Merqueo Raises $50M to Expand Online Grocery Delivery in Latin America

Merqueo Secures $50 Million in Series C Funding

Merqueo, a Latin American company specializing in full-stack, on-demand delivery services, has successfully raised $50 million in a Series C funding round. This investment will fuel its expansion across the region.

Investment Details

IDC Ventures, Digital Bridge, and IDB Invest jointly led this funding round. Additional participation came from MGM Innova Group, Celtic House Venture Partners, Palm Drive Capital, and existing investors. This brings the total funding secured by the Bogota, Colombia-based startup since its founding in 2017 to $85 million.

Leadership and Experience

Miguel McAllister, CEO and co-founder of Merqueo, possesses significant experience in the delivery sector within Latin America. He previously co-founded Domicilios.com, a food delivery service later acquired by Delivery Hero and integrated with Brazil’s iFood.

A Unique Business Model

McAllister characterizes Merqueo as a dedicated online supermarket offering a completely integrated grocery delivery solution. The company directly sources products from major brands and local suppliers, eliminating intermediaries and utilizing a network of dark stores for efficient fulfillment.

Dark stores are essentially traditional retail locations repurposed as local distribution hubs.

Product Range and Market Presence

Merqueo’s catalog encompasses over 8,000 items. These include fresh produce, packaged foods, household necessities, beverages, and frozen goods.

Currently, the service is available in over 25 cities across Colombia, Mexico, and Brazil, serving a user base exceeding 600,000 customers.

Impressive Growth and Potential Acquisition

The company is nearing $100 million in annual revenue, demonstrating substantial growth of over 2.5x in 2020. Merqueo has also achieved positive cash flow within its most established market, Colombia.

According to McAllister, several large retail chains and retailers in Latin America have expressed interest in acquiring Merqueo over the past year.

Speed and Flexibility in Delivery

A key factor in Merqueo’s success is its commitment to speed and convenience. Customers can select their preferred delivery method and timeframe, with options ranging from 10-minute rapid delivery to scheduled two-hour slots for same-day or next-day service.

Supply Chain Control and Profitability

Owning and managing the entire supply chain allows Merqueo to secure favorable margins, offer competitive pricing, and maintain strong unit economics, as highlighted by McAllister.

Expansion Plans

The newly acquired capital will be strategically allocated towards geographic expansion. Merqueo is currently initiating its expansion into Brazil, beginning with Sao Paulo this month.

Plans are in place to launch services in other major Brazilian cities, including Rio de Janeiro, Fortaleza, and Salvador de Bahia, in the coming year.

Market Opportunity in Latin America

The online grocery market in Latin America presents a significant opportunity, currently representing only 1% of total grocery sales – considerably lower than in regions like the U.S., EU, and China.

Other companies operating in this competitive landscape include GoPuff (U.S.), Getir (Turkey), and Jüsto (Mexico), which recently secured $65 million in Series A funding.

McAllister noted that the pandemic significantly accelerated the adoption of online grocery shopping in Latin America, increasing its share from 0.3% to 1%. Furthermore, user adoption continues to rise at a rate 50% faster post-pandemic.

The overall e-commerce market in Latin America, valued at $85 billion, is experiencing rapid growth and is projected to reach $116.2 billion in 2023.

Team Growth and Future Ambitions

Merqueo currently employs over 1,300 individuals across Latin America, a 60% increase from the previous year. The company intends to continue expanding its workforce and building the largest and most extensive network of dark stores in Latin America.

Investor Confidence

Alejandro Rodríguez, managing partner at IDC Ventures, expressed strong confidence in Merqueo’s potential.

Rodríguez stated that Merqueo is the most advanced company in the region among those considered. He also emphasized the team’s proven ability to scale the business and achieve profitability.

Technical and Operational Expertise

Rodríguez acknowledged the inherent technical and operational challenges of online grocery delivery. He believes Merqueo’s technological capabilities and operational proficiency enable it to overcome these hurdles, resulting in a superior customer experience.

He concluded by highlighting the company’s successful combination of excellent service metrics and healthy unit economics.