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Since its arrival in Mexico in February of 2010, the managerial meetings of the Privalia team had customarily started with good news. This was not just any news, but information that was important because of its exceptional value for those present: New information capable of inspiring the best and most brilliant in all of those that collaborate with the company.
Miguel Giribet, Country Manager of Privalia Mexico, knew that this custom reflected a special way in which the company's founders saw and understood the business. Faithful to the philosophy and values of the firm, Miguel waited for the managers to take their seats in the meeting room, and without further adieu, told them that he had been summoned to Barcelona to meet with the company's founders and chief executives to discuss Privalia's progress in Mexico. Miguel's team reacted to the news with concern. It was easy to see why this was a problem: as things were, this was not exactly good news.
Privalia, an online shopping club for fashion brands founded in 2006 by José Manuel Villanueva and Lucas Camé, had decided to internationalize throughout Europe and Latin America (see Exhibit 1). The objective of the international expansion was to reproduce the overwhelming success they had experienced in Spain, where they expected to surpass 150 million Euros in sales in 2010. The company detected an opportunity to diversify their markets, which is why they decided to invest first in Italy (2007), then in Brazil (2009), and finally in Mexico (2010). They sought synergies in each new market in order to take full advantage of the learning curve.
However, after the first two months of operation in Mexico, the results were not living up to expectations. Although the growth of registered users on the virtual platform had been robust, visits to the website were still not translating into the volume of sales necessary to get out of red numbers. This led company executives to start questioning the expansion strategy.
Miguel knew they had to turn this situation around as soon as possible in order to make sure uncertainty did not put the entire Privalia enterprise in Mexico at risk. In his mind, there were three main areas that needed work:
1. Technological development.
2. Marketing...