In November 2023 I was a guest on ROI com Cast, a marketing and e-commerce podcast in Portuguese. Super Depo, my bootstrapped household goods e-commerce, was almost three years old. The conversation covered everything I learned moving from a career in corporate finance to running an online retail operation. Below are the main points.
Start with the marketplace
Launching your own website from scratch takes a large product range, inventory, paid traffic and a structure to handle fraud and chargebacks. A marketplace delivers all of that ready-made: logistics, payments and visitors. In return, it charges a high commission, but only when a sale happens. For three partners who still had other jobs, it was the way to get moving with little risk and validate demand.
We started on Mercado Livre with a line of tools, focusing on A-curve products, the highest-volume items. We built the company's processes to meet the metrics the platform rewards: fast delivery, a nota fiscal (the Brazilian electronic invoice) on every sale, few complaints. It took 18 months to two years for the operation to reach a meaningful scale. When Mercado Livre published its requirements for Official Store status, we already met all of them.
Low margins call for automation
In retail, net profit usually runs between 3% and 5% of revenue. With margins like that, every manual step weighs on the result. That is why Super Depo was built to run with as little human intervention as possible: software costs more to implement, but almost nothing to maintain.
At first, I built an Excel integration myself that pulled sales from Mercado Livre and calculated margins. It worked, but it took an enormous amount of effort and I do not recommend it. We moved to Bling, a Brazilian ERP for online sellers, and connected the marketplaces directly to it, with no hub in between. That cuts costs and avoids selling the last unit in stock twice. Sales and margin data go to the cloud and feed each channel's pricing spreadsheets, because every marketplace has its own commission and rules. Today that pricing and promotions work runs on Sales Booster.
Minimum cash is not little cash
At the company, we work with the concept of minimum cash: a cash level we never go below, roughly 30% of sales, to absorb a higher tax bill or a weaker month. The game for any company is surviving over the long term, and that depends on healthy cash flow. If a bill comes due and you have to roll it over, something is wrong and needs fixing.
Advertising, catalog and our own website
Ads inside the marketplaces are essential: we saw sellers grow 20% to 30% from one month to the next just by starting to use them. The metric we track is ACOS (advertising cost of sales), ad spend as a share of revenue. As Mercado Livre moved to a catalog model, where several sellers compete for the same listing, part of that spend shifted from ads to discounts. What does not add up is doing both at the same time.
Our own website means building from scratch everything the marketplace used to provide, and it calls for a broader product range, with B- and C-curve products. Our logistics experience on the marketplace helped build the operation. The challenge became bringing in traffic.
The advice I left
Do things right: pay your employees properly, pay your taxes, issue your invoices. If a company's goal is to last, it will not get there operating outside the law. And if the business only works that way, it may not be viable.