Transcript
Speaker: Hello, I'm Russell Poisson from Edison Group. And this afternoon, I'm very excited to have with me Leandro Medeiros, who is the CEO of Dafiti, which is Global Fashion Group's business in Latin America. Hello, Leandro. Hi, Russell.
Speaker: ah Nice to be here. Thanks for anvi invitation. ah So Leandro, technology is clearly a central enabler to the to the growth. um Could you talk about how DFETI is ah building the foundations for the next stage of growth and what that potentially means for its scalability and the profit outlook, please?
Speaker: Well, Russell, we do think and technology is a foundation for scale, not just a tool for for today's operations. The question we ask o ourselves is, are we building systems that will grow with the business or systems that will eventually constrain them?
Speaker: So this is this is a key part of our strategy and we are currently executing it with a significant modernization of our core infrastructure, our backend systems, our data architecture, and of course, our AI enablement layer.
Speaker: This is structural, not incremental. This is the kind of investment that only makes sense if you're building for the long term. And they are very, very interconnected.
Speaker: When you talk about big systems, the data architecture infrastructure that you need to to and get the most out of it, this is the base for any AI evolution that we need in the business.
Speaker: AI readiness is embedded in in in this one in in the foundation of the work that we are doing from the start. We really think as an AI-first company.
Speaker: So every change that we are doing now, we we think as how we can do this change with these AI lenses. The data quality, the integrations, the architectural decisions we are making now, it's what allow AI to deliver a real business value.
Speaker: Not just an isolated experience, but real es scalable um capabilities across the organization. On the cost side, this transformation is also about efficiency.
Speaker: We want to remain efficient with our technology spend, while simultaneously increasing our capacity to innovate and move faster commercially.
Speaker: And of course, we do believe that with these new systems and with AI, we can even we can even have a linear organization for for the future. The modular building gets more efficient at its scales.
Speaker: And that comp compounding dynamic is what a platform business like ours should deliver. Great. And it's no surprise that the Latin American e-commerce market is highly competitive. So what do you think makes Dafiti different and how how you maintain that position going forward? Russell, to win in a...
Speaker: In fashion, in general in in general, in this region specifically, in that environment, ah we have to be generally better at fashion, not just cheaper or bigger.
Speaker: Latin America may be maybe one of the most complex and competitive e-commerce markets. You have large local generalist platforms with enormous scale and capital in the region, and you have aggressive core border cross-border players coming with low price and fast expanding logistics.
Speaker: that's why i That's why we need to be very, very focused on what we do better and do not distract ourselves with with other things and with or other other activities that the general ah the general players are doing.
Speaker: This is Dafti sits. We are Q-player fashion platform with genuine depth in creation, brand relations and operational capability across the two markets that we are operating now.
Speaker: There are competitors and we respect all of them, but a combination or or what we do is hard to have replicate at our level of specialization and our level of expertise and our focus on on on fashion and and e-commerce.
Speaker: I'll give you some examples. First, assortment. We have built a long-term strategic partnership with the most relevant fashion brands in the region, being them either from global or or local ah companies.
Speaker: And we actively manage that portfolio for quality, not just for breadth of this assortment. That takes years and cannot be replicated quickly.
Speaker: That demands expert people. That demands and and season after season of um relationship and commercial agreements and commercial results to build this confidence between a retailer and and a brand or seller.
Speaker: Second experience, we are focused on the full customer journey from discovery through that from from discovery to delivery, returns, customer service. And in fashion specifically, we know that the post-purchase experience is where it's built or lost, and we are very focused on that.
Speaker: um Customers need to be comfortable and confident buying clothes or shoes, which in the region is not is not ah that much penetrated as as I mentioned in the beginning. Customers are more used to go to physical stores to do that.
Speaker: So this experience throughout the journey, that's what we built so far and that's where we continue to focus for in the future. Third, flexible offerings for ah for our brand partners like launched, fulfilled by the FIT in 2024 and expanding our ads platform creates a compounding dynamic.
Speaker: Our relationship is not just transactional, it is strategic and throughout other aspects of of what a platform can offer. The more brands engage with our platform services, the better the data, the stronger the margins and the broader the offer to customers.
Speaker: Each side of that equation, being brand, seller, customer or us, reforce each other when we have this compound effect. So perhaps you could say something now about what you think are the main growth drivers going forward. And on the opposite side of that, what do you think are the key risks? what are the What are the main things that you you have to keep an eye on?
Speaker: Brazil remains our core growth engine. The opportunity is in deepening customer value, increasing purchase frequency through our loyalty initiatives, continuing to improve our creative mix and scaling platform services, which is is still in the early stage of its potential.
Speaker: Colombia is a structurally healthy business for years with significant long-term upside. Like several markets in the region, it hasn't been immune to macroeconomic pressures over recent months, monks but underlying fundamentals remain solid.
Speaker: We see Colombia as a genuine second market for the FITI with dedicated strategy and execution behind it. But ah we need to be clear, Brazil is 80% of our business. This where our main focus is.
Speaker: ah One of our biggest growth levers is what we call the customer flywheel. How we blend acquisition, retention and frequency reinforcing each other in a cycle that improves ah unit economics as it scales.
Speaker: Our cashback initiative, for example, or one leg of our loyalty program, is a central mechanism within that flywheel. We are shifting from brand discounts, mechanics, chew towards this rotation model, which rewards consistent engagement and builds lasting loyalty with us.
Speaker: The risks I watch most closely are honestly macroeconomic. currency volatility. and And by the way, macroeconomic risks are what this region is used to. We we grew and work um knowing and learning each day how to navigate in this kind of volatility. So for us, it's is is even business as usual usual having these macroeconomic issues. But as I mentioned, currency volatility, and consumer confidence, competitive intensity of large, as I mentioned, local and regional generalist platforms with significant capital to deploy both from the region and from from other continents.
Speaker: Also, any uncertainty in terms of politics, this is what Latin America is about. And we need to know how to navigate on that. Our answer was always a staying focused on what our competitors cannot easily replicate. Fashion expertise, great assortment, brand relations, and an experience built specifically for fashion.
Speaker: We need to focus on, especially on microeconomic uncertainty, <unk>g focus on what we can control and what we can do better. focusing a bit more on the short term, what are the two or three key priorities for 2026?
Speaker: And another thing which is obviously ah favorite subjects at the moment is AI. ah What stage do you think that moves from experimentation to actually having a real impact on the business?
Speaker: Russell, first, as I mentioned, and this combination of ah customer flywheel and focus on profitable customers, this is key for us.
Speaker: So we need to accelerate acquisition, deeper retention through our cashback program and continue raising the bar on delivery and service across both markets. But always focusing and focusing more each day on more valuable more valuable customers with higher margins that can ensure are focused more on profitability than only on top line.
Speaker: Second, ah what we need what we need to do is is what we've been doing, the turnaround that we're doing in the FITIS in the last three years. We need to keep building an organization that funds its own growth through cost discipline, infrastructure infrastructure cost efficiency, order profitability, as I mentioned, scaling marketplace and platform servers so they they can continue contributing meaningfully to the P&L not not just show promising results. These are key, these activities are key for us to keep focused on being a sustainable and self-sustainable organization.
Speaker: Third, as you mentioned, AI, um we are moving from expert day experimentation to real results. ah Of course, we've been trying AI, especially in the last um two two years, 18 months to two years, in several different fronts.
Speaker: But what we are doing, especially in 2026, is moving to activities that are really showing up in our numbers. I'll give you a strong example.
Speaker: Our AI virtual studio, it allows us to produce fashion content at scale, campaigns, our our everything that looks, the image that that appears in our you our our app, for example, without any physical photoshoops.
Speaker: Our product catalog across both countries is 100% AI generated, as much as our campaigns. This is a huge saving in both cost and timing, where e-production costs are down in the last year, 50% in Brazil, thanks to these initiatives.
Speaker: um that's That's one of the most important examples that we have is ah is a revolution more than a revolution. ah we We even and moved our office to mulller is to a smaller premise because we don't need all those studios that you normally see in e-commerce like ours because we do everything a nowadays with AI.
Speaker: That's great to hear. And my final question, Leandro, is um without giving gain away anything that's too competitively sensitive, how do you think the Latin American e-commerce consumer is going to evolve over the next two to three years? And perhaps how Defeat is going to position itself to serve those customers over that time?
Speaker: The Latin American fashion consumer is becoming more digital, as I mentioned, and more demanding every year. ah The customers in the region, they are mobile first and mobile is already the dominant channel, both for the customers and and for our business.
Speaker: The question now is how we can make that experience generally great throughout the whole experience, not just a functional transactional relationship between us, our our platform and our customers. So this remains key.
Speaker: ah Personalization is becoming a baseline expectation. Customers expect the platform to understand their style, their size, their moment. AI plays a big role here.
Speaker: it's what It's what makes that possible at scale. But has to feel relevant and trustworthy, not just gimmick and and automated. And trust and loyalty will matter more over time. In this region, consistency and transparency are what convert a transaction to a relationship.
Speaker: That's exactly what our cashback program is designed to build. Not discounts, but genuine loyalty that that is rewarded through time and can change behavior.
Speaker: For that 50, that means continuing invest in the full journey. Discovery, delivery speed, friction and returns. ah We are building for a customer who wants fashion to be easy, trendy, but also accessible.
Speaker: In Latin America, that customer base is growing fast. And we we believe there is is still um a huge opportunity for the company and the group in the region.
Speaker: Well, Leandro, want to thank you for taking the time to speak to us today and give us such a good insight into the business and the region. So we will look forward to seeing the division's progress in Global Fashion Group's results.
Speaker: Thanks, Russell. Thanks for having me today.
