The COVID-19 pandemic has led to folks all over the place buying extra on-line and Latin America is not any exception.
São Paulo-based Nuvemshop has developed an e-commerce platform that goals to permit SMBs and retailers to attach extra straight with their shoppers. With extra folks in Latin America getting used to creating purchases digitally, the corporate has skilled a serious surge in enterprise over the previous yr.
Demand for Nuvemshop’s providing was already heating up previous to the pandemic. However over the previous 12 months, that demand has skyrocketed as extra retailers have been in search of better management over their manufacturers.
Relatively than promoting their items on current marketplaces (equivalent to Mercado Libre, the Brazilian equal of Amazon), many retailers and entrepreneurs are opting to start out and develop their very own on-line companies, in keeping with Nuvemshop co-founder and CEO Santiago Sosa.
“Most retailers have entered the web by promoting on marketplaces however we’re listening to from newer generations of retailers and SMBs that they don’t wish to be intermediated anymore,” he mentioned. “They wish to join extra straight with shoppers and convey their very own model, picture and voice.”
The proof is within the numbers.
Nuvemshop has seen the variety of retailers on its platform surge to almost 80,000 throughout Brazil, Argentina and Mexico in comparison with 20,000 at the beginning of 2020. These companies vary from direct-to-consumer (DTC) upstarts to bigger manufacturers equivalent to PlayMobil, Billabong and Luigi Bosca. Nearly each KPI tripled within the firm in 2020 because the world noticed an enormous transition to on-line, and Nuvemshop’s platform was residence to 14 million transactions final yr, in keeping with Sosa.
“With us, companies can discover a extra complete ecosystem round funds, logistics, transport and catalogue/stock administration,” he mentioned.
Nuvemshop’s speedy progress caught the eye of Silicon Valley-based Accel. Having simply raised $30 million in a Sequence C spherical in October and attaining profitability in 2020, the Nuvemshop staff was not searching for extra capital.
However Ethan Choi, a associate at Accel, mentioned his agency noticed in Nuvemshop the potential to be the market chief, or the “de facto” e-commerce platform, in Latin America.
“Accel has been investing in e-commerce for a really very long time. It’s an important space for us,” Choi mentioned. “We noticed what they have been constructing and all their potential. So we pre-emptively requested them to allow us to make investments.”
Immediately, Nuvemshop is saying that it has closed on a $90 million Sequence D funding led by Accel. ThornTree Capital and returning backers Kaszek, Qualcomm Ventures and others additionally put cash within the spherical, which brings Nuvemshop’s complete funding raised since its 2011 inception to almost $130 million. The corporate declined to disclose at what valuation this newest spherical was raised however it’s notable that its Sequence D is triple the scale of its Sequence C, raised simply over six months prior. Sosa mentioned solely that there was a “substantial improve” in valuation since its Sequence C.
Nuvemshop is banking on the truth that the density of SMBs in Latin America is increased in most Latin American international locations in comparison with the U.S. On high of that, the $85 billion e-commerce market in Latin America is rising quickly with projections of it reaching $116.2 billion in 2023.
“In Brazil, it grew 40% final yr however continues to be underpenetrated, representing lower than 10% of retail gross sales. In Latin America as an entire, penetration is someplace between 5 and 10%,” Sosa mentioned.
Final yr, the corporate transitioned from a closed product to a platform that’s open to everybody from third events, builders, businesses and different SaaS distributors. By Nuvemshop’s APIs, all these third events can join their apps into Nuvemshop’s platform.
“Our platform turns into way more highly effective, distributors are producing extra income and retailers have extra choices,” Sosa instructed TechCrunch. “So everybody wins.” At the moment, Nuvemshop has about 150 purposes publishing on its ecosystem, which he tasks will greater than triple over the subsequent 12 to 18 months.
As for comparisons to Shopify, Sosa mentioned the corporate doesn’t essentially make them however believes they’re “honest.”
To Choi, there are a lot of similarities.
“We noticed Amazon get to actually massive scale within the U.S.. Retailers additionally discovered instruments to construct their very own presence. This birthed Shopify, which immediately is value $160 billion. Each corporations noticed their market caps quadruple in the course of the pandemic,” he mentioned. “Now we’re seeing the identical dynamics in LatAm…Our wager right here is that this firm and enterprise has all the identical dynamics and the identical actually highly effective tailwinds.”
For Accel associate Andrew Braccia, Nuvemshop has a transparent first mover benefit.
“Over the previous decade, direct-to-consumer has develop into some of the necessary drivers of entrepreneurship globally,” he mentioned. “Latin America is not any exception to this development, and we imagine that Nuvemshop has the extent of sophistication and talent to grasp all that change and gas the continued transformation of commerce from offline to on-line.”
Wanting forward, Sosa expects Nuvemshop will use its new capital to considerably spend money on: persevering with to open its APIs; funds processing and monetary companies; “the whole lot associated to logistics and logistics administration” and attracting smaller retailers. It additionally plans to develop into different markets equivalent to Colombia, Chile and Peru over the subsequent 18-24 months. Nuvemshop presently operates in Mexico, Brazil and Argentina.
“Whereas the international locations share the identical secular tendencies and product expertise, they’ve very totally different market dynamics,” Sosa mentioned. “This requires an on the bottom native information to make all of it work. Separate markets require distinct information. That makes this a extra difficult alternative, however one that permits a long-term aggressive benefit.”