The e-commerce tsunami formed by the pandemic earthquake has jolted consumers and businesses into a new transactional reality. With e-commerce transactions growing 75% in 2020 and growing 6% in 2021, home and garden retailers in Latin America continue to experience increased pressure from the arrival of global powers such as ‘IKEA (Mexico, Chile, Peru), and the regional expansion of Amazon.
Although recent growth has already hinted at the need for all players to adapt and excel in the online environment, the rapidly evolving pandemic has represented a hard landing for players who have taken their time. to act, many of them struggling to meet consumer needs and expectations. . These expectations, along with pressure from new entrants who have immediate scale, consumer awareness and a good reputation for e-commerce sales, are leading competitors to improve the online shopping experience offered, investing heavily in improving both pre-sales and post-sales. – sales experiences.
The socialization paradox manifests itself in why shoppers choose online
The reopening of physical stores causes consumers to experience different levels of comfort when interacting with other people. According to Euromonitor International’s 2022 survey of online shopping in Latin America, there was a clear choice of isolation by a significant proportion of consumers, who use online channels specifically to avoid interactions with other shoppers. (12%) or even with sellers (11%). in physical stores. How do you bring consumers back to stores via in-store experiences if the discomfort of human interaction is exactly what they’re trying to avoid?
Source: Euromonitor International Passport data, Home and Garden, 2022 edition
However, the change in motivation has not had an equal impact on all areas of the home and garden. Gardening products are usually displayed in well-ventilated spaces or outdoors, which helps e-commerce peak penetration to be noticeably smoother. Gardening grew by 9% in 2020 and 7% in 2021, all in constant value.
During the pandemic, Latin American consumers have also started to put their own DIY projects into practice, guiding the home improvement category to 22% growth in constant value – but we can see how much this growth was more dependent on the shift to online shopping. Home improvement is closely tied to assisted selling, as buyers need to make sure their home project is feasible, while they need to see the true colors of the house’s paint and see the patterns of the wallpaper or flooring. Physical interaction with products and sales advisors is therefore important – which makes the growing reliance on the online shopping experience all the more important.
There are other categories in which consumers want to have an even more detailed interaction with the product before deciding on their purchase. Homewares, and primarily furnishings, fall under this psychology because they have a taste-driven selling process that goes through a tactile or at least visual experience before the buyer closes the deal. affair. Online sales growth in these categories has been the difference (in constant value) between declining or remaining flat, with some small growth achieved (homewares grew 3% and 4% respectively in 2020 /2021; furniture increased by 1% and 4% in the same years). These categories in particular needed improvements in the online shopping experience as they have become much more dependent on e-commerce.
Breaking the physical boundary in the pre-sale phase
Sodimac, a regional market leader, launched its “online assisted selling” and “online decoration evaluation” services in Chile, which offer customers the possibility of receiving advice on products, furnishings and expert decorating through a video call. Sodimac has also invested at the regional level in 3D visualization and augmented reality functionalities, providing its customers with tools allowing them to carry out a virtual test of a product at home, so that they are sure that it corresponds to their personal tastes and the space available in their homes.
Source: Google Play – App Sodimac Homecenter Colombia
The location and size of stores are other challenges. With less space, companies aren’t able to show off their full portfolios, reducing the variety of brands on shelves. The solution is for companies to provide a physical space for consumers to test and experience their products, as well as decorative configurations, rather than showing numerous SKUs, and promote the completion of the sales process through the online environment, where a larger portfolio is available. These experiential centers, also known as guide shops, are essential in cultivating consumers’ final purchasing decision for products that require more consideration and are at the heart of Sodimac Homecenter’s strategy.
Streamlined logistics and technology: the recipe for a successful fulfillment process
MadeiraMadeira, one of Brazil’s newest ‘unicorns’, was initially a purely online store, but has just opened its 110th physical store. The company acquired logistics start-up iTrack to monitor and manage deliveries and collections, allowing the customer to track the process. He also created the logistics company Bulky Log, because investment in distribution centers is essential to operate in large countries (such as Brazil), which cannot centralize their logistics in a single city without compromising the speed of service.
While MadeiraMadeira continued its expansion by opening a distribution center in the Northeast region, Mobly, another Brazilian player, made a similar move, opening its fourth distribution center (the first in the Northeast), aimed at reducing freight costs for consumers, handling around 30% of its business in the region. Mobly also has its own dedicated logistics division, called Mobly Log.
After encountering a series of challenges with delivery times during the pandemic in Chile and Argentina, Sodimac also focused on improving its fulfillment process. It has invested in a new distribution center in the Santiago metropolitan area and is also creating an additional distribution center dedicated to cybersales events.
Latin American retailers are pushing their online operations hard to stay afloat in the race for experience, but face increasing competition. New entrants such as IKEA and Amazon, leaders in direct-to-consumer selling, are adding pressure to this formula, and as brands improve their services, the pace and degree of change will only increase.
Companies that follow the path of excellence in online sales must gain a deep understanding of consumer behavior when shopping across different categories. Efforts must bridge the gap between the digital environment and physical shopping engines in each category, delivering a satisfying and fulfilling shopping experience at all stages of the customer journey.
For more insights, read our report, Global Home Improvement and Gardening Market