We have been present in the market for more than 30 years, offering our customers an integrated business management system that covers the entire retail chain, from business automation software that performs all necessary operations from the POS to comprehensive ERP, which includes, among other features, inventory management, CRM, financial, accounting and tax management, product lifecycle management, supply management, and other interconnected features.
We believe that our greatest competitive advantage is our exclusive focus on retail. This allowed us to develop a set of software and applications with a high level of depth—both in terms of specific retail verticals as well as across different sizes of retailers. In addition, our business model is based on the collection of monthly maintenance fees, instead of charging high start-up licensing fees, thereby making our solutions very scalable and affordable for retailers of different sizes. In recent years we have developed new offerings adjacent to POS and ERP software based on cloud delivery model. This has facilitated the sale and implementation of these solutions and strongly encouraged their cross-selling to the same customer base. These new solutions include, for example, a complete e-commerce platform, integrated with ERP, allowing traditional retailers to take advantage of this new channel of sales and communication with customers, and an innovative CRM software focused on tools that maximize efficiency in retailer-customer interactions, among other solutions, such as electronic invoices, connectivity, electronic funds transfers and mobile applications.
Another important model of our performance is our vertical integration in professional services related to the implementation, customization and consulting relating to our software solutions. This brings us closer to the retailers, expands our knowledge of their performance models and fosters the exchange of best practices among retailers of different sizes and verticals. Finally, we also focus on the model of direct sales and services to our customers. Our sales teams are focused both in the search for new customers and in the management of existing portfolios. This proximity to our customers is one of the main reasons for our high rate of contract renewals.
In December 2016, we had over 3,000 employees in our headquarters and branch offices. In addition, we have relationship centers and partners throughout Brazil and abroad. To comprehensively meet the current needs of the retail market, we offer diverse solutions to our customers, as described below.
To comprehensively meet the current needs of the retail market, we offer various solutions to our customers. Our solutions provide the essential functions necessary to effectively manage and process the operational and financial resources of a Brazilian retail organization. Our applications enable our customers to interact, collaborate and make business decisions using accurate data from multiple devices.
We have a SaaS (Software as a Service) collection model, which features (1) a low setup fee, or in many cases, no setup fee; (2) charges for professional implementation, customization and consulting services; and (3) the payment of a periodic maintenance fee for use of our software to ensure recurrent and predictable revenues.
Most of our revenue is derived from monthly charges for using the systems we develop. Our revenue is divided into two groups:
- Recurring revenues: derive from monthly charges for usage of software, which includes product updates, technical support, help desk and software hosting services, payment of support teams located onsite with the customer and connectivity services. These are called recurring revenues because of the frequency of their occurrence and the high rate of renewal of such contracts.
- Service revenues: derive from implementation of services for our solutions, including customization, training and other services related to our products and the payment of the software setup fee. These do not recur automatically.
ERP is a software platform developed to integrate the various departments of a company, enabling the automation and storage of all business information. We offer this solution in cloud versions, especially for franchises and smaller customers, and also as an “on premise” solution for franchisors and larger chains. We offer expertise in all processes and legislation linked to the segment, seeking to adapt our product portfolio to each company profile, regardless of size or business model, and with solutions that seek to cover and aggregate all aspects of the company. We can serve customers from different verticals of retail, such as clothing, footwear, accessories, food service, car dealerships, construction materials, department stores, electronics and computing, among many others. The main modules of our ERP are:
- Commercial: sales order management integrated with internal and external partners;
- Industrial: control of production, from purchase with suppliers to delivery of product to the logistics department;
- Supply: inventory management, pricing and timelines for replacement of products and materials;
- Administration: business information and analysis for directors and managers;
- Logistics: inventory control of raw materials and finished goods, cash and deposits;
- Financial: operations that are necessary for the company‘s financial management, by creating parameters on the applicable rules; and
- Accounting and taxation: management of regulatory and administrative information.
The ERP solutions are designed to fit the size and profile of our customers in accordance with their needs:
- Small and medium retailers: We provide to small and medium-sized retailers an ERP solution that controls different business phases, from production to in-store sales with a user-friendly interface, high safety standards, high degree of flexibility and low implementation costs. We seek to focus our sales and R&D efforts on retailers with annual revenues starting at R$5 million, because, at this level, the companies‘ risks of failure decrease while the opportunity to conduct cross-selling of solutions in our portfolio increases.
- Large stores or chains: We offer robust solutions for this retail profile, which we believe is ideal for large stores or chains, serving everything from financial, accounting and tax processes to inventory management, production, logistics and sales.
- Franchisors and franchisees: We offer an ERP franchise model, entirely online and with resources that cover everything from management of POS to information management. We believe that this retail model represents a great opportunity for franchises, and we have dedicated significant efforts on R&D and sales to serve these customers in a distinct manner.
We offer software solutions for our customers‘ in-store terminals where sales transactions occur. In the vast majority of cases, these solutions are integrated with our own ERP software. In some cases, our POS solutions can also be integrated with ERP software from other suppliers.
We offer expertise in all processes and legislation linked to the specific retail segment in which our customers operate, seeking to adapt our POS profile to each customer, regardless of size or business model, with solutions that seek to cover and aggregate all of a store‘s operational needs. We can serve customers from the most varied retail verticals, such as clothing, footwear, accessories, food service, car dealerships, construction materials, department stores, electronics and computing, among many others.
We offer solutions that control two key sectors of the retail outlet:
- Terminal operation software and POS software: pre-sale operations management software, sales, cash management, store inventory, accounting and tax management, receipt issuance, electronic invoice (NF-e) and customer registry.
- Store maintenance and management: entry and exit of goods (inventory control), terminal configuration and administrative tasks.
Via smartphones or tablets, customers are served in a fast and customized manner, with no lines and far more interaction with the variety of products offered in the store. We offer solutions for different retail segments using features such as the virtual catalog, lookbook combinations, inventory query, pre-sale and sale record, waitlist and closure of service.
Examples of mobility modules include:
- Linx Fashion (Moda) Mobile : extends the interaction of the brands with their customers, who can use and interact with the collection‘s lookbook, add their favorite pieces to a wish list or share them on social networks, find the nearest shops, access the brand‘s blog and stay attuned to all the latest fashions.
- Linx Shopping (“Mall”) Mobile : allows users to easily gain access to mall information, such as a list of shops and food service, up-to-date movie schedule, calendar of events, news, sales, parking availability and payment, directions and descriptions of all services offered.
Mobile solutions are offered in cloud and are integrated with our other software. These offerings focus on cross-selling within our existing customer base.
Our e-commerce platform is fully integrated with our ERP software. This is an important competitive advantage, because it makes inventory, customer, and process management easier and more accurate on the part of retailers. It is entirely based on cloud and the primary focus of this platform is cross-selling to our existing customers.
E-commerce services consist of the receipt of wholesale orders and the monitoring of sales targets, directed sales to the final consumer and an interactive electronic catalog with information about inventory and prices, among others, that are integrated to the ERP system.
Our e-commerce solutions are designed to enable our customers to offer consistent, relevant and personalized cross-channel shopping through catalog, merchandising, marketing, research and guided navigation, personalization, automated recommendations, and live help capabilities. This combined platform is designed to enable our customers to strengthen customer loyalty, improve brand value, achieve better results of operations, enhance customer service and improve response times in online and traditional commercial settings.
We consider our CRM applications innovative and distinguished. It is entirely cloud based and focuses on enabling retailers to manage and interact directly with customers.
We offer a broad portfolio of CRM applications that are designed to help our customers to manage their sales processes more efficiently, integrate marketing campaigns and content into their sales processes more efficiently and deliver high-quality service to their customers. CRM provides information to increase acquisition and retention and to maximize quality of service to the brand‘s consumers. Our CRM solutions provide information to our customers to allow them to appeal to new customers as well as re-acquire and reactivate inactive customers through marketing campaigns, loyalty programs and corporate gift cards. As a complementary offering to our other software solutions, the main focus is on cross-selling to our existing customer base.
Currently, a significant volume of debit and credit card transactions pass through the cloud gateways managed by Linx (R$14.6 billion in 2015). Moreover, this network connects the headquarters, branches and stores promoting traffic of data from various types of management software, including those based on cloud and electronic funds transfer. The network has its own infrastructure in dozens of the largest malls and backbone in the primary data centers with redundant host systems.
With a technology team that monitors, manages and provides support 24 hours a day, seven days a week, Linx has its own network operational center and an efficient help desk for the stores. Thus, it is possible to interconnect headquarters and branches across the country with secure and high-performance dedicated links, through which many critical and high value added retail services traverse, particularly those based on cloud.
We actively seek to expand our connectivity and electronic payment mechanisms. With the increase in debit and credit card transactions, as well as the adoption of cloud-based software, the importance of and demand for these solutions has increased.
We offer connectivity and electronic funds transfer services as a complementary solution to our software solutions and our primary strategy is on cross-selling to our existing customer base. Customers using our connectivity and electronic funds transfer solutions may experience improved performance, stability and availability of our other software solutions.
As a company focused exclusively on retail, we believe that having our own teams to implement, customize, support and advise customers regarding our software is a critical factor in our success and an advantage that sets us apart from our competitors. We understand that proximity to customers allows us to not only improve the quality of our solutions, but also to expand and improve our understanding of the dynamics of different vertical retail businesses.
Our implementation system must be properly configured to meet the business requirements and work within the internal processes of each of our customers. After a customer signs the service contract with us, our implementation sector installs the customer‘s software systems, customizes its settings to meet the customer‘s business needs and trains the customer to use the system. Our implementation services include:
- evaluation and planning of our software‘s ability to meet the customer‘s business requirements, especially with regard to the size and complexity of the projects to be supported, as well as the customer‘s customization needs;
- integration of our systems with our customer‘s existing software systems;
- administration of the project‘s lifecycle by certified professionals and in accordance with the recommended practices of the Project Management Institute;
- software configuration to meet our customer‘s internal rules and integration with financial institutions and the federal government;
- fine-tuned adjustment and customization of software solutions to meet the customer‘s business needs such as reports or issuance of notes, etc.;
- development of an implementation strategy that assesses operational impacts and improves ease of learning about the new computerized operations; and
- operational assistance with “on the job” training and reinforcement.
For the implementation of the solutions purchased by the client, service hours will be allocated according to the needs of the project and will be recognized in our results during the fiscal period in which they are provided. Following installation, we begin to collect maintenance fees.
Our systems are focused on the retail sector, and therefore do not require significant customization before being implemented. However, in light of the need to adapt software systems to a customer‘s business needs, we have a customization team that understands our customers‘ day-to-day business needs and makes the necessary changes in our systems.
Our support department aims to provide our customers with any support necessary for the continuity of their operations. Our call center is available 24 hours a day for data centers and 14 hours a day for systems, seven days a week. In addition, we offer customer service and tracking via extranet.
In order to assist customers in understanding and using our products, we offer:
- on-line documentation of our systems via extranet;
- online material organized by topic and by organizational processes;
- information regarding organizational processes and routines, presented alongside operation manuals for our systems; and
- electronic delivery of system documentation files that can be requested from our main customer support center.
Our customers can access program documentation by logging onto our customer website.
We develop our products internally. The software market in which we compete experiences rapid technological advances in software, evolution of software technologies, changes in customers‘ needs and frequent launches of new products. R&D is an important component of our investment plan, given its strategic importance to the sector in which we operate. R&D investments allow us to develop increasingly customized software solutions to our customers and deliver technological innovations that increase user productivity.
The main objectives of our R&D activities are:
- technical enhancements in our software to increase efficiency;
- development, adoption and evaluation of new technologies;
- improvements in existing software products; and
- development of methodologies that increase software quality and efficiency.
Experienced and skilled professionals play an important role in providing professional services to our customers and we invest in the training and skill-building of our professionals. We also offer training to customers, partners and employees as part of our mission to accelerate the adoption and use of our software products. This creates opportunities to increase our revenues from products. We created the Linx Retail Academy to meet our customers‘ demand for training. The Linx Retail Academy offers technical and theoretical courses focused on the solutions we develop. In particular, these courses apply theoretical concepts and technology solutions to the context of business management. Our facility has classrooms equipped with the latest generation of technology and has a team of expert instructors in each business area.
We conduct sales from our headquarters and nine branch offices in the principal states in Brazil. As a way to supplement our operations geographically, especially in less populous states, we also use indirect channels, such as franchises and sales representatives.
We prioritize direct assistance to our customers, given our focus on retail, long-term solutions and the expertise of our professionals. Our direct channels consist of business managers dedicated to our customer base (known internally as “farmers”) and business managers responsible for prospecting new customers (known as “hunters”). Our sales team is specialized in retail and is knowledgeable about the specialized needs of companies of different verticals and sizes and the various solutions we offer. We focus our efforts and manage the opportunities created by our business managers through a single CRM software program, which facilitates cross-selling of our products and allows for greater visibility of our sales results. We also have specialized sales planning and management teams that seek to standardize methodologies and processes and increase the productivity and efficiency of our sales activities. In addition, we have a sales office in Belo Horizonte in the State of Minas Gerais, which is responsible for seeking out and scheduling initial visits for our hunters.
Our indirect sales channels consist of franchises and sales representatives. These sales channels allow us to be present in places where we do not have our own sales offices. Our 126 franchises are mostly exclusive product distribution channels through which we acquire new customers and negotiate solutions in the regions where we operate. Our franchises also carry out training, implementation and customization of our software solutions. We also have ten non-exclusive sales representatives that operate in certain other regions.
Our franchises and sales representatives receive as commission a percentage of the licensing income they generate. Our franchises also receive a percentage of the maintenance revenue generated by customers located in regions where they operate. All billing of our customers for sales generated by our indirect channels is carried out directly by us. Our headquarters and branch offices serve as models for the operational, sales and technical activities of our franchisees. We have a department that controls, monitors and coordinates with our franchises and sales representatives while assisting them in the development of operational, sales, administrative and marketing strategies. The activities of our franchises are also monitored by customer satisfaction surveys administered by our sales agents.