MadeiraMadeira co-founders Marcelo and Daniel Scandian, and Robson Privado. Photo: Courtesy.

MadeiraMadeira's next steps: its own logistics ops to conquer Brazil's South and Southeast regions with next-day delivery

The co-founder and president of the newest Brazilian unicorn, Daniel Scandian, also talked to LABS about acquisitions and a future IPO

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The marketplace of furniture and home goods MadeiraMadeira is Brazil‘s newest unicorn. Last Thursday, with an investment of $190 million led by SoftBank’s Latin American investment fund and the Brazilian public and private investment firm, Dynamo, the startup announced that it had exceeded the market value of $1 billion. The fifth round of investments in the company’s history came at least a year earlier than planned, motivated by the substantial growth in sales on the platform in 2020, which more than doubled over 2019, and the desire to be the Brazilians one-stop shop when it comes to house goods, a kind of Brazilian Ikea (or WayFair, the company founded by one of the main angel investors of MadeiraMadeira, Niraj Shah)

Speaking to LABS on Friday afternoon, president and co-founder of MadeiraMadeira, Daniel Scandian, said that the company’s next steps are focused on offering next day deliveries to the South and Southeast regions of Brazil, where the startup structured throughout 2020 its own logistic operations. In the rest of the country, the startup works with partners.

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Daniel Scandian, founder and CEO at MadeiraMadeira
Daniel Scandian, founder, and CEO at the online platform for furniture and household articles MadeiraMadeira. Photo: Courtesy.

Last year, MadeiraMadeira tripled the number of distribution centers to 15. One of them, a 20,000 square meter building in the city of Jundiai, in Sao Paulo state, plays a key role of fulfillment, that is, of storage and logistical treatment of private label furniture and products from the 10,000 sellers on the startup’s marketplace. In Greater São Paulo, this will start in February, followed by other capitals in the South and Southeast, and, later, in these two regions’ interior.

It is an operation similar to that of Mercado Libre and Magazine Luiza, but with a difference: “We are 100% specialized in large, multivolume products, especially furniture. Normally, you don’t see fulfillment centers for this type of product,” explains Scandian.

In parallel, MadeiraMadeira will continue to invest in the strategy of opening physical compact stores – guide shops focused on the consumer experience – to make the brand reach the hearts and minds of end customers in a more organic way than the ads on Facebook or Google to which e-commerce companies are so used to. The startup opened nine guide shops in 2020.

Facade of the compact store opened at the company’s headquarters in Curitiba, in 2020. Photo: Courtesy.

Despite the e-commerce push brought about the COVID-19 pandemic, with millions of consumers buying for the first time online, Scandian said it is too early to say how much of that movement is here to stay.

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“E-commerce in Brazil had a retail penetration of 7%. Throughout the pandemic, this peaked at 17% and has now dropped to 10%. We still don’t know where it will stabilize. But see, historically, the penetration of online sales has grown between 1% and 1.5% per year in the country. This means that five years from now, more than 80% of this market will still be offline,” stresses Scandian.

Unlike large retailers that had to accelerate their digital transformation, MadeiraMadeira is learning to do physical retail now, and in a new way, already having an optimized logistics structure, focused on omnichannel operations and using stores only as a point of experience and relationship with the end customer. “Our competitors are betting on large stores and us, on compact and pulverized stores. We visited a company in India, Pepperfry, which is also betting on this model. It is a complement to our brand-building strategy,” he says.

Interior of the compact store opened at the company’s headquarters in Curitiba in 2020, focusing mainly on the startup’s own furniture brand. Photo: Courtesy.

Acquisitions and future IPO

The last round of funds injection in MadeiraMadeira was accompanied by Flybridge and monashees, who were already partners in the company, and also by new investors who will help the startup to prepare itself for a future IPO. According to Scandian, the managers Velt Partners, Brasil Capital, and Lakewood Capital have “one foot in investment in startups”, but they have experience in investing in publicly traded companies, so they will be fundamental in preparing MadeiraMadeira for this objective in the coming years.

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About six months ago, MadeiraMadeira also set up a team focused on mergers and acquisitions. According to Scandian, the main mission of this team is to create a framework that will guide the startup’s next actions in this direction. “It is a tool for inorganic growth, which will bring talents and new technologies,” emphasizes Scandian.

MadeiraMadeira currently has around 1,300 employees, and is expected to arrive in December 2021 with 2,700.