Mexico City-based online grocery store Justo is still operating at full capacity with the goal of saturating the Latin American market.
The company claims to be the first supermarket in Mexico without a physical store that allows customers to shop directly through a website or app, with Justo delivering orders to a location of the customer’s choice.
We previously reported on the company last February when it raised $65 million in a Series A round led by General Catalyst. At the time, CEO Ricardo Weber told gaming-updates that the company, founded in 2019, has weathered the first year of the global pandemic well, with sales up 16x in 2020.
Weber plans to use Series A funding to expand into Mexico and Latin America — a market he believes represents a $600 billion opportunity — which the company has done.
“The global pandemic has helped immensely with food acceptance in Latin America,” he said. “It used to be 1%, now it’s 3%, and it’s growing aggressively.”
Those few percentage points have helped Justo become a “gangbuster” that has grown fivefold in Mexico and reached a 99.4% completion rate in the last 12 months. It now has over 100,000 users in every market, and Weber predicts that number will grow to millions by the end of the year.
It entered the Peruvian market late last year after acquiring local online retailer Freshmart and has since announced the opening of its first physical store in Lima, offering a hybrid supermarket model. It also launched EconoFresh, an online discount supermarket that complements the FreshSmart offering by giving shoppers even more choice.
Weber said the company also opened last October in So Paulo in Brazil, which is seeing a solid 30-40% month-over-month growth and the region already accounts for 25% of Justo’s total sales. Plans are underway to expand the network to other cities, including Belo Horizonte, Rio de Janeiro, Porto Alegre and Curitiba. Weber expects to be able to move to 20 more cities in the coming years.
This further expansion is supported by another round of funding, this time $152 million in Series B funding, again led by General Catalyst. New and existing investors including Tarsadia Capital, Citius, Arago Capital, Foundation Capital and Quiet Capital also joined the round to bring Justo’s total venture capital investment to over $250 million.
“Right now, we believe we have a mature value proposition, especially as our business is actively expanding and we are refining technology for large-scale operations,” Weber said. “We are the largest grocery store in Latin America and we see the biggest companies like Walmart as competitors so we can still do something to increase our share. Supermarkets in particular are focused on infrastructure and Justo is committed to the latter.”
Weber also has an eye on Colombia and Chile and strategically determines when the time is right to move to those countries, either directly or through acquisitions, as Justo did in Peru.
The company has collected between 7,000 and 8,000 SKUs, with the main categories being fruits, vegetables, proteins, and cleaning products. This is about 2,000 SKUs more than last year, depending on the city.
After that, Justo will focus on further personalizing its products in each city. It is developing its relationships to buy directly from small and medium farmers while continuing to focus on sustainability and waste reduction.
Meanwhile, U.S. online grocery shopping could become a $187.7 billion industry by 2024, up from $95.8 billion in 2020. Delivery is dominated by established companies like Walmart, Instacart and DoorDash, with delivery startups around the world also making headway. For example, when raising venture capital.
For example, Rino recently took $3 million to deliver groceries to Vietnam, Boksu is now valued at $100 million after raising $22 million, Joker and Gorilla have billions of dollars—the case of Gorilla Billions. also repaid in the last six months.
Obviously, there are a lot of bigwigs and shakers in this industry, but grocery delivery is also a complex industry. BayArea Inno reported last month that I reported that they had raised $12 million, just a month after Zero Grocery closed. In a Facebook post, the company said, “Fundraising has always been the biggest battle we have had to go through. Unfortunately, this is a battle we have lost.”
Weber also noted that delivering groceries “was a challenge, especially from an operational standpoint” and as the business grew, it became even more challenging. That’s why Justo has focused on a full shopping cart approach to get people to make all their purchases through the company, not just a few everyday items, he said.
General Catalyst senior lawyer Ze’ev Tepris agreed, saying he has seen both quick-trade and full-basket models in Latin America, and while shipping is hard to set up, he prefers the full-basket method. The best way to combine a healthy economy.
“It’s not about convenience, it’s about people buying tickets once a week for $100 to $150 instead of $15 to $20,” Thepris said. “That’s how the unit economy works.”