How a fashion e-retailer uses Apple’s iBeacon technology to reach shoppers in Brazil

BY MATT LINDNER Research Analyst

The Dafiti Group has grown web sales by an estimated 150% since launching in 2011.

One of the fastest-growing fashion e-retailers in Brazil is incorporating Apple’s location-based iBeacon technology in an effort to capitalize on a growing mobile audience.

The Dafiti Group has incorporated the technology into its strategy as a means of better personalizing its offerings and the kinds of mobile notifications it sends shoppers. The Dafiti Group ranks No. 19 in Internet Retailer’s 2014 Latin America 500.

Here’s how the technology works: A retailer will place beacons, tiny bits of hardware powered by Bluetooth Low Energy technology that emit signals which are picked up by cell phones, in strategic physical locations. Those signals can tell the retailer where someone is and allow it to tailor a promotion to a consumer’s phone regardless of whether that person is connected to the Internet. For example, the retailer can send an offer for a popular shoe brand to a shopper in the shoe department.

The technology helps e-retailers better personalize mobile offers. As part of the company’s strategy to better reach shoppers, Dafiti spread its beacons across highly trafficked areas of Brazil’s largest city, São Paulo. “We want to increase the relevance of our mobile platforms with our customers and make the use of mobile devices an even more convenient shopping experience,” says co-founder Malte Huffmann.

The notifications sent by the retailer’s beacons are stored in Apple’s Passbook application so that shoppers can use those discounts at their convenience, the company says. Passbook is the same app that houses Apple’s mobile payment system Apple Pay.

But, given the fact that Dafiti is an online-only retailer with no physical retail locations, how does the company plan to make money from location-based technology?

Huffmann says the beacons are placed in areas such as shopping malls, on commercial streets, and in trendy neighborhoods, which allows the company to glean more information about where a customer is and what kinds of products they might be interested in learning more about. “Different offers were made for each place,” Huffmann says. “For example, we’ll send sports offers in an outdoor context and so on. We can also go down to a brand level and show a message and a link to the products of certain brands when the customer is near the store. As the offer is contextualized, the communication efficiency is very high. Metrics such as click-through rate and conversion rate being higher than the average are the results.”

By personalizing each interaction, Huffmann says the company is hoping to increase conversion and generate better brand awareness among those who have downloaded its app.

“Our next step as an online and fashion company is to be part of our customers’ life, providing fashion content and being relevant at each interaction,” Huffmann says. “Technologies such as geotargeting enable us to straighten our connection with our customer once we can send a contextualized offer in perfect timing.”

Dafiti is targeting a large audience. According to the city of São Paulo's official web site, it is home to around 40 million people and 258 shopping malls, meaning there is plenty of opportunity for Dafiti to collect a lot of information about a lot of people. Brazilian consumers are expected to spend around $38.75 billion online this year, according to Brazilian e-commerce and information technology research firm eBit.

“People from all over the country come to São Paulo either to make business or to be aware of the trends, making the city culturally relevant and a trendsetter,” Huffmann says.

Dafiti has grown rapidly since launching in 2011, from an Internet Retailer-estimated $70.8 million in web sales in 2011 to $177.0 million in 2013, an increase of 150%.