Jüsto, the Mexico City-based online grocery retailer, remains in full swing with the goal of saturating the Latin American market.
The company claims to be the first supermarket in Mexico without a physical store to allow customers to buy groceries directly through its website or an app, and Jüsto will deliver the order to the customer’s location of 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 TechCrunch that the company, founded in 2019, weathered the first year of the global pandemic well and saw a 16-fold increase in sales in 2020.
Weber planned to use the Series A funding to expand into Mexico and Latin America — a market he told me represents a $600 billion opportunity — and the company did just that.
“The global pandemic has helped a lot in food adoption in Latin America,” he added. “Before it was 1% and now it’s 3% and it’s growing aggressively.”
These few percentage points of adoption helped Jüsto become “Gangbuster”, growing 5x in Mexico and achieving a 99.4% completion rate in the last 12 months. It now has more than 100,000 users in each of its markets, and Weber forecasts millions by the end of the year.
The company entered the Peruvian market late last year after acquiring local e-grocery retailer Freshmart and has since announced the opening of its first physical store in Lima, offering a hybrid grocery model. It also launched Ekonofresh, a discount online supermarket that complements its Freshmart offering to give customers even more choice there.
The company also launched in Brazil last October in São Paulo and has seen steady month-on-month growth of between 30% and 40%, and the region already accounts for 25% of Jüsto’s total sales, Weber said. It is now planning to expand to other cities including Belo Horizonte, Rio de Janeiro, Porto Alegre and Curitiba. Weber expects to be able to move to 20 other cities in the next few years.
Supporting this continued expansion is a new round of funding, this time in the form of a $152 million Series B round, 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 Jüsto’s total venture capital investment to over $250 million to date.
“Right now, we believe we have a mature value proposition, especially as our operations expand aggressively and we improve technology to expand operations,” Weber said. “We’re the leading grocer in Latin America and we face competition from the biggest companies like Walmart, so there are still things we can do to increase our share. Grocery stores are mainly focused on infrastructure, and Jüsto is also following this.”
Weber also has Colombia and Chile in mind and is strategically evaluating when the right time is to go to these countries, either directly or through acquisitions such as Jüsto in Peru.
The company has amassed between 7,000 and 8,000 SKUs, with the main categories being fruits, vegetables, proteins, and cleaning products. Depending on the city, that’s about 2,000 SKUs more than last year.
Next, Jüsto will focus on continuing to personalize its products in each city. It is also expanding its relationships with small and medium-sized farmers to buy directly from them, while the company remains focused on sustainability and waste reduction.
Meanwhile, the online grocery industry in the US is poised to become a $187.7 billion business by 2024, up from $95.8 billion in 2020. Delivery will be provided by incumbents like Walmart, Instacart and DoorDash dominates, and delivery startups around the world are also seeing successes such as raising venture capital.
For example, Rino recently raked in $3 million for food delivery in Vietnam, Bokksu is now valued at $100 million after raising $22 million, JOKR and Gorillas have billion dollar valuations – in Fall of Gorillas Billions – while Egypt’s Breadfast and Appetito and India’s Zepto have also raised funds in the last six months.
It’s clear that there are many movers and shakers in this industry, but grocery delivery is also a challenging industry. Last month, BayArea Inno reported that Zero Grocery closed just a month after I reported they had raised $12 million. In a Facebook post, the company explained, “Fundraising has always been the biggest battle we’ve faced. Unfortunately it is the fight that we lost.”
Weber, too, noted that grocery delivery “wasn’t easy, especially on the operational side,” which became even more difficult as a company grew. That’s one of the reasons Jüsto has focused on the full-basket approach, aiming for people to do all their shopping through the company and not just a few convenience items, he added.
Zeev Thepris, a senior associate at General Catalyst, agreed, saying he’s seen both the fast trade and full-basket models in Latin America, and while delivery is difficult to set up, he finds the full-basket method is the better way to get there one-size-fits-all economy, which is solid.
“It’s not about convenience, it’s about people shopping once a week with a checkout that costs $100 to $150 versus $15 to $20 for those convenience purchases,” Thepris added. “That’s what makes single economics work.”