DIA

A race against time: accelerating grocery ecommerce during the pandemic How DIA integrated 352 supermarkets into its omnichannel operations in less than four months.

Ebook - DIA Case Table of Contents Intro 03 05 06 08 10 11 The road to grocery ecommerce The end is only the beginning When plans go awry Reaping the rewards Avenues of growth

DIA Case Study 3 DIA is a leading network of proximity supermarkets, with 6,626 physical stores and franchises across Argentina, Brazil, Portugal and Spain. As a perfect testament to its name, DIA’s aim is to serve the daily needs of its more than 20 million global customers, following a winning formula of well-located and easily accessible stores, high-quality private brands, diverse product assortment and, of course, the best prices. DIA’s operation in Argentina is especially triumphant. Having arrived in the country back in 1996, DIA quickly became a fan favourite amongst locals. After 25 years, the chain is present in Buenos Aires and seven provinces through more than 900 stores and six distribution centres. But perhaps DIA’s greatest success in Argentina is its recent and accelerated digital transformation, when the disruptive events of 2020 threatened the wellbeing of more than 300,000 daily customers, and required swift and bold actions to protect a long-standing retail legacy – with ecommerce.

Results Rapid platform migration Optimisation of processes Convenience that drives sale Record-time omnichannel implementation Doubled the conversion rate DIA completed the migration in just three months. With home delivery and pick-up in-store, DIA could cut logistics costs, decrease inventory rupture and boost revenue. More than 50% of online shoppers opted for the newly implemented pick-up in-store option. DIA integrated 352 physical stores into its ecommerce website in just 14 weeks. Year on year, DIA experienced a 100% increase of its conversion rate.

DIA Case Study 5 The road to grocery ecommerce In Argentina, DIA had set up an ecommerce operation a few years ago, highly aware that digitalisation was going to be imperative for all retailers sooner or later, with customer convenience dictating the rules of the game. At first, the chain tested the digital commerce waters with a focus on non- food items. It was the perfect learning experience, as non-food items are more easily manageable than perishable ones – fulfilment can be done under normal parameters and there is no expiration date to notably expedite the delivery process. DIA struck gold with this strategy. The growth of the non-food ecommerce channel was huge, and so DIA decided to be bolder and venture into food ecommerce, too. It was, after all, an intrinsic part of its ultimate goal: being close to its customers every day, no matter their shopping preferences. But such a grand undertaking requires a technology to match, one that can support the logistical intricacies of the sector, offer flexibility, and catalyze enterprise-level growth – in a rapid manner. DIA ideally envisioned having native, out-of-the-box capabilities and features such as an integrated order management system (OMS), the ability to implement pick-up in-store, geolocation registration, powerful pricing and promotion modules, and a vast ecosystem of payment providers. In June 2018, DIA chose to migrate to VTEX Commerce Platform to guarantee it could expertly tackle every scenario of an online grocery store – and so it did. Just three months after handpicking the new platform provider, in August 2018, the revamped DIA Online was launched, selling both food and non-food items. “When we started in ecommerce, we only offered non-food products. However, sales growth through this channel was such that we decided in 2018 to include food products and relaunch the website as DIA Online, which was a great challenge.” Fernanda Onzari Nobua, Ecommerce Director of DIA Argentina

DIA Case Study 6 The end is only the beginning Oftentimes, the most difficult part of an ecommerce operation is not launching it, but maintaining and constantly improving it – and DIA can attest this. Despite launching DIA Online in 2018, the operation was not yet the best it could be. For instance, the food and non-food ecommerce operations were still not truly unified, and neither were the online and offline sales channels: general goods were being shipped from distribution centers, whereas food items from only a few brick-and-mortar stores that held a vast assortment of products. This meant that physical customers of those stores and the virtual shoppers buying on DIA Online were in competition for the same limited stock, therefore triggering a high percentage of “out-of-stock” notifications and negatively impacting the user experience. Expansion was needed. DIA already had its eyes set on seamlessly integrating 352 stores into the ecommerce operations and enabling both home delivery and pick-up in-store, thus eliminating friction from the online buyer’s shopping experience. “It is key to be able to create synergy between both channels, taking into account that our operation is mainly based on physical stores.” Fernanda Onzari Nobua, Ecommerce Director of DIA Argentina

DIA Case Study 7 The bold omnichannel plan would be possible using VTEX’s native marketplace architecture and its so-called ‘Franchise Accounts’ . In the platform, DIA could set up one such seller account for each of its brick-and-mortar stores, allowing them to share a main product catalog while also offering them the autonomy to have their own logistics, prices and order management. Moreover, DIA could also implement a so-called ‘White Label Architecture’ , a configuration that easily enables ship- from-store. Using this architecture, when an order is placed, the VTEX checkout will search among all the available sellers the one that can deliver with the best SLA. Therefore, instead of having the customer select which physical store the products should be shipped from, an algorithm does the heavy-lifting, ensuring all parties are satisfied. That way, the customer can conveniently get everything on their shopping list in due time even if the desired items are tens of miles away from home – minimising inventory rupture, optimising logistics costs and increasing revenue for DIA in the meantime.

DIA Case Study 8 When plans go awry In 2020, after most of its internal systems were upgraded to the highest of standards to ensure everything would run smoothly, DIA was ready to see its bold omnichannel vision come to fruition – but then came the global coronavirus pandemic. Fortunately for DIA, the new status quo, one in which people were forced indoors and prefered the safer option of online shopping, did not require a drastic change of plans, but it did require an acceleration. Initially, to match the high demand for grocery through its online channels, DIA turned two of its physical stores into ‘dark stores’. Dark stores are stores (or sometimes distribution centers) closed to the public, functioning 24/7 solely for picking up or delivering orders placed online. “This was a great option for us, since we could reach more than 160 new neighborhoods and we could make the DIA Online service known to many more families.” Fernanda Onzari Nobua, Ecommerce Director of DIA Argentina

DIA Case Study 9 But dark stores were only a short-term fix, so DIA started simultaneously integrating its physical stores, with clusters of 25-30 newly added stores per week. By July 2020, in just three and a half months, DIA integrated 352 branches, making its broad product offering available quickly and safely to its customers. “The support of the VTEX team was key to achieving the implementation in record time, allowing us to scale our operations further.” Fernanda Onzari Nobua, Ecommerce Director of DIA Argentina “The support of all DIA teams was necessary.” Fernanda Onzari Nobua, Ecommerce Director of DIA Argentina However, bringing ecommerce into the world of brick-and-mortar retail had massive implications for DIA’s employees, both procedural and cultural. They had to be brought up to speed on new technologies and processes to support the ship-from-store and pick-up in-store operations, which implied training sessions, on top of restructuring – all in record time and in the middle of the pandemic.

DIA Case Study 10 Reaping the rewards After a marketing campaign to promote the phenomenal expansion of DIA Online, a key element in attracting customers, success did not wait to appear. Compared to 2019, conversion rate increased by 100%, and more than 50% of customers were new to DIA’s online store. An impressive validation of the ecommerce operations was seen during the big retail events of Hot Sale and Cyber Monday, when DIA grew year- over-year by 583% and 316%, respectively. What’s more, in November 2020 alone, 50% of the orders placed on the ecommerce website were through pick-up in-store, validating the investment made in a tool that natively supports this. It is imperative to highlight that these figures are bound to skyrocket in the years to come due to several factors. Firstly, the internet user penetration rate in Argentina is following an upward trend. Secondly, and relatedly, ecommerce maturity is also increasing, as people are gaining both access and trust to online shopping “The challenge was showing our customers the assortment and stock of each of these new stores – but the integration with VTEX made it possible.” – and companies like DIA are helping them along, with FAQs and Customer Service chatbots. Thirdly, as people become progressively accustomed to the convenience of online shopping, they are less likely to revert to the old way of shopping. While the rhetoric against physical shopping will no longer be about safety, it will be about time. In fact, 63% of online grocery shoppers say that online grocery shopping saved them time, an incredibly important aspect in an age where time is considered the greatest asset. Just take a look at DIA: online shoppers can quickly find and add the products they are looking for using an intuitive website navigation, an advanced search engine and powerful filtering capabilities. Additionally, they can also obtain item recommendations. And once products are in the cart, they will not disappear – the registered shopper will not need to waste any more time repeating the process if something urgent had to be done that very second or if the laptop’s battery suddenly died. And, of course, the flexibility of having home delivery or pick-up in-store – in up to three hours for over 100 stores – is the cherry on top. Digitalisation has the potential to deliver unprecedented convenience and personalization, which means that the changes in consumer behaviour that we are witnessing today are not fleeting – they’re profound and enduring.

DIA Case Study 11 Avenues of growth In 2021, DIA is fully dedicated to further optimizing and growing its ecommerce. First things first: integrating more than 900 stores. While no easy feat, this success would cement DIA’s leading position in the Argentinian grocery landscape and would make a statement for fellow grocers riding the digitalisation wave. In parallel, DIA will also continue to improve the user’s shopping experience, ticking everything from website loading time to design to stock availability. Moreover, the chain’s loyalty program, ClubDIA, will be stretched across the omnichannel operations, granting a single view over a customer’s exclusive discounts and, most importantly, unifying savings. Last but not least, DIA will strengthen its marketplace operations, a business opportunity that materialized itself thanks to the ability to easily connect other sellers to the ecommerce platform. Currently, DIA’s marketplace already offers both Electrolux and Whirlpool products. Soon enough, however, taking advantage of VTEX’s Collaborative Commerce approach, DIA Online will be able to onboard other retailers, diversifying stock and boosting this supplementary revenue stream. To support these initiatives long-term and to continue the commendable work started in 2020, DIA is training more than 90 people in the commercial area with the aim of shaping omnichannel specialists – a role that all retailers will need in their talent arsenal in this new digital era of commerce. Commerce Architecture

DIA Case Study 12 See more at: vtex.com Drive business growth with collaborative commerce from VTEX VTEX is the first and only global, fully integrated, end-to-end commerce solution with native marketplace and OMS capabilities. We help companies in retail, manufacturing, wholesale, groceries, consumer packaged goods and other verticals to sell more, operate more efficiently, scale seamlessly and deliver remarkable customer experience. Our modern microservices-based architecture and our powerful business and developer tools allow VTEX to future-proof our customers’ businesses and free them from software updates.