At the end, margins were pretty low as the offers were supposed to have big discounts and the partners were tough negotiators.
Curitiba, Brazil (PRWEB) August 27, 2012
Oferta do Dia is Portuguese for Offer of the Day. The concept is very similar to Woot.com, in which one product gets featured with a big discount every day. Oferta do Dia is a service of MuccaShop (muccashop.com.br), a Brazilian website that works like a Shopping Mall in the web. MuccaShop partners with several e-commerce websites and advertise their products quite like Google Shopping or TheFind.com. Originally, when Oferta do Dia was launched as a hotsite inside MuccaShop, the company negotiated on a daily basis the best product and the best price their partners could offer.
The initial plan was to advertise and sell products and their partners would deliver the product. At the end of every day, they would send a list including all sales and customer details to the partners so they could ship the goods. That went on for some time and problems started to appear. Sometimes the product would not reach the customer. Sometimes the partner would take a few days to ship the product and customers would open charges against MuccaShop. Very few cases if compared to the gross volume of sales, but at the same time, very time consuming. In addition, the amount of money going back and forth was enormous according to Carlos Fertonani, co-founder of the company. The revenue was collected from the customers and passed onto the partners, an operation which, if not done with tight controls, it could have gone very bad. At the end, margins were pretty low as the offers were supposed to have big discounts and the partners were tough negotiators, complains Fertonani.
In August 2012, after six months operating this way, the company decided to Pivot. Oferta do Dia would continue to feature one product per day, but differently than before, now when customers click on the Buy button, they will be re-directed to the partner’s website to finalize the purchase over there. This way logistics issues, payment collection and customer services would be entirely upon to the partner. In case they delay the shipment or deliver wrong or broken products they will have to deal directly with the customer. Moreover, the margins basically stayed the same if not increased in some cases.
This way the company now is able to focus in aggregating new users to the base as well as the advertisement itself which is the main difficulty their partners face and something they are really willing to partner for.