The challenges of e-commerce for the new middle class

The success of "e-commerce" has become increasingly evident in Brazil, with annual growth rates higher than twenty percent. Of course, even traditional retail companies started to see in e-commerce an opportunity to increase their sales. At the same time, new "dot-com companies" or virtual enterprises, are solidified in this scenario as "major players".

We at Cosin consider as the greatest current challenge, to attract customers from the "new middle class" to e-commerce. According to Data Popular Institute, 108 million Brazilians who are part of class C generate 1.17 trillion reais in transactions per year and have more than 100 million credit cards (58% of credit).

These numbers, obviously, are enough to draw the attention of any company. For e-commerce companies, this segment of the population is even more relevant as 2/3 of Brazilian Internet users are in classes C and D. However, reaching this audience is not easy.

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The first important aspect relates to payment methods.

In our analysis, for the new middle class, payment options may be more decisive in the purchase process than the actual merchandise price. Although the new middle class has a high number of credit cards, the available limit may not be enough to buy the product. Thus, the market has provided some alternatives, such as: bank payment slips, "private label" cards (with own or outsourced operation), multiple payment methods for a single purchase, purchase with recurring credit card payments, among others.

Advantages and disadvantages

Certainly, each option has advantages and disadvantages, but regardless of the alternative chosen by the e-commerce company, it is clear that this new process will generate greater complexity for the IT area, as well as the Finance and Controlling area.

In some cases, it may increase significantly the operation costs, serving as "input" for the commercial area to assess the pricing model and commercial policies.

We believe that the essential factor in this case is to assess alternatives comprehensively, considering customer attraction as well as the operational model and costs.

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The second important aspect is related to assortment.

Studies show that new middle class consumers value brands, their value perception is directed according to their needs, and they accept new technologies quickly. These aspects must be reflected in the website selling proposition and translated into appropriate assortment to this audience.

To achieve results, we are certain that the language used by the e-commerce in the entire purchase and post-purchase process must be understandable, simple and objective. The steps in the sales flow must be clear and capable of guiding the customer.

The website must also provide information about the products and their use. Procedures to cancel orders or exchange products must be appropriate for the market segment, in terms of location and access to infrastructure.

All these factors help the company to create a trustworthy relationship with the customer. In addition to a satisfied customer, this means referrals to friends and family or even positive comments on social networks, which, in the virtual world, is synonymous with success.

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