Top Advice for Entrepreneurs Trying to Break into the Retail Sector
ecomércio-RS is the Federation of Trade in Goods and Services for the state of Rio Grande do Sul. This trade organization represents companies involved in goods, services and tourism, which make up the most diverse production chains in the state’s economy and comprise 53 percent of the state’s GDP. Fecomércio helps support startups, companies and workers through education, advocacy and investment programs.
The small business landscape in Rio Grande do Sul is changing as retail and ecommerce start to take over parts of the market formerly dominated by agriculture and the service industry. “Rio Grande do Sul was an agriculture and tourism based economy until very recently, and there wasn’t a lot of thought put into the connections between tech innovation and the wider economy,” says Giancarlo Giacomelli, an educational technology manager at Senac RS.
This is where Fecomércio-RS comes in, filling the gap and making the connections between startups and investors, and helping the state pivot to a new era. “For decades, Fecomério-RS has been working to support the tertiary sector, and we understand the importance of participating in the innovation ecosystem to renew our purpose, providing entrepreneurs with what is most innovative and enthusiastic for the digital transformation of their businesses,” says the president of Fecomércio-RS/Sesc/Senac, Luiz Carlos Bohn. “For this, we have founded several open innovation initiatives in our institution.”
“We highlight a lot of the service industry in our work because that is our traditional market,” says Giancarlo. “We were an economy of service providers, but we are seeing change and growth in the state economy. We need to rethink what commerce means and what it can provide as a whole, not just in the service industry. Ultimately, we are restructuring the economic matrix of our state. We are climbing a ladder that started in the service industry, but that now informs the models we apply to new sectors.”
Ultimately we are restructuring the economic matrix of our state. We are climbing a ladder that started in the service industry but that now informs the models we apply to new sectors.
The service industry, with sectors from beauty to restaurants to tourism, is in the DNA of RS. “Our economy is made up of excellent service providers, and we need to focus on bringing that to the digital age,” says Lianamar Rosa, dean of Universitário Senac RS. Commerce accounts for about 52.7 percent of the state economy, but ecommerce specifically is growing rapidly and taking up a lot of space in the sector, so there is a need to make sure that a digital transformation is possible.
As dean of Senac University, Lianamar is at the forefront of preparing the next generation of business leaders for this new digital reality. “We need to bring those services into a tech space and make sure every company has a clear and representative web presence. Beyond that, our teaching sector is providing some of the best professionals in the tech, business management and culinary industries. Beyond our work as business developers and incubators, we are set on creating the most innovative individuals in a wide range of fields. Our school and incubator have even prepared companies and professionals for worldwide competitions. Most recently, we sent a former student to the international culinary innovation competition in France.”
Our teaching sector is providing some of the best professionals in the tech, business management and culinary industries.… We are set on creating the most innovative individuals in a wide range of fields.
In addition to education and advocacy work, the organization also operates Lab Fecomércio, an incubator that helps startups to connect with mentors and investors in our network. The lab was created to connect startups and students to companies that work in retail. Lianamar adds that they also work together with the Caldera Institute through the Ebulição initiative, which helps startups to develop their projects and business plans before they begin the incubation process in the lab.
For Giancarlo, the biggest challenge for ecommerce based startups in Rio Grande do Sul is logistics. “We still struggle with that, because we don’t have an established industry to manage the growing demand.” Giancarlo points to Moderniza, one of the Fecomércio Lab startups, as an example of a company that was able to successfully mitigate the supply-and-demand logistical challenges of ecommerce by providing new storage-management tech for ecommerce platforms to communicate with their warehouses, helping them to intelligently manage stock. They also worked with other organizations to help minimize bureaucratic complexities of last-mile delivery.
Giancarlo also recommends that new startups in the retail and ecommerce space focus on building B2B connections to more quickly scale and gain traction. One of the biggest VCs in the state, Venture, is solely focused on B2B. Without a B2B focus, it can be hard for new retail startups to be successful. The experts at Fecomércio recommend that only after establishing those B2B customers and connections should startups move to a B2C model.
Most important tips for startups:
- Focus on B2B connections. To maximize profitability, focus on the B2B market first. It can also be easier to find funding. One of the biggest VCs in the state, Venture, is solely focused on B2B right now; it’s what they prioritize when investing and what they push their start ups to concentrate on. Without a B2B model, it’s much more difficult to scale and to be successful in retail, so focus on establishing those steady business connections before moving to B2C.
- Research your market. RS is an evolving market, so do your research and make sure you are offering customers the products they actually want.
- Logistics is key. One of the specific challenges in RS is logistics and last mile delivery, which is a problem in the rapidly growing ecommerce space. Have supply chains and stock systems nailed down, and work with competent local partners like Moderniza in order to compensate.