Customer Service Sucks in Latin America. Amazon May Change ThatBy
Traffic, infrastructure, transportation: you name it, it’s bad
Chilean apps are trying to help retailers get ahead of Amazon
A two-week delivery schedule is tough to meet in Latin America. Never mind two days.
Cintia Puebla bought a set of shelves on SACI Falabella’s website on Nov. 11. They were supposed to be delivered within two weeks, but a month later she still had no product and no response from the company. She voiced her concerns on a popular Chilean complaint website, where she learned that delivery problems are the biggest issue facing most retailers. The 28-year-old had already made her first payment.
"I went to a store to cancel the purchase, but they said that there’s nothing they can do," Puebla said. She has yet to receive the shelves, and all she’s heard from Falabella is that there’s a problem at the warehouse. "I don’t even want them anymore."
Welcome to customer service in Latin America.
"For a long time, many retailers in the region have made logistics a second-tier concern," said Alvaro Echeverria, a Chilean mathematician and developer of the logistics app Simpliroute. "They made sure that the shopping experience was good all the way to the cart, but what comes after that wasn’t a concern for the CEOs."
With Amazon and Ikea making incursions into the region, retailers better get smart and start addressing the logistics hiccups marring their customer relations, Echeverria said. Poor infrastructure and few nationwide transportation companies make shipping and delivery services lengthy and unreliable, Morgan Stanley said in a Dec. 19 report. Mexico City tops the global TomTom Traffic Index for congestion, and Rio de Janeiro and Santiago lead South America.
Echeverria and others are seizing the opportunity. His Simpliroute app is taking off, with sales jumped 30 percent from October to November. He expects to reach $3 million in revenue in 2018 when the company pushes into Brazil. The software uses algorithms coupled with traffic and cargo data to determine the optimal number of vehicles, routes and timing to use each day. It’s helped cut costs by an average of 30 percent.
Cornershop, an app developed by Chilean programmer Daniel Undurraga, is also looking to tap into the demand for better service. The app determines which of its army of thousands of part-time shoppers can deliver products from groceries to medicine in less than 90 minutes. Undurraga got the idea as a self-confessed heavy user of Amazon Prime Now in San Francisco.
"The key of the software is showing the client in advance how long we will take to deliver," Undurraga says by phone from Mexico City. "If you’re asking for a six-pack of beer, we can use someone on a bike, but if you ask for 100 different products, we’ll need a car. Then the client determines if they take the offer or not."
Walmart Chile SA operates www.lider.cl, offering delivery in 24 hours, and also has an agreement with Cornershop. So does Jumbo, a supermarket division of Cencosud. Among Cornershop’s backers are venture capital firms that financed Facebook and Spotify. The company’s studying expansion ínto Argentina, Peru, Colombia and Brazil.
Morgan Stanley points out that while Amazon could become an important player in the region in the long-term, logistics may favor local players. The market, however, sees locals challenged to compete against Amazon’s deep pockets and "intense consumer centric approach," the bank said.
Falabella seems to be trying to get it together. It announced plans to invest $1 billion in logistics over the next four years. That’s a long time to wait for shelving.