitors in May, proving to be online shoppers’ favorite in the home improvement category

 

We made an analysis of the Top 20 Most visited sites in the U.S Hispanic and LatAm Markets, according to ComScore. In both rankings, there are several  e-commerce platforms, which is interesting, because it shows how relevant these sites are for users in both regions. But there are differences in the relative weight of these sites in the U.S. Hispanic and Latin American markets.

Comercio Electrónico While it is no news that e-commerce has developed rapidly in the U.S., the fact that in the U.S. Hispanic ranking there are 4 e-commerce related companies (Amazon, eBay, Wal-Mart and Craigslist, although the latter is more classified-oriented) reflects a stronger presence of e-commerce sites in the U.S. Hispanic market when compared to Latin America (where there are only two E-commerce sites among the top twenty sites ranked by unique users, see below).

In Latin America, it is interesting to note how Mercado Libre and OLX are part of the Top 20 Most Visited sites by Unique Visitors.

Total Unique Visitors (000)
Source: comScore Media Metrix, U.S.. HISPANIC All, Home and Work, Top 20 propertiesMay-14May-15% Change
   Google Sites26,03726,0490
   Facebook19,03319,0740
   Microsoft Sites22,91718,189-21
   Yahoo Sites22,61518,020-20
   Amazon Sites10,29011,59113
   AOL, Inc.11,44710,967-4
   Mode Media9,6319,134-5
   eBay7,0057,6049
   Wikimedia Foundation Sites6,3017,59220
   Apple Inc.8,2377,063-14
   Comcast NBCUniversal5,9206,2455
   Turner Digital7,7526,181-20
   CBS Interactive6,1305,887-4
   Ask Network7,3665,531-25
   craigslist, inc.4,7025,37114
   About5,7434,706-18
   Wal-Mart3,1354,52744
   TWITTER.COM4,4984,288-5
   Linkedin4,4924,156-7
   Adobe Sites2,9724,06937

Comment: Google, Facebook, Microsoft and Yahoo are the top 4 within the ranking accounting for almost 44% in May 15. Google, which is first in the ranking, accounts for almost 14% of Unique Users in May 15.

Total Unique Visitors (000)
Source: comScore Media Metrix, LATIN AMERICA, Home and Work, Top 20 propertiesMay-14May-15% Change
   Google Sites167,532166,035-1
   Facebook146,042138,437-5
   Microsoft Sites133,513123,741-7
   Yahoo Sites118,81799,994-16
   Wikimedia Foundation Sites66,80161,372-8
   Terra – Telefonica61,75051,211-17
   MercadoLibre48,11250,8296
   UOL51,30347,823-7
   R7 Portal48,83844,581-9
   Globo46,17841,427-10
   Linkedin40,91338,243-7
   Ask Network53,16132,480-39
   Grupo NZN29,07930,0043
   IG Portal31,39726,270-16
   Batanga Sites15,56025,82366
   OLX Inc.20,38625,15023
   Softonic.com Sites30,07823,732-21
   TARINGA.NET30,08223,291-23
   BitTorrent Network20,16522,62712
   WORDPRESS.COM32,60522,011-32

Comment:In this second ranking, Google, Facebook, Microsoft and Yahoo are the top 4 again with almost 38% of Unique User in May 15.Google ranks first with 15, 5% of unique Users.

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A summary for Corporate Marketers, Media Sales Executives and Advertising Agencies to see what clients are moving into the Hispanic market and/or targeting Hispanic consumers right now.

 

    •  Wal-Mart 
      Wal-Mart Seeks Content From Marketers as Part of ‘Print Plus’ Initiative. The retail giant wants brands to supply content, such as recipes and how-to videos, to use in its 80-million-circulation weekly circular. Smartphone users will see the content as they move their phones over the print ads. While some retailers like Safeway have said they may eliminate print circulars, Wal-Mart is still bullish on them. This new initiative will save Wal-Mart money by giving it free content, but it will also benefit marketers with mass print exposure.

 

    •  Experian-OMD
      Experian, the company that markets various credit-analysis products has replaced Ocean Media on the buying side and The Martin Agency, which handled media planning, Ad Age reports. Martin will still handle creative. Ocean Media did not participate in the review, but other media agencies pitching included Starcom, MEC and Horizon Media. This is a sizable media account, with about US $385 million spent on advertising in 2012.

 

    • J.C. Penney
      The retailer will reverse Ron Johnson’s strategy strategy of reducing discounts and put coupon advertising in newspapers again, William Ackman, the activist investor who recruited the ousted chief executive, said last week. Johnson, who was replaced by Myron E. Ullman III on April 8, implemented a pricing strategy that eliminated almost all of the company’s discounts and promotions in favor of everyday low prices. Shoppers shunned the department store chain, and sales sank 25 percent last year.

 

    •  Frozen Food Institute-Roundtable
      The American Frozen Food Institute and the Frozen Food Roundtable, a coalition of freezer-case heavyweights including ConAgra, General Mills, H.J. Heinz, Kellog Co. and Nestlé USA, along with retail behemoth Wal-Mart are pooling their might to launch a campaign that could reach up to US $50 million in spending, AdAge reports.  McCann Erickson is tipped to win the agency review for the push, whose goal is to warm consumers to the frozen-food aisle. The frozen-food players began early this year to build the skeleton of a multi-million-dollar campaign to target baby-boomer, millennial and Hispanic shoppers.

 

    • Mayo Clinic
      The Mayo Clinic has Launched a Spanish-Language Outreach Campaign. Every year, thousands of Spanish-speaking patients travel to the Minnesota-based nonprofit clinic from all over the world for cutting-edge treatment and Mayo has launched a new storytelling campaign to better connect with them. Historias Mayo is a series of Spanish-language video stories about Latino patients and doctors. It’s meant to inform people that Mayo is open to patients from all over the world, regardless of income or language, and that there are doctors and services available in Spanish. The videos feature both unknown figures as well as famous faces, like Mexican race car driver Adrián Fernandez and Venezuelan fencing champion Carmen Militza Perez, who is now a doctor at Mayo.

 

    • Integrated Multicultural Media Solutions
      Longtime media entrepreneur Pluria Marshall Jr. has launched a newly expanded media planning and buying firm that will execute advertising buys across all media – digital, radio, television, newspapers and magazines, officials announced today. The privately owned company, Integrated Multicultural Media Solutions (IMMSD)  now becomes the nation’s only certified, full-service African-American media management company, Marshall said, uniquely positioned to serve the broader needs of advertisers and agencies. “Too often, media agencies lack meaningful knowledge about how to effectively reach consumers in diverse communities – especially black communities,’’ said Marshall, president and chief executive of IMMS. “That’s not a mistake you can afford to make with a black consumer base that’s expected to spend more than $1 trillion on goods and services in the U.S. this year,” he added. Founded in 2012, IMMS is an ideal strategic partner for any advertiser or agency seeking experts in multicultural media planning and buying, Marshall said. Media expert Randy Novak, a top executive at Geomentum/NSA – the nation’s largest hyperlocal media and marketing agency – said the experts at IMMS do what needs to be done to service client needs.
    •  

    • Aflac
      Aflac, the supplemental insurance company in the United States, introduced its latest Spanish language television commercial, Physical Therapy. The funny and informative ad debuts today Monday, April 15, on local Telemundo, Univision, Telefutura and Estrella TV stations in Miami, New York, Los Angeles, Houston, San Francisco andOrlando. It will also air on two television networks in Puerto Rico and on radio stations in all of these same markets. This integrated campaign also reminds consumers to visit Aflac’s latest innovation called the Real Cost Calculator, which provides valuable information to help policyholders and potential policyholders understand the out-of-pocket medical and household costs associated with an individual or family member who is injured or diagnosed with an illness. This innovative tool is being unveiled en Espanol for the first time at Aflac.com/costoreal. “In any language, Physical Therapy sends a very serious but entertaining message about how our policies can help people focus on recovery rather than worry about finances when a medical setback occurs,” said Aflac Executive Vice President, Chief Marketing and Sales Officer, Michael Zuna. 
    •  

    • Group M
      GroupM has created a new unit designed to help beef up the operation’s multicultural offering. It will be led by Gonzalo Del Fa, currently managing director of MEC Bravo, the Hispanic specialist unit at GroupM media shop MEC.
       

      GET ALL THE LEADS YOU NEED WITH PORTADA’S INTERACTIVE DIRECTORY OF CORPORATE MARKETERS AND MEDIA BUYERS! For detailed contact information on Hispanic Corporate Marketers at these companies and the decision makers at their Advertising Agencies, get access to Portada’s Interactive Directory of Corporate Marketers and Agencies targeting Hispanics of more than 3,000 Leading Agency and Marketing/Advertising Directors who are targeting Hispanics. (Downloadable into an Excel Spreadsheet for seamless integration into your own database!). If you are a Subscriber to the Directory login and access the Directory.

      Learn more about the enormous role Online Video can play in the Latin (Latin America and U.S. Hispanic) marketing space. Book now for our Latin Online Video Forum, a required event for any marketing professional.

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