Business

Brazilian iFood acquires SiteMercado aiming to expand on grocery stores deliveries

The deal shows how large online companies are moving to take advantage of the industry changes in the wake of the pandemic

REUTERS/Paulo Whitaker
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  • Founded five years ago, SiteMercado works as a digital white label, through which small businesses can have their own e-commerce channels;
  • Currently, the platform has sellers in 476 Brazilian cities, as opposed to 1,000 cities in which iFood operates

Brazilian delivery startup iFood announced on Wednesday the acquisition of SiteMercado, which makes online sales intermediation for supermarkets and smaller grocery stores, expanding its bet in a sector that has skyrocketed in recent months with the isolation measures to contain the Covid-19 pandemic.

Founded five years ago and headquartered in São José do Rio Preto, in the interior of São Paulo state, SiteMercado works as a digital white label, through which small businesses can have their own e-commerce channels. Currently, the portal has sellers in 476 cities in 24 states in Brazil.

The acquisition of 100% of the business, for an undisclosed amount, reinforces the intention of the largest platform for ordering meals in Brazil to diversify and expand revenues in a sector in which it debuted in 2019 with its iFood Mercado division, currently with 2,100 sellers.

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SiteMercado will continue to operate independently, with its own payment and delivery arrangements, explained Henrique Iwamoto, vice president of Business at iFood.

“These are complementary businesses, but we see many chances of synergies in the future,” Iwamoto told Reuters, mentioning for example the possibility that both brands reaching all municipalities where today there is only one of them. iFood currently operates in about 1,000 Brazilian cities.

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iFood expects its supermarket arm to reach 3,000 sellers in 250 cities by the end of 2020.

The acquisition shows how large e-commerce companies are moving to take advantage of the industry changes, in the wake of the pandemic, also looking for niche operations almost entirely physical, such as supermarkets.

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iFood Mercado itself says that its sales in August grew 240% in relation to March, when the measures of social distancing took effect in Brazil.

After purchasing Supermercado Now in January, retailer B2W announced in May a partnership with the supermarket group BIG to integrate sales platforms.

Mercado Livre, the largest e-commerce platform in Latin America, has also started to sell supermarket products since May.