Miami — Food delivery services continue to explode in Latin America. Entrepreneurs are attacking the market in every which way, and hoping that the method they’ve derived is the one that sticks. Some investors think that the 15 min delivery promise can’t hold forever because startups can’t afford to keep that pace up if they aren’t being subsidized by investors, while others look at the demand and think instant delivery is here to stay. But few companies are betting that in exchange for savings, consumers might be willing to plan ahead and shop for groceries online in advance of when they need them.
In fact, this is a tactic that Amazon has employed in the U.S.: if you’re not in a rush to get your order the next day or two, the company gives you a discount of around a dollar (on some orders, not all).
Following in their footsteps is Brazilian online grocer, Shopper, that today announced the close of a $30 million series C round, just 8 months after their $21 million series B. The round was led by GIC of Singapore, with participation from Quartz, (the fund of the chairman of Renner), Minerva Foods, Oikos, and Floating Point.
The company says its service is 12% cheaper than other online groceries because consumers order groceries significantly ahead of time. The company does not have any brick and mortar operations.
“If a consumer buys products before they run out, they don’t need to rush the delivery, so we can save money there and offer better prices,” said Fábio Rodas, co-founder and CEO of Shopper.
“Since we can anticipate the buys, we can plan the logistics and therefore have better prices. It’s not a subsidized model, our model is indeed cheaper,” said Bruna Vaz, co-founder and COO of Shopper.
Until its Series B, Shopper sold goods with a long shelf life - mostly things you’d keep in your pantry - but the company used the money from the previous round to launch Shopper Fresh, which offers weekly grocery delivery of fresh foods.
The company started in the city of São Paulo in 2015, and today is in 75 cities in the state. It plans to use the money from this round to build a third warehouse in the state (they already have two), and to launch in Rio de Janeiro in 2022.
Often, founder’s ideas for startups come from a pain point they’ve experienced themselves, but for others, it’s more about the desire to become an entrepreneur and build something that changes the way people live their lives - not to mention the possible monetary compensation that can come with building a company that scales. Rodas and Vaz are in the second category.
“There weren’t any fun stories like we had run out of soap at home and we saw the need. We really just looked at the market,” said Rodas. “We realized that the system hadn’t changed in generations.”
They considered different models and looked abroad to see what works. In the U.S., InstaCart is immensely successful. The American company is valued at $39 billion and offers fast grocery delivery services from various retailers, but it does not own any warehouses or any of the stores - it’s purely delivery. But the rush delivery comes at a significant cost when added up over a year, for example.
“Brazil is a very poor country, different from than the U.S. and Europe, so while InstaCart was already successful in the U.S., we realized that the model wouldn’t work here,” Rodas said.
Indeed, InstaCart is used by many single people who live in urban cores and have a busy life and therefore don’t have time to go to the supermarket. It’s not about saving money, but rather about saving time.
“We target larger families, so we’re looking at more than 1,000 reais in savings per year,” Rodas said.
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