Hinode Group Adapts to New Consumer Behavior & Expands Into Mexico During the Pandemic

Hinode is a powerhouse in Latin America’s beauty and wellness space, manufacturing 700 brands of products including men’s and women’s fragrances, skincare and bath products, hair care, makeup, and nutritional supplements. Using the multilevel marketing model since 2008, Hinode Group has grown to more than 450 franchised distribution centers, thousands of independent consultants, and enough manufacturing capacity to produce 9 million to 18 million product units per month.

In 2017, Hinode started expanding outside Brazil. After successful moves into Bolivia, Colombia, Ecuador, and Peru, the company set its sights on the fast-growing Mexican consumer market. After a year and a half of planning, Hinode Group announced its launch into Mexico in January 2020.

Within months, the company found itself serving a new market with unique customer needs and expectations just as consumer behavior in all its markets was undergoing changes. “During the pandemic, Mexico became a more complicated market in terms of risk, as banks implemented restrictions that affected approval rates,” said Bruno Lima, International Finance Manager of Hinode Group. “We needed tools to reduce the rejections that were occurring when good customers’ orders were mistaken for attempted fraud.”

96.2%

The Challenge: Support Growth in Dynamic Ecommerce Markets During a Major Consumer Behavior Shift

Typically, ecommerce businesses draw on customer histories to evaluate orders for risk, along with other steps like looking for shipping and billing address matches and setting order value cutoff points. Soon, though, Hinode was looking at an increase in brand-new customers – shoppers pushed from stores to websites by pandemic lockdowns. These customers had little to no online shopping history to use for fraud screening, many were buying in bulk, and some were shipping to addresses of relatives and friends.

17% of Mexican consumers made their first online order after the start of the pandemic, and 28% of those new online shoppers’ first purchases were in the beauty category. While the number of online shoppers grew, so did the number of false declines. 43% of Mexican shoppers had at least one order declined between March 2020 and March 2021, and 41% of those shoppers said they experienced fewer declines in 2019.

False declines create revenue problems for brands, as well as reputational problems. 41% of Mexican shoppers say they’ll boycott a website that declines their order, and 43% will complain about the merchant on social media.
(Source: ClearSale’s State of Consumer Attitudes on Ecommerce, Fraud & CX 2021)

To protect its brand image and customer relationships in this new market, Hinode Group needed to reduce false declines and increase good order approvals.

The Solution: ClearSale Total Guaranteed Protection

Hinode Group needed a fraud prevention solution that could tell the difference between good customers with no online buying history and fraud attempts, not only in Mexico but in all its markets. “We knew we needed the support of people with deep expertise to help us manage these challenges,” Lima said.

ClearSale’s Total Guaranteed Protection solution gave Hinode Group more than two decades of experience in card-not-present fraud prevention in some of the world’s most dynamic ecommerce markets. ClearSale’s proprietary, AI-driven statistical technology, the world’s largest team of CNP fraud analysts, and optional chargeback insurance gave Grupo Hinode the resources and expertise it sought to increase good order approvals while preventing fraud and chargebacks.

With ClearSale leveraging its ability to check customer behavior and history, its model for evaluating new online shoppers accurately, and machine learning processes to accelerate order screening and approvals based on real customer behavior, Hinode gained a range of continuously improving benefits for its ecommerce channels.

ClearSale has provided Hinode Group with:

• Dramatically higher order approval rates that increase revenue and improve the customer experience.

• Virtually no chargebacks, plus costs covered by ClearSale for any fraud chargebacks that slip through.

• Localized expertise and AI-powered fraud controls that learn customer behavior in each market for fine-tuned order screening, faster manual reviews when needed, and fewer false declines.

• Fraud screening that supports a variety of ecommerce payment options, including digital wallet payments and pre-validated payments.

• Confidence and support for any future Hinode Group ecommerce expansion plans and for sales growth in existing markets.
  

The Results: A Dramatic Increase in Approval Values to a Monthly Average of 96.2%

From January to March 2021, the approval rate across all Hinode’s sites increased from 79.2% to 95.83%. In Mexico, the approval increase was even larger – from 72.96% to 95.59% during the same period. From January through September 2021, Hinode’s average monthly approval rate was 93.56%. From January through November, the company’s average monthly approval rate across all markets was 96.2%.

While approving more orders, ClearSale also blocked large amounts of attempted fraud – an average of US $9,964 per month from January through September 2021 in Mexico, and an average of more than US $11,000 per month from January through November 2021 across Hinode Group’s markets.

Meanwhile, Hinode’s average monthly chargeback rate across all its ecommerce operations from January through November 2021 was 0.06%. In Mexico from January through September 2021, the average chargeback rate for Hinode Group was 0.28% per month, well below the average Mexican ecommerce monthly chargeback rate of 3% to 6%. (Source: ClearSale Guide to Ecommerce in Mexico)

Thanks to its partnership with ClearSale, Grupo Hinode’s expansion into Mexico during the pandemic resulted in higher average monthly revenue, fewer false declines, stronger relationships with customers in its newest market, and no chargeback costs. Now, the company is ready for whatever comes next.

“Working with ClearSale’s platform and their live analysts has simplified our operations,” Batista said. “The user experience has been easy and fluid, the chargeback insurance has helped with cost savings, and ClearSale’s ability to approve more transactions has helped our CX. I would tell other merchants to save themselves time when they’re looking for fraud prevention and go with ClearSale.”

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