CHAPTER 7: TECNOLATINAS PROFILES
When the originality is in the execution of the business model
Industry: Fashion, E-commerce
CEO: Philipp Povel
HQ: Sao Paulo
Office: Sao Paulo, Santiago, Mexico, Buenos Aires
Founded in January 2011, Dafiti has proven that Latin Americans are craving for good fashion opportunities, and are very much willing to find them online. First launched in Brazil with the support of the German investment firm Rocket Internet, this retailer and marketplace has since expanded to Argentina, Chile, Colombia, and Mexico, and grown to become one of the heavyweights in the Latin American e-commerce space.
First started by the Brazilian Philipp Povel, and his German co-founders Malte Huffman, Malte Horeyseck, and Thibaud Lecuyer, who met in the European country and, after realizing the opportunity that the Latin American country represented, decided to move to Sao Paulo in order to start the venture. The company was an overnight success.
Dafiti started up as an online fashion retailer, targeting mostly women in its home market. Backed with R$50 million Reais (US$30 Million, at the time’s exchange rate) the company invested heavily in advertising, and in providing a great customer experience, and soon positioned itself as a leader in the online fashion sector in the country.
Expansion didn’t take long. By November of 2011, only eleven months after its foundation, the company was opening offices in Buenos Aires and Santiago and expanding to serve the Argentine and Chilean markets. A few months later, at the beginning of 2012, new sites were opened in Colombia and Mexico – the latter of which has since been sold to a Mexican fund and merged with the local site Clickonero to form a new retailer that operates under a new brand called Ösom by Dafiti – turning Dafiti into a true regional player, and enabling it to receive $45 Million dollars from JP Morgan in a Series B round in August that year, and an extra $65 Million dollars in a further round from Quadrant Capital Advisors only four months later.
Often dubbed the “Latin American Zappos” by the foreign press, Dafiti has managed to receive the kind of funding and attention usually reserved for the most promising startups at Silicon Valley. And this goes to show the true potential of the retail space in Latin America.
Today, the company’s sites across the region sell over 80,000 products from categories like men and women’s apparel, footwear, and accessories, as well as sports gear and equipment, children’s clothing, and home décor from a vast variety of brands, always adapting to the local taste of the local markets where it operates, and offering a very rich catalogue of goods produced by local suppliers.
Additionally, Dafiti operates a marketplace, where it allows third party brands and vendors to offer their catalogues to the store’s audience, and to take advantage of its payment options and delivery network. However, unlike MercadoLibre, the leading player in the marketplace scene in the region, Dafiti’s site is not open for users to sell their products, but rather sellers need to go through a vetting process and get approval before being allowed to sell at the site.
One of the reasons this site was able to expand so rapidly has to do to with the lack of competition it first found in the region. E-commerce is certainly not a new market, but few companies were doing it at the scale Dafiti managed to grow to in a really short time. In order to make operations efficient, its founders chose to run most processes, including storage and delivery in house, and through a small network of trusted partners. This way, they made sure to provide a satisfactory experience to their customers, over half of which were first timers when it came to buying online.
Realizing the potential the e-commerce space still has in the region, Dafiti has also launched a white label B2B service called dftStores, which serves companies that wish to start selling online through their own branded sites. For a fee, Dafiti handles these companies’ online operations, inventories, and the distribution of their orders. Besides opening a new line of business, this has enabled the company to grow its footprint in the region’s online retail sector, while turning potential competitors into allies, and getting a chunk of their business.
Today, this Brazilian company has more than 1,600 employees regionwide, and operates warehouses in all the four countries where it currently operates. For the future the company is betting on mobile technology, a channel that already accounts for more than 16% of its total sales, and which should grow over the upcoming years, especially considering that connectivity in the region is growing almost exclusively through new smartphone users. At the same time, the company appears to have taken a page out Amazon’s book, and is expanding its online presence to the physical world, where in 2015 it opened its first brick and mortar store called Dafiti Live in Sao Paulo. This way, the company expects to appeal to all of its customers’ senses, and be able to offer a truly global experience, something many major e-commerce players throughout the world are doing.
In just a few years Dafiti has grown to become one of the most meaningful companies in its space, and a true case study for the opportunity that Latin America represents for talented tech entrepreneurs, and smart investors
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