:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/YD5Q4PAMD5BCZAEGLXLVW6ZZVU.jpg "Vinícius Fernandes, Lucas Chitas and Marco Tulio Korehisa, co-founders of Canal Dstak.")
Miami — Retailers in Brazil have traditionally taken buying trips to the Brás in São Paulo, the nation’s largest garment district, or other garment districts throughout the country, to place their orders. Orders are paid for in cash, and installments aren’t available. For a country like Brazil, where security remains an issue, it’s not a safe practice to walk around the city with thousands of reais in your pocket. Retailers come from all over the country, often traveling by bus or plane and then also having to pay for hotels, in order to do a couple days worth of shopping. To get an idea of the size of the Brás, the district processes about $4 billion per year.
Getting there can be an exhausting trip that can get pricey very fast.
Over the years, these retailers s have started using WhatsApp and Instagram to do some of their shopping, but then they face the issues of multiple shipments, and the cost of shipping adds up, not to mention there not being a way to pay in installments - a common practice for consumers in Brazil. Considering that most of these retailers also don’t have credit cards, cash flow has also been a challenge.
“Some of these people walk around the Brás with their life’s savings in their pockets,” said Lucas Chita, co-founder and CEO of Canal Dstak, a new B2B online fashion marketplace for retailers.
The company is based in São Paulo in the middle of the Brás, and today it’s announcing the close of a $2.6 million seed round.
While Amazon and Mercado Libre exist to serve consumers, a similar solution for retailers has taken longer. In 2019, Zax launched a similar solution and to date the company has raised $8.1 million, according to Pitchbook.
Canal Dstak launched in June 2020, and has 350 wholesalers onboard, along with 130,000 monthly active users. The company offers flexible payment options in the form of BNPL (buy now pay later), with up to a six month payback-period, and interest rates ranging from 4.5 - 15% per month, depending on the length of the loan.
Retailers can shop from multiple wholesalers, who then ship the goods to Canal Dstak’s fullfillment center. The orders are organized into one shipment and then sent to the retailers, meaning that retailers only have to pay one shipment fee, which Chita says is 75-80% cheaper than regular shipment options. Packages arrive between 24 hours and 12 days, he added.
“My grandmothers were retailers, so we’re familiar with the pain points,” Chita said.
The company, which was founded by Chita, Marco Túlio Moraes Korehisa, and Vinícius Fernandes, started with apparel, but have since expanded to costume jewelry and cosmetics, and footwear as well.
The company acknowledges that its customer base would benefit from more financial products in the future, and they plan to build out these products, but for now, they’ll be using the money from this round to grow their team from 35 to 60 employees, and to onboard more sellers. As of now, they already have more than 200 wholesalers on a waiting list.
“When we became this one stop shop platform, we made the life of these entrepreneurs much easier,” said Chita.
The round was led by Valutia, a venture capital fund focused on early-stage startups, with participation from SV Latam Capital, Verve Capital, Shilling VC, Rhombuz VC, Allievo Capital, BluStone, and Crivo Ventures.
