by Alison Weiss
In Brazil, the popular idiomatic expression Lindo maravilhoso! (Beautiful, marvelous!) is used to enthusiastically describe everything from the weather to art. It’s just one example of how important beauty is in a culture where women will not even shop for groceries at the supermarket unless they are bem arrumada (well dressed) with styled hair, makeup, nice clothes, and high heels.
Location: Itapecerica da Serra, state of São Paulo, Brazil
Revenue: US$3 billion in 2013
Oracle products: Oracle ATG Web Commerce 10
Digital Media Innovator
Length of tenure: Eight years
Education: Bachelor of Engineering in electrical and electronics engineering, Escola de Engenharia Mauá
Personal quote/mantra: “Make it happen.”
Brazilian men and women alike spend a high percentage of their disposable income on cosmetics, fragrance, and personal care items to improve their appearance, averaging US$240 each year, according to analysts at the consulting firm A.T. Kearney. Indeed, the booming personal care and cosmetics market in Brazil is expected to grow 38 percent from US$42 billion in sales in 2011 to US$59 billion in 2016, according to market research firm Euromonitor International. The Brazilian Association of the Cosmetic, Toiletry and Fragrance Industry reports that the beauty sector in Brazil accounts for 10 percent of the global beauty products market, making it the world’s third largest (behind the United States and Japan).
More and more global cosmetics companies are entering the very lucrative Brazilian arena, but management at Natura Cosmeticos S.A. (Natura), one of Brazil’s leading beauty firms, has no intention of giving any ground to newcomers. Natura enjoys an estimated 21.8 percent share of the Brazilian market. To secure that position, business, logistics, and IT innovation executives recently deployed Oracle ATG Web Commerce 10 to create Rede Natura (Natura Network), an innovative e-commerce platform to digitally empower the company’s 1,657,000 independent direct sales representatives. According to Marcio Orlandi, digital media innovator at Natura, these representatives are critical to the company’s success.
“Natura is a company moved by two different passions: the passion for cosmetics and the passion for relationships,” says Orlandi. “Every day our consultants wake up and think of new and innovative ways to engage their customers and sell our products. An ‘army’ as big as this is irreplaceable and very powerful. So rather than creating our own e-commerce space and competing with consultants, it was clear that we should empower them with their own e-commerce spaces and sales tools.”Well-Being
In 1969, Natura began with one store in São Paolo, but very quickly founder Luiz Seabra realized that he wanted not just to sell cosmetics but to be able to truly get to know customers and recommend the best products for them. These goals were not achievable with a typical retail store. As a result, in 1973 the company embraced a direct sales model in which a network of independent consultants educate, interact with, and pamper customers.
Today, the company has approximately 7,000 employees and offers a line of 1,000 products, including cosmetics, fragrances, and shampoos. Soaps scented with regional tropical flavors such as Brazil nut, passion fruit, and acai berry are very popular. There is also a personal care line for men. In 2013, Natura’s revenue reached US$3 billion.
The best part of my job is talking to customers and recommending products for them, which I can do more of since Rede Natura manages the rest.”–Larissa Mendes, Consultant, Natura
Over the years, Natura has expanded internationally into Argentina, Bolivia, Chile, Colombia, France, and Peru. But company executives know that 84 percent of Natura’s business is still in Brazil. To thrive in an increasingly competitive market, they need to continually evaluate how to harness innovation to meet Brazilians’ needs for all things beautiful.
For management, that meant launching an e-commerce platform that promotes and leverages the personal relationships the sales reps have developed with their customers. Rather than establishing a traditional online store where consumers purchase products directly, Natura’s management envisioned a platform to give the company’s consultants their own online stores or “spaces” to sell products and provide enhanced services to customers. The result: Rede Natura, a commerce platform that not only powers transactions but also connects consultants to social networking and marketing opportunities.Enabling Logistics with E-Commerce
In 2012, management identified one area ripe for improvement: product delivery times. Until recently, Natura used a system in which customers placed orders directly with their Natura consultants. Sometimes consultants had products in stock at their homes and could deliver products quickly. But it was far more typical for consultants to take orders from multiple customers until the consultants had enough products to make up a minimum order to submit to Natura. Then, consultants had to wait to receive the products. Only then did they make deliveries to the homes of customers and collect payments. In some rural areas of northern Brazil, the process could take as long as 15 to 20 days from the time a customer placed an order until she received her shampoo or fragrance.
Replacing this process with an e-commerce platform would definitely streamline product delivery logistics and give Natura a competitive edge. But managing payment processes would need careful consideration, because credit and debit cards are not as common in Brazil as they are in other countries. More importantly, whatever new e-commerce system was created, it could not negatively affect Natura’s biggest market differentiator: the relationships the frontline sales consultants have with their customers.
“We had to reinvent ourselves,” concedes Orlandi. “But we wanted to maintain the ability of consultants to personally interact with customers and recommend specific products to them. We’re a company that has created a physical social network, which enables consultants to sell our beauty products to 100 million customers. But we had to find a way to harness this personal social network to sell through digital social networks.”Natura Stats
|Amount sales are expected to grow in the personal care and cosmetics market in Brazil between 2011 and 2016|
|Average amount per year that men and women in Brazil spend on cosmetics, fragrance, and personal care items|
|Natura’s total revenue for 2013|
Indeed, determining how to maximize digital social networks as part of a new e-commerce platform promised huge potential gains. Research published by KPMG International reveals that 77 percent of Brazilian “netizens” access blogs and use social networks, particularly Facebook and YouTube. Further, a 2012 report on the Brazilian cosmetics industry published by Cosmetics Inspiration and Creation, a consulting firm based in Paris, France, indicates that because social networking is so huge in Brazil, beauty bloggers play pivotal roles in discussing and recommending cosmetics.
Daniela Ferreira, a beauty expert who writes for magazines and cosmetics industry blogs in Brazil and manages her own popular beauty blog, Ciculodabeleza (Circle of Beauty), is well acquainted with Brazilians’ passion for beauty and social networking. “Readers like the informal tone in beauty blogs. They identify with trendsetting bloggers and are very willing to follow product advice and suggestions,” she says.Value of Accelerators
With so much at stake, Natura management assembled a transformational team that included personnel from logistics, digital media, commercial innovation, and customer relationship management (CRM). This cross-functional group helped conceptualize the new Rede Natura and determined that it should be built on the Oracle ATG Web Commerce 10 platform because of that product’s scalability, customizability, and flexibility. Object Edge, a California-based implementation partner with an Oracle specialization in Oracle ATG Web Commerce and a track record of successful e-commerce projects in Brazil, joined the project to help realize Natura’s vision.
“We knew they needed something different than a traditional online store,” says Jags Krishnamurthy, chief operating officer at Object Edge. “The solution had to empower—not compete with—consultants, and it had to be easy for consultants to use.”
Object Edge experts and Natura IT staff formed a joint team to develop the technology side of Natura Network. They gave each consultant his or her own digital “ministore” (site) to profile products in an environment that digitally duplicates the experience of the colorful Natura product catalog. Object Edge experts used one of their unique accelerators during proof of concept to demonstrate that Oracle ATG Web Commerce could easily scale to 2 million consultants.
Object Edge accelerators also streamlined the implementation of features, including the ability to offer product bundles and “buy one, get one free” offers and the ability for customers to order online but make payments at a local bank (a common practice in Brazil). The team used yet another accelerator to show Natura’s product portfolio in three ways to closely mimic the way customers shop in traditional stores. Products can be located by name, by category, or by specialized product groupings targeted to certain types of customer, such as athletes or businesswomen.
“We had a good idea of what we wanted to do with Rede Natura,” says Orlandi. “But the processes to show products and check out were more complicated than we realized. It helped having Object Edge’s extensive knowledge and to use their accelerators.”Natural Networking
Initially, Rede Natura was launched in a pilot with 700 consultants in Campinas in the state of São Paolo and then broadened to encompass 3,000 consultants in two cities. So far, reaction has been positive. While consultants can still continue to sell using traditional methods, most see Rede Natura as a valuable new channel offering even more ways to make customers happy. In fact, the initial rollouts have gone so well that in March 2014 Rede Natura was upgraded, adapted, and fully integrated with Natura’s back-end systems, and it will be made available to consultants across Brazil later in the year.
Larissa Mendes was the first Natura consultant to set up her online space. She joined the company in 2012 but had some reservations about direct selling because of the challenges with managing customer payments and making product deliveries to customer homes. She is very happy that Rede Natura has made logistics so much easier. “The advantage to having my own space on the Natura site is that customers have more payment options, and secure product delivery to customer homes is managed by Natura and takes just two working days,” she says. “The best part of my job is talking to customers and recommending products for them, which I can do more of since Rede Natura manages the rest.”
And if a customer doesn’t already have a Natura consultant, Rede Natura delivers a generic store where the customer can select products to purchase. At checkout, she is directed to use the search engine to select a consultant through which to make the purchases.
Rather than creating our own e-commerce space and competing with consultants, it was clear that we should empower them with their own e-commerce spaces and sales tools.”–Marcio Orlandi, Digital Media Innovator, Natura
It is at this juncture that Rede Natura maximizes the Brazilian love of social networking and beauty in an innovative way. Rather than simply matching a customer to a consultant in a geographic location, when given permission by the customer Rede Natura taps into the customer’s social networks. This allows the system to scan Facebook friends, for example, and match the customer to a Natura consultant within the social network who is a cousin, a friend of a friend, or a coworker.
To keep competition fair online, Natura products listed in each consultant’s “space” are priced the same, and it’s not possible to use search engines to find a consultant with the lowest prices. Instead, consultants can generate personalized discount coupons for specific customers that are redeemable at checkout.
Mendes appreciates that Rede Natura is tightly integrated with Natura’s CRM system. “We can learn even more about our customers now because we get reports about which products are selling the fastest,” she says. “We can also see which purchases were not completed by customers and reach out to those customers with targeted offers for other products.”
For Orlandi, Rede Natura is a work in progress. With more consultants coming online every day, he is constantly exploring the digital frontier to make the Rede Natura shopping experience easier and more exciting for Natura customers and consultants alike. With the help of Object Edge, the Oracle ATG Web Commerce–based platform will soon have a product search feature modeled after the innovative StumbleUpon discovery engine that finds and recommends web content to users. In the case of Rede Natura, customers will be able to use a search feature to discover products and content. For example, a customer might use the feature to find and watch a video about makeup techniques with products listed below or explore an article about how perfume is made.
In addition, consultants will soon be able to more fully personalize their online spaces to offer products they make themselves or to sell products beyond just what Natura sells. The idea is for Rede Natura to evolve into a marketplace.
“We see Rede Natura spaces as more than simply a way for customers to buy our personal care products,” Orlandi observes. “Spaces are places for consultants and customers to connect around beauty and create and strengthen relationships.”
Photography by Shutterstock