Brazilian startup Compra3 launches group buying site

Brazilian start-up Compra3 is leaving beta testing today and opening up its group buying site to the public, complete with social networking features, more than 100,0000 users, and almost one million products on offer. The site exclusively targets the Brazilian market at the moment, although the company says it is considering some options for expansion to Spain and the US.

The Compra3 business model is similar to that of Chicago-based group buying site Groupon. However there are differences. Users don’t have to wait until a critical mass of buyers is reached before being able to make a purchase (in that sense, it’s a bit like eWinWin). They can immediately purchase an item with a specific discount, say 10%, and then receive cash back throughout the rest of the 30-day buying period as more users purchase the same item, bringing the price down further.

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The social networking features being launched today include customer profiles, the ability to view recently purchased products and recommended products and vote and comment on others’ recommendations, and integration with Twitter, Facebook and other social media sites. The more a user promotes a product they’ve bought through social networking, the more likely the price of that product is to drop.

After striking deals last year with retail outlets such as Wal-mart and Lojas Americanas and developing a road-map for the business and the website, the compay closed a seed round of $1.2 million from local investors Carlos Nissel and Daniel Tinoco and New York business angel investor, Michael Nicklas.

Though many group buying sites have recently focused on promoting services offered by local vendors, Compra3 decided to initially focus on products that are already offered online in Brazil. The site is currently generating over $100,000 in monthly purchases, but co-founder Bruno Medeiros (pictured left above) is confident that number will increase substantially with the new social networking features being launched today.

With Groupon recently announcing a $30 million investment from Accel Partners, the influx of start-ups focusing on coordinating groups of buyers has recently accelerated. Compra3’s Medeiros, and his partner, Andre Monteiro, foresaw the potential in Brazil of employing social media tools during the consumer purchase process back in 2007.

Before deciding on a strategy, the founders made a study of players that were gaining traction in other markets and tested some concepts within the Brazilian market.  After traveling to the US, England and Spain and meeting with people knowledgeable in e-commerce and group buying, the two felt they were ready to beginning testing in their home market at the beginning of 2008.  At the end of that year, they had gained the market insight they needed and were ready to build out the Compra3 site and ecosystem.

Time will tell whether the company is able to get user adoption numbers on an upward slope and, in turn, ride a growing tide of online purchases in the country. Indeed, according to some studies, the Brazilian retail e-commerce market grew 29% last year (that’s almost double the US growth) and is expected to grow another 30% this year, with sales projected to surpass $10 billion. Outside investors are certainly beginning to take note as evidenced by the recent $342 million investment by South African media company, Naspers Limited, in Brazilain e-commerce site Buscape.com last year.

As attested to by the accelerated growth of group buying start-ups in the US, with recent entrants such as Scoop St., many see much potential in the space. Medeiros and Monteiro see the same potential within the Brazilian market. Although smaller than the US market, it has, as yet, been untapped by other companies, and it will be interesting to watch how Compra3 fairs with its offering.

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