Strategy

Payless LATAM bet on VTEX omnichannel to fulfill their customer-centric nature

Andreea Pop
Andreea Pop October 1, 2020
Payless LATAM bet on VTEX omnichannel to fulfill their customer-centric nature

Payless Inc. is a renowned global footwear chain, with a roller-coaster 64-year history to tell. The LATAM division, handling 450 brick-and-mortar stores scattered across 21 countries, is now gradually launching ecommerce stores under a strong omnichannel vision with VTEX, aiming to become the digital leader of the industry.

Digital commerce, the shield against a retail apocalypse

In 2019, the American operations of Payless entered bankruptcy. After a decline that started with the 2017 infamous “retail apocalypse”, the giant retailer was finally forced to shut down 2500 stores across the US. Payless LATAM took the North American division’s experience as a cautionary tale.

By planning to undergo a profound digital transformation in 2020, Payless LATAM wanted to protect their strong brick-and-mortar operations. Payless LATAM knew an ecommerce wave was bound to hit their shores soon. They also knew they needed to digitalise their operations in order to withstand it. Thankfully, a lower ecommerce maturity in the Latin American region meant time was on their side.

And so they took action: they brought in knowledgeable management, restructured their internal teams, changed their ERP, upgraded their POS and migrated to VTEX Commerce Platform, a fully-integrated marketplace-commerce-OMS solution with flexibility to provide endless business possibilities, such as franchising, marketplaces, and cross-border ecommerce. Chief among them, however, was omnichannel

“The decision to migrate to VTEX was based on its adaptability. VTEX would allow Payless to continue its growth based on omnichannel. The possibility of adapting –  and adapting fast – was an incredibly important factor.”

Diana Cardona, Ecommerce Manager of PaylessLATAM

The wonders of (VTEX) omnichannel

From the beginning, strengthening the online sales operations was meant to support the grander vision of omnichannel. This meant ecommerce was not going to compete with brick-and-mortar. Instead, it would be a good support system in an industry where the tendency to shop in-store will never truly disappear – you know how it goes: the size might not be quite right, or the crimson red might be one shade too intense.

“We are betting on the omnichannel approach, because we want to take advantage of our 450 stores with good locations. Many people select the shoes in ecommerce, but prefer to go to the store to try them on, where they tend to buy additional items.”

Justo Fuentes, CEO of PaylessLATAM

Most importantly, however, omnichannel would become the perfect strategy for a brand that, above all, aspires to offer a great shopping experience. Not only does omnichannel enable more buying options for the customer, but it also eliminates all friction between channels. For instance, PaylessLATAM initially plans to ship 100% of their orders from the stores, therefore drastically reducing order delivery times. Other added benefits to the customer will be reflected in a more efficient Customer Service, a more diverse inventory and the ability to score Payless Club loyalty points across all channels. Given Payless’s main target audience is families, such a seamless experience will bring much-needed convenience into their footwear shopping.

“It will not matter if the customer is contacting Payless through the website or through social media or by going to a store or by calling on the phone. We are all about providing them with a great experience.”

Diana Cardona, Ecommerce Manager of PaylessLATAM

But the advantages of omnichannel with VTEX are not one-sided. On the contrary, PaylessLATAM stand to gain plenty of operational efficiency due to their unified view over inventory which will cut unnecessary logistics costs. Additionally, ecommerce as an add-on to brick-and-mortar retail under the guise of omnichannel with VTEX will slowly but surely accustom customers to digital retail. Consequently, Payless Latam would then be able to expand their online operations in an organic manner and to achieve their boldest ambitions.

The Big Dream

PaylessLATAM have always provided good styles at good prices, but now they’re elevating their game by throwing big brands into the winning formula. By focusing on signing deals with instantly recognizable brands, they desire to bridge the trust gap between customers and ecommerce.

“The role of brands for ecommerce consumers is more relevant than for brick-and-mortar consumers. When you don’t offer the option to touch and try the products, the only thing giving credibility to your merchandise is brands.”

Justo Fuentes, CEO of PaylessLATAM

Moreover, they plan on exclusively dedicating 30% of their collections to ecommerce, further persuading customers to buy online. They also intend to diversify their product offering, ensuring a good range of items no matter the season and no matter the market trends. With an upgraded brand portfolio, Payless have their eyes set on creating a digital store with up to 10,000 product lines, a far cry from the mere 800 lines a physical store can manage. From there on, the only way to go is up.

“There’s no clear leadership in terms of ecommerce in the shoe business, which means there’s an opportunity for Payless to be the first one, to be the best one.”

Justo Fuentes, CEO of PaylessLATAM

Leading the change

Little did PaylessLATAM know, all their digitalisation efforts were going to be justified sooner than expected, with COVID-19 greatly accelerating people’s acceptance of ecommerce.

“This pandemic is creating many problems, but at the same time, it is creating opportunities. The biggest opportunity in emerging markets, such as Latin American ones, is ecommerce, because people have gradually started to trust ecommerce after shopping online for their necessities.”

Justo Fuentes, CEO of PaylessLATAM

In a race to match the rapidly-evolving consumer behaviour, PaylessLATAM will launch 5 ecommerce stores this October in Ecuador, Guatemala, El Salvador, Honduras and Peru. Soon after, Colombia, Panama, Nicaragua, Costa Rica and their 12 other markets will gradually follow suit. However, an issue remains: plenty of people in Latin America still do not possess an email account, let alone know how to make a purchase online; similarly, fear of payment scams and lost packages is running rampant. 

To tackle this apprehension towards digital commerce, PaylessLATAM took it upon themselves to educate their community. They are creating more content to guide customers step-by-step on their websites, enabling them to become self-sufficient while shopping online. The anxiety induced by the prospect of incorrect size is also mitigated by a sizing guide and by free “hand-in-hand” returns through which the courier is replacing the incorrect size with one that fits perfectly. What is more, Payless Latam are proactive in their communication with the client, announcing every change in order status. Hence, they are taking the social responsibility of instilling a different sense of security whenever someone shops on their online channels.

“For someone that doesn’t have any ecommerce experience, taking that first step is difficult. You have to provide a lot of security and you have to communicate a lot of trust. Thus, with a friendlier process, customers are willing to continue shopping online, which gradually makes them overcome their fears.”

Diana Cardona, Ecommerce Manager of PaylessLATAM

Although trivial for more mature markets, such care and attention is groundbreaking and immensely beneficial for boosting ecommerce’s popularity in Latin America. And if ecommerce will grow in Latin America, so will PaylessLATAM.

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