carsales.com.au entered the Brazilian market a little over 2 1/2 years after it’s acquisition of 30% of Webmotors.com.au. It’s fair to say that in that time we have learnt a hell of a lot about ourselves and doing business in Brazil. As a strategic investor we have been very hands on with the Webmotors team as well as being active at a Board level.
So here’s 6 things that we’ve discovered about our business in Brazil:
1. It’s expensive. For a start it is a long way to Brazil and not conducive to a couple of days trip so it gets expensive to travel there regularly. Starting a business entity is difficult and expensive. A range of taxes including a ~40% tax on expenses paid in foreign currency is something to learn about quickly. Then there’s little things like office rents which get inflated with all the extra services required/expected in Brazil such as extra electronic security, security personnel, full time cleaners, etc.
2. Regions are important. This one has been an important learning in regards to our strategy. It is not uncommon for online brands to have varying degrees of popularity in different geographical areas but we were not used to coming up against so many smaller, regional online plays that had a great following from not only consumers but also from the dealers. This has led us to two acquisitions so far of these regional plays in Meucarango.com.br and Compreauto.com.br. This is a big difference to the Australian market.
3. Dealers are dealers. Car dealers in Brazil have pretty much the same challenges, objectives, profit margins, profit drivers, structure, etc as car dealers in Australia. There are always going to be little differences but overall the great initiatives and products carsales has brought to the Australian market are applicable to the Brazilian market. This is great to have confidence in the strategic direction we are bringing to Webmotors.
4. Consumers are consumers. Like dealers we have found that consumers have the same needs and wants in Brazil as Australia. Like carsales, consumers come to Webmotors to find, sell or learn about cars, nothing else. It was great to learn that many thousands of consumers want to contact dealers via email form, as well as by phone, and the ratios are very similar to what we have with carsales. Private sellers are willing to pay for a premium service that works even though there are general classifieds giants offering a “freemium” service. Again, this gives us further confidence in the carsales strategic direction in Brazil.
5. User Interface. One of the first things the Webmotors team was keen to do when we had the capability was to replicate the carsales website. We added the Ryvuss search engine, structured the user interface around carsales and our users of the web site immediately gave us feedback. Feedback is always good to receive even if it is not so good as it provides the chance to change for the better and this is what we did. The changes we had to make weren’t significant but they did provide an insight into what our users expect on Webmotors which is a little different to carsales.
6. Culture is good. It has been a great experience working with the Webmotors team of ~200 people. They are not afraid to put the hours in when it is required and the passion is the most obvious characteristic which is not unlike carsales. The people have been the best and easiest part of carsales strategic position in Webmotors. Language has not been a barrier as all of the senior people are fluent in English from usually US education. Brazilians and Australians are not unlike apart from some obvious differences, this has been the best part.
I’m sure all businesses and industries are different in attempting to do business in Brazil. These are just 6 things that have had an impact in our decision making and direction.