Pandemic anticipates 3-year profit from shopping delivery startup

The coronavirus pandemic is an undeniable social catastrophe. But it was defined by many also as a time machine for business, as it accelerated the process of digitizing the economy in a way impossible to achieve in the old normal. The startup Delivery Center is an exponent of this truth. Founded in 2017 to turn malls and stores into mini-distribution centers, based on an online sales strategy, the company hoped to achieve the financial balance, known as "break-even", between the end of 2023 and 2024. Now, Saulo Brazil, co-president of the company, believes that it could be hit by the end of 2021. "It took us a year to put together a plan for 2020 and the next few years, and in one month, we changed everything," he said. Brazil leads the business alongside founder Andreas Blazoudakis, former partner of technology group Movile. Delivery Center welcomes the shopkeeper at its base and places it in the most diverse e-commerce channels with which it has partnership. The list includes Rappi, Uber Eats, iFood, Mercado Livre, the e-commerces of each mall and more recently a partnership with B2W, owner of Americas.com and Submarino, was closed. In total, there are 15 market-places. "We are totally agnostic in terms of channels. The more, the better." When the sale is carried out in e-commerce, the company takes care of the logistics of the product, withdraws in the store and leads to the customer in 24 hours. The goal of Delivery Center is to allow each store to be also an e-commerce and still function as a place of inventory. The company has a mini hub inside the malls to manage the distribution. "The way it's done today, the logistics of e-commerce doesn't make much sense. A customer away from a CD takes days to receive a product that is sometimes in a nearby store in their region. It's very efficient to win," he said. Although satisfied with the opportunity for growth, Brazil knows well that the current situation is quite delicate. "We created the business to help the shopkeeper without digital strategy and logistics grow and sell more. Now, our responsibility has increased a lot. We have to help him survive, not break." The result of the pandemic, in the view of the co-president of Delivery Center, will be a change in both logistics strategy and the concept of physical store. The place that the customer attends will have "to deliver an experience with the brand" and stop being just a place for sales, in the view of the executive. Even as the reopening of the malls accelerates, Brazil believes that digital channels will continue to be strengthened, both due to an expected delay in the resumption of confidence and a more definitive change of habit. Before the coronavirus, the expectation was that the break-even would be obtained when the total sales moved on the platform reached 1 billion dollars — an estimate made when the dollar was worth less than 4 reais. Now, Brazil assesses that the balance between own revenues (a fee on sales) and costs plus expenses will occur with 1 billion reais of GMV – the new acronym of fashion in retail, which in a free translation of English means gross value of sales, that is, good old billing. "In addition to our growth being very accelerated, we also see the possible efficiency gains with investment in technology." Earlier this year, Delivery Center raised 69 million reais from its partners. "The money raised is being enough for this strong reaction to the pandemic, but we are already preparing the third round for the end of this year or beginning of 2021." In addition to the founders, the company's shareholder base has a designer list with the mall administrators brMalls, Multiplan and Cyrella Commercial Properties (CCP), as well as Bloomin Brands (Outback and Abraccio), The Trigo Group (Spoleto), Fernando Stein, the Indigo parking network and José Galló, chairman of renner's Board of Directors. In total, the contributions received exceed 100 million reais. The growth that Delivery Center experiences with the pandemic is not simple to visualize in percentages. To be better understood, multiplication works more. At the end of last year, there were 1,000 shopkeepers served, mostly food. At the end of May, the base multiplied by three, with 3,000 shopkeepers, from 30 different malls, after an explosion in non-food adhesion. "What I signed from contract in a month, I now sign on time," Brazil said, explaining that it also serves some street food. To meet the organization of this expansion outside the standards, the company also had to invest. It had 90 employees in the holding company, that is, in its central offices (São Paulo and Curitiba), 200 operators within the hubs and 1,000 delivery companies, at the end of 2019. Five months later, Brazil manages a team of more than 200 professionals in the holding company, 300 field operators and 3,000 couriers. The expectation is that this year's GMV will be 300 million reais, more than three times the value of last year. The previous plan for 2020 was to operate in five states, in a total of 17 cities. But by the end of this year, there will be between 35 and 40 cities, spread between 18 and 20 states. "Before, the idea was to operate from Minas Gerais down. But now we're going to the Midwest and Northeast." Despite the pandemic kick, Brazil still sees a lot of room for change, especially in the non-food market. The pandemic has only accelerated membership, but everything still needs to work better. Of today's sales, food still accounts for 75%. Before the pandemic, it was 95%. The expectation, however, is that this percentage will be less than 50% later this year. "Brands and stores are still at the beginning of learning how to better use urban inventory, already in the last mile, next to the customer."