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Home Goods Sales Triple With Nary an Item Sold Online

Stock MarketsDec 05, 2020 07:50AM ET
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By Christiana Sciaudone -- Sales jumped 200% in the third quarter for home goods retailer Betterware De Mexico SA de CV (NASDAQ:BWMX). With the company poised to start online sales next week, the numbers are likely to keep on keeping on.

The only Mexican company directly listed on the Nasdaq, Betterware de Mexico is a direct-to-consumer retailer (think, catalogues and local associates hawking their wares), and the jump online won't change that. It will bring the brand to consumers who haven't yet used it, but always through a local representative who not only takes care of the last-mile delivery, thereby keeping costs down for the company, but who also accepts cash. 

Betterware de Mexico has plenty of online competition -- Amazon (NASDAQ:AMZN) and Mercado Libre, to name two -- but "accepting cash is necessary to achieve ecommerce success," according to a Practical eCommerce report in June. While buyers can pay for online goods via convenience stores by printing a page with a barcode and paying in cash, representatives of the home goods company take cash in hand. 

That positions Betterware de Mexico to win over a large swath of the population, and the company is, accordingly, preparing for major expansion.

"We have a lot of opportunity to grow in the future," said Chief Executive Officer Andres Campos in a phone interview alongside his father, Chairman Luis Campos. 

The company has bumped its earnings before interest, taxes, depreciation and amortization for the full year to a range of 1.900 million pesos ($95.6 million) and 2.100 million pesos, up from its previous guidance of 1.45 million pesos. It expects its Ebitda margin to be between 26.2% and 28.9%.

Betterware de Mexico went public in March through a reverse merger with special purpose acquisition company DD3 Acquisition Corp . The company sells everything from chip clips and toilet paper stands to lingerie wash bags and purse lights. Betterware de Mexico currently serves more than 3 million Mexican households, and is already profitable in Guatemala, where it began a pilot project this year.

"Today we only have a 20% market penetration in Mexico," said Andres Campos. "We still have a lot of room to grow."

New Markets in Sight

With Guatemala proving to be a win, the company expects to move into Peru and Colombia in the next few years. 

More immediately, however, is the launch next week of a web marketing platform that should attract a whole new swath of Mexicans who maybe haven't ever ordered from a catalogue or met a company representative.

"This model is even stronger than standard ecommerce," Andres said. Orders are delivered through representatives, who take care of the last delivery mile without any cost to Betterware, a competitive advantage against rivals. Perhaps more importantly, "we're able to collect cash on delivery. Traditional ecommerce models cannot do that in Mexico." 

More than a third of the population has no bank account, meaning cash remains king, Practical eCommerce reported. Internet use is also not as widespread as in other countries.

In 2019, about 56% of homes had access to the web, but for those without it, most said they couldn't afford it. Still, ecommerce revenue should grow at a compound annual rate of 6.5% over the next four years for a total of $21.8 billion in 2024, according to Practical eCommerce. 

Betterware, which makes its own items largely in factories in China, introduces about 300 new products each year, and it aims to delve into new categories, though the executives declined to give further details. It is another vector of growth for the ambitious group.

Not that it is without competition. Walmart (NYSE:WMT) de Mexico, Home Depot (NYSE:HD) and Tupperware (NYSE:TUP) are among Betterware de Mexico's biggest rivals, but the executives point to their specializing in the home as one of their differentials. 

"We are very close to our consumers," Andres Campos said. "We invest a lot in understanding the consumer and understanding the house," coming up with the exact products we know that our markets need.  

"We are prepared to continue to grow," he said. 




Home Goods Sales Triple With Nary an Item Sold Online

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