Merqueo de Colombia secures $ 50 million to expand its online grocery delivery service in Latin America – TechCrunch

Purchase, operating a full-stack on-demand delivery service in Latin America, has raised $ 50 million in a Series C funding round.

IDC Ventures, Digital Bridge and IDB Invest co-led the round, which also featured participation from MGM Innova Group, Celtic House Venture Partners, Palm Drive Capital and previous shareholders. The financing brings the total for the Bogotá, Colombia-based startup raised to $ 85 million since its inception in 2017.

Merqueo CEO and co-founder Miguel McAllister knows a thing or two about the delivery space in Latin America as he also co-founded, a Latin American food delivery company that was bought by Berlin-based Delivery Hero and later. merged with iFood from Brazil.

McAllister describes Merqueo as a “pure online supermarket with a fully integrated grocery delivery service” sourcing directly from big brands and local suppliers, bypassing middlemen and “delivering directly from their network of dark stores.” (The dark stores are traditional retail stores that have become local logistics centers. “

Merqueo offers more than 8,000 products, including fresh food, packaged products, basic household products, beverages and frozen products. It currently operates in more than 25 cities in Colombia, Mexico and Brazil and has more than 600,000 users.

Image credits: Purchase

You must be doing something right. The startup has about $ 100 million in “execution fee revenue,” according to McAllister, having grown more than 2.5 times in 2020. Merqueo also achieved positive cash flow in Colombia, its most mature market. Over the past year, large Latin American retail chains and retailers have approached the company to acquire it, McAllister said.

Part of the company’s success could be attributed to the speed and flexibility it offers. Users can choose how and when to receive their groceries based on their needs, and the startup offers delivery in as little as 10 minutes or three to four hours. Users can also schedule delivery of their groceries in two-hour intervals for the same day or the next day.

In addition, owning and controlling the “full” vertical supply chain gives you the ability to earn better margins, offer competitive prices and achieve a healthy unit economy, according to McAllister.

Merqueo plans to use its new capital in part to expand geographically. The company is currently in phase one of its expansion to Brazil, initially entering Sao Paulo at the end of this month. Next year, it hopes to launch in other Brazilian cities such as Rio de Janeiro, Fortaleza and Salvador de Bahia.

The market opportunity in Latin America is huge considering that online grocery sales only account for just 1% of the market, much lower than in the US, the EU, or China, for example. Other players in the increasingly crowded space include Gopuff In the USA, Bring from Turkey and Jüsto, based in Mexico, which raised $ 65 million in a Series A led by General Atlantic earlier this year.

“The pandemic accelerated the adoption of online grocery shopping in LatAm,” McAllister told TechCrunch. “The region went from 0.3% of online grocery share to 1%. And after the pandemic, we are seeing a 50% increase in the rate of user adoption. ” Overall, the $ 85 billion e-commerce market in Latin America is growing rapidly, with projections of reaching $ 116.2 billion in 2023.

Merqueo currently has more than 1,300 employees in LatAm, 60% more than last year. He plans to continue hiring with the proceeds of the Series C round and work to “become the largest and most ambitious dark store network in Latin America.”

Alejandro Rodríguez, managing partner at IDC Ventures, is naturally optimistic about Merqueo’s potential.

“Of all the opportunities we analyze, Merqueo is undoubtedly the most advanced in the region. … The Merqueo team has shown that it knows how to scale the business and how to reach profitability, ”Rodríguez told TechCrunch.

Online grocery delivery is a business with many technical and operational complexities, he said. In his view, Merqueo’s technology and operational expertise allow it to address those issues in a way that has led to “the best customer experience we’ve seen in a scalable way.”

“They have the best combination of excellent service metrics and a healthy unit economy,” added Rodríguez.

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