Buscapé and the Brazilian Price Comparison Market

I’m willing to claim that Buscapé is the most successful online business ever founded in Brazil, with a small catch.

Buscapé has for most of its 14 years been owned by foreign interests, first by American Great Partners Hill and later by South Africa-based Naspers. The day that Naspers bought Buscapé in 2009 was celebrated by the Brazilian online community as a new era for online business in Brazil.

The European price comparison company Kelkoo recently advertised for business development managers for the Brazilian market at their office in the UK.

I know Kelkoo fairly well from Europe and although I have been active in the Brazilian digital-media scene for half a decade it was news to me that they actually have been trying to enter the market since last millennium.

This post is not about Kelkoo’s position in Brazil but rather the Brazilian market for price comparison services.

Price Comparison in Brazil = Buscapé + Naspers

I’m willing to claim that Buscapé is the most successful online business ever founded in Brazil, with a small catch.

Buscapé has for most of its 14 years been owned by foreign interests, first by American Great Partners Hill and later by South Africa-based Naspers. The day that Naspers bought Buscapé in 2009 was celebrated by the Brazilian online community as a new era for online business in Brazil.

It’s true that the 8 (!!) Brazilian founders had their big payday, but the real beneficiary must have been American-based Great Partners Hill with a majority ownership in the company.

Buscapé Beyond Price Comparison

It’s not possible to convincingly argue that Buscapé is struggling or losing momentum. According to numbers presented in Naspers’ financial statements for 2012, they enjoy a 65% year over year growth. However, Naspers also notified their shareholders that competition in Brazil is increasing, and that profitability for Buscapé is affected by investment in new growth initiatives.

Today Buscapé maintains no fewer than 22 brands in the Brazilian market according to a recent presentation by CEO Romero Rodrigues:

• Buscapé (Price Comparison)
• Navegg (Audience Segmentation)
• Lomadee (Affiliate Marketing)
• eBehavior (Behavioral Marketing)
• Winke (Social Network for Sharing Purchases)
• CortaContas (Service Price Comparison)
• Bondfaro (Yet Another Price Comparison Service)
• SaveMe (Deal-of-the-day Aggregation)
• FControl (Fraud Detection)
• Bcash (Online Payment)
• PagosOnline (Yet Another Online Payment Service)
• e-bit (Webshop Rating)
• Confiômetro (Consumer Review)
• Quebarato! (Online Classified)
• Hotmart (Online Marketing)
• Urbanizo (Real Estate Classified)
• Moda it (Fashion Blog Aggregator)
• Recomind (Social Shopping Recommendation)
• Shopcliq (Social Commerce)
• Meucarrinho (Shopping List)
• Brandsclub (Shopping Club)
• platafor.me (Shopping Chart)

The list is on the edge of ridiculous. There’s no way one company can focus and build 22 different brands in parallel unless brand building is its business model.

Buscapé’s role in Brazil is much like Google in Silicon Valley. The big difference is that when Google acquires a company, they integrate it into their core product.

At the moment Buscapé is even operating direct competitors to other companies owned by Naspers. Quebarato! from Buscapé and OLX, which is directly owned by Naspers, fight over the same free classified advertisements in Brazil.

Buscapé’s Core Product and Weaknesses

It’s safe to say that Buscapé wouldn’t be what it is today if it hadn’t been for the huge fragmentation in the Brazilian e-commerce market.

As of November 2012, Buscapé had more than 500 000 stores registered, but far from all of these are actively advertising. When Amazon gets their logistics for physical goods organised in Brazil, it’s easy to imagine many of the smaller merchandisers selling their products through Amazon rather than operating their own e-commerce solution and advertising through Buscapé.

Buscapé is nailing the mobile experience and with a fast-growing barcode database it’s difficult to imagine how anybody would be able to catch-up with them in the Brazilian market.

From a consumer point of view, there are two main weaknesses that bring business opportunities for a new player.

1. Fulfillment guarantees

I would easily leave my credit card with a price comparison tool that could guarantee same-day delivery similar to what eBay is doing in San Francisco.

In metropolitan areas like São Paulo and Rio de Janeiro, we are used to same-day delivery of most products bought in a physical store, however for some reason webshops still tend to operate with 3 – 5 business days delivery terms.

2. Transparency

I’m never certain when using Buscapé if I’m actually finding the best price and therefore I never trust the service completely. All companies having products listed in Buscapé pay for the listing. The CPC is from BRL 0.10 for hotels up to BRL 0.97 for TVs.

Using Buscapé is like having Google with only Adwords. The business model is good, but it only works for lack of a better alternative.

Buscapé Will Play Dirty

Kelkoo or any other company that considers entering the Brazilian market competing head to head with Buscapé should have a look at the judgment ruling in lawsuit 583.00.2012.131958-7. Buscapé tried to stop Google prioritising Google Shopping in Google search results ahead of Buscapé.

Only Buscapé and old media companies in Brazil would even think about presenting such a case for the court. Just like Google Shopping, Buscapé is also 100% advertisement without any value apart from the advertisement.

The equivalent would be if a store brought a lawsuit against Buscapé for not including them in their comparison service free of charge. Anyway, the Brazilian legal system worked; Buscapé lost the lawsuit and was ordered to cover Google’s legal costs.

How to Compete with Buscapé

Buscapé has been around for 14 years and the market is ready for disruption. However, a new player in the Brazilian price comparison market has a huge task ahead.

The brand Buscapé is as closely related to Brazilian success as Coca-Cola is related to the USA. It’s hard to imagine that any company will be able to challenge Buscapé on brand value in the Brazilian price comparison space. However, there are indeed opportunities in the area of features and benefits.

I mentioned some of the weaknesses of Buscapé above. There are also other aspects of price comparison search where a new player can benefit from a greater level of transparency and curation.