Colombian on-demand grocery startup Merqueo has raised a $50 million investment in a Series C round led by IDC Ventures, Digital Bridge, and IDB Invest to expand its business in Latin American countries. The investment round was also supported by MGM Innova Group, Celtic House Venture Partners, Palm Drive Capital, and previous shareholders.
The company, which started operating in Brazil in July, plans to invest $20 million in the first 12 months to expand its network of dark stores in the country and, consequently, its service area in the metropolitan region of Sao Paulo.
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Currently, Merqueo already has a distribution center on the west side of the São Paulo capital and covers more than half of the city of São Paulo and nearby cities, such as Osasco and Barueri.
The idea is to increase its coverage area in the metropolitan region with the opening of another seven dark stores to support the distribution of products to consumers.
“Merqueo has developed all the necessary attributes and technology to operate in a complex market such as Latin America. Cash acceptance, variety of delivery categories, and affordable prices are critical variables to consider to scale startups in the region,” says Alejandro Rodríguez, managing partner at IDC Ventures.
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On-demand groceries delivery gained greater visibility during the COVID-19 pandemic and is a sector where competition comes from traditional groups such as GPA and Carrefour to e-commerces such as B2W, Magazine Luiza, and delivery apps such as Rappi, iFood, and Uber Eats.
Merqueo’s strategy in front of the crowded dark stores market in Latin America is the “competitive prices and quality deliveries and products”, since Merqueo is not an intermediary, but works with the whole chain, from the purchase with producers, the stock, and the delivery.
The app started operating in São Paulo and the metropolitan region with Ultra delivery, within 15 minutes, Express, within 60 minutes and scheduled deliveries. In Brazil, the app will have more than 4,000 products from vegetables, essential pantry items, dairy, meat, hygiene, and home care products. Payment of purchases can be made through the app or at delivery with a POS (debit, credit) or cash.
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According to Merqueo, while in China online supermarket sales represent 40% of the market, in Latin America the market share is only 1%. “Merqueo is focused on building a highly scalable platform that can offer great service for the best price. Once we have proven our model, we are looking for investors to continue our expansion across the region,” says Miguel McAllister, CEO, and co-founder of Merqueo.
Unlike some competitors, Merqueo’s app has proprietary technology, which guarantees real-time visibility of product inventory, without having to swap out missing items.
McAllister co-founded Merqueo with the well-known Colombian delivery industry entrepreneur José Calderón in 2017. They also founded Domicilios.com, which was acquired by Delivery Hero in 2017. iFood merged with Domicilios in Colombia last year.
The duo also co-founded RobinFood (ex-MUY) in 2018, where McAllister follows as a board member. Both Domicilios.com and Merqueo are companies valued at more than $100 million.