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Magento and Brazil, Challenges of a platform
The document discusses the challenges faced by Magento in the Brazilian market, emphasizing issues such as the lack of strategic planning among entrepreneurs, misconceptions about the costs associated with the platform, and the need for localized features in ecommerce. It highlights common misconceptions, such as the belief that opening an online store is simple and requires no marketing or planning. The document concludes by outlining strategies for success in Brazil, emphasizing the importance of education, understanding bureaucracy, and the value of patience.
Magento and Brazil, Challenges of a platform
- 1. Magento and Brazil, Challengesof a Platform - Ver. 1.0 1 / 5 Av. Cristóvão Colombo, 545 – Prédio 02, 5º Andar – Nós Coworking Floresta – Porto Alegre, RS – Brazil – 90560-003 +55 51 3037-5997 – gugliotti.com.br presentation: MAGENTO AND BRAZIL, CHALLENGES OF A PLATFORM author: ANDRÉ GUGLIOTTI revision: 1 on: 29/APR/2014 MAGENTO AND BRAZIL, CHALLENGES OF A PLATFORM HAND OUT 1) About the speaker André Gugliotti – www.andregugliotti.com.br Twitter: @AndreGugliotti Facebook: www.facebook.com/BlogDoAndreGugliotti Specialized consultant in Magento Commerce, working with the platform since 2008 Author of two books about Magento – Online stores with Magento and Magento Themes Magento Commercial Engineer, granted by eCommerce Academy, Paris, France Organizer of Bargento Brazil 2) A few words about Brazil First slides present an overview about Brazilian economy and market behavior. We can feature these points: • Brazilian economic stability is recent, as before 1994 the country faced serious inflation, with prices doubling in short periods and no faith in the money could be verified. • After 1994, with the new currency, the Real (BRL), environment started to change, with stability beside structural changes. • Even with this new scenario, Brazilian companies still present a lack of planning and strategy on their behavior: Brazilian entrepreneurs are not used to long-term plannings or market research, especially due to past behavior. • Lots of companies drive their operations without knowing the direction or what should do to win or even survive. Many decisions are made trusting only on entrepreneurs’ feelings and few studies or researches are available. 3) Common thinking When talking about common things among Brazilian entrepreneurs, I list these points:
- 2. Magento and Brazil, Challengesof a Platform - Ver. 1.0 2 / 5 Av. Cristóvão Colombo, 545 – Prédio 02, 5º Andar – Nós Coworking Floresta – Porto Alegre, RS – Brazil – 90560-003 +55 51 3037-5997 – gugliotti.com.br • Just open an online store and we will get rich – there is a legend that it’s really easy to open an online store and it doesn’t have same problems of a conventional store. More than that, just opening an online store and consumers will flood it and buy everything. • We don’t need planning – an online store doesn’t need planning because it’s not a company, it doesn’t have an office or a building, it’s just online. And so the planning. • Developers can handle with everything – who builds an online store? Developers! So, they must have the knowledge to run it and to handle with payment methods, shipping methods, marketing and so on. • We have an unique product – it’s a common sense among Brazilian store owners that their product is unique and everybody wants it. A few months later, they discover that their money went away and no one bought anything at their stores. • We will be the next Amazon or Facebook – like the previous item, there is a common idea that the next Facebook is there but no strategy, business plan or marketing research support it. • No need for marketing – once the store is launched, no need for marketing or ads. Google is a power tool that can attract millions of customers in a short period. So, no budget was reserved to marketing and stores go bankruptcy without customers or orders. • We don’t need to know the market – with unique and special product, no one needs to know the market and even study customer behavior or preferences. The result is confusing stores, with no target or a clear goal. • Budget? What’s that? – The result of lack of planning and strategy are stores build without separate budget and decision mistakes when managing it.
- 3. Magento and Brazil, Challengesof a Platform - Ver. 1.0 3 / 5 Av. Cristóvão Colombo, 545 – Prédio 02, 5º Andar – Nós Coworking Floresta – Porto Alegre, RS – Brazil – 90560-003 +55 51 3037-5997 – gugliotti.com.br 4) Store ownership model Brazilian culture has a concept: you just own what you can touch. Same thing is faced when talking about virtual stores: leasing models like SaaS are not a good model to Brazil because common thinking is that “they are wasting money with a thing that doesn’t belong to them”. That said, companies that offer services invoiced in a monthly basis are the first option being used mainly by startup stores, especially by people not familiar with technology. Looking into SaaS services and hosted options, there is another model, made by hosted and proprietary software. Some companies develop ecommerce platforms, without open source codes and keep them running on their own servers, deciding what features will be part of system and how fast they will be updated. In this Hosted + Proprietary model, when a new client enters in this system, he must pay a setup fee, usually around $5k – $25k , comprising theme customization and catalog settings. After that, a monthly fee is required to maintain the store. If store owner decides to change the platform, he should start from zero again and nothing can be reused. 5) “Magento has no costs” There is a myth among Brazilian store owners and developers that Magento is free – not as free of no paid license required but free of no costs involved. Common thinking is, once Magento is free, you don’t need a budget and nothing requires payments, everything is ready to use without investment. With this concept in mind, many people get scared when discover that Magento needs a VPS or a dedicated server, with more resources, themes must be bought, modules must be bought, install and configuration are not includes, etc. Another thing store owners discover suddenly is that those modules got “by free” don’t have support and problems must be solved by a developer (and of course, he charges for that).
- 4. Magento and Brazil, Challengesof a Platform - Ver. 1.0 4 / 5 Av. Cristóvão Colombo, 545 – Prédio 02, 5º Andar – Nós Coworking Floresta – Porto Alegre, RS – Brazil – 90560-003 +55 51 3037-5997 – gugliotti.com.br 6) Lack of a Brazilian Edition As Brazil has a lot of particularities, it claims for a special edition, featuring different approaches and providing special modules. • Magento is not prepared for Brazilian market – Brazil has differences like payments in installments and unique payment methods. Brazilian behavior when buying is different and requires specific features. • Difficulty Brazilian tax system and legal documents – Brazil tax system is really complicated, as every state has its own legislation and store owners should deal with three different government levels. • Portuguese translation – there are 3 different translation packages, all translated by volunteers but none of them is official. • Local payment methods integration – as Brazil has unique payment methods, this is a critical point. Despite of it, most local payment methods have payment modules that are constantly broken and don’t attend the most of required by customers. • Local shipping methods integration – Correios is the official mail service in Brazil and the only one who reaches all Brazil. There is no official module integrating to Magento. 7) Official initiatives in Brazil Magento Inc. had opened an office in Sao Paulo, under PayPal structure but it was shut down in the same year, without any perspective of reopening. The number of Certified Partners and Certified Developers tells much about Magento official presence in Brazil and how companies see the importance of being certified and run along Magento directives.
- 5. Magento and Brazil, Challengesof a Platform - Ver. 1.0 5 / 5 Av. Cristóvão Colombo, 545 – Prédio 02, 5º Andar – Nós Coworking Floresta – Porto Alegre, RS – Brazil – 90560-003 +55 51 3037-5997 – gugliotti.com.br 8) How to win in Brazil The main message is: it’s possible win in Brazil. Just keep in mind the differences between Brazilian behavior and other countries and prepare yourself to face this fight. • Risks as every other markets – Brazilian market is as risky as every other markets. It’s mandatory to have a good plan and know the market before enter on it. • Investing in education and trainings – Unfortunately, Brazil is facing a black-out of qualified professionals in every segment, including ecommerce. Instead of hunting good professionals, you’d better train and prepare them. • Dealing with Brazilian bureaucracy – Brazil has tons of bureaucracy and you should get used at least of main concepts before boarding it. • Providing good and qualified services – Providing qualified services is the key to go ahead in any market, but in Brazil it’s the best way to feature yourself as a special company. • Handling with language – Brazilians have the ability to communicate in other languages but to succeed there, you should speak Portuguese. And be aware that Portuguese spoken in Brazil is different of Portuguese spoken in Portugal. • Having patience... tons of patience – the best advice to win in Brazil, as everything takes time and could long for a long, long time.