The GMV represents the total amount paid in reais by the buyers, for the purchase of products or services provided and carried out successfully, through our sales formats. Transactions immediately rejected, for whatever reason, by payment processing institutions are not considered to be successful. Transactions that can subsequently be rejected by the platform as a result of security analyzes after confirmation of payment, or by cancellation of users, which may occur before the billing of products are removed from the calculation. Orders returned by users after delivery, based on the exercise of the right to withdraw from the purchase are not excluded from GMV. Our product sales happen through three different channels:
WestwingClub: buyers’ club based on an inspirational journey filled with discoveries, contains time-limited campaigns (shoppable magazine)
WestwingNow: need and search purchase-based model.
Gallery: physical store that explores the shopping experience, generating brand awareness and integrating other channels (phygital) with the infinite aisle.
The Company’s revenue comes from two business models, cross docking and drop shipping, the first having the most relevant volume.
Cross docking, responsible for most of the Company’s revenue, consists of the sale of furniture, decorative objects, clothing, accessories and other lifestyle items (food, beverages, cosmetics, etc.), using the low or zero inventory model, which means that most products are purchased only at the end of the campaigns, based on the executed sales. The Company also sells private label products, which obtain a profitability 1000 bps higher in the contribution margin compared to the sale of third-party products.
the Company also conducts business intermediation operations, selling third-party products through its platform. In this model, the Company receives the funds and transfers it to the supplier charging a take rate. It is important to emphasize that the absolute value of sales in this business model is part of the GMV calculation, but not the revenue calculation, where only the take rate is accounted for.
The Cos of Goods Sold (COGS) and the cost of provided services correspond mainly to the acquisition cost of goods offered through the Company’s sales channels.
Fixed and/or administrative expenses of sales, marketing, general and administrative, including contingencies and other results, and not including expenses with logistics, customer care, payment costs and IFRS adjustments.
Considers investments/expenses for customer acquisition and remarketing/retargeting, including organic marketing (content marketing, influencers, collabs, public relations, invite your friend, SEO, etc.), performance marketing and offline media.
The marketing investment contributes to the Company’s business strategy continuous development, as it strengthens our brand, maintaining attractive financial indicators and increasing the number of registrations, customers and purchases on our platform. In addition, the Company must increase investments in marketing in order to reach adjacent markets, and increase its presence on social media.
Approximately 80% of purchases made on the platform are made by recurring buyers, which means buyers who have make two purchases or more during the year. Therefore, we consider our revenue model to behave similarly to Software as a Service companies’, given the high level of recurring purchases.
With the positive historical return of LTV/CAC, there is a great opportunity to leverage the Company’s growth through marketing investments, mainly in content marketing and brand awareness, besides performance marketing.