A new app and a subsidiary focused on logistics. These are the two main projects for 2020 of MadeiraMadeira, an e-commerce platform of household articles that mixes products of their own with a marketplace operation.
Born in the Brazilian Southern city of Curitiba, from a traditional flooring industry that went bankrupt with the 2008 crisis, the company has grown 80% per year and should end 2019 with its first BRL 1 billion in revenues. “What’s ahead is even more promising,” Robson Privado, one of the cofounders and VP of sales and marketing at MadeiraMadeira, told LABS.
Announced in September, the $110 million investment led by the Japanese conglomerate Softbank, which also included investments by Light Street Capital and Flybridge Capital Partners, is the main source of funding for these new plans.
“What we have been doing this year and it will be one of the big investments next year is helping our suppliers develop products that are specific to e-commerce,” says Privado.
Operating through the so-called dropshipping logistic method, MadeiraMadeira has no stock of the products it sells. Upon receiving the consumer’s order, it sends it directly to the manufacturer, who dispatches the product to the customer. This operation is cheaper for MadeiraMadeira and faster for the customer compared to other e-commerce logistics methods. On the other hand, gives the company less control over the quality of its products, packaging and transport process.
“These suppliers were used to selling offline. When you sell one-by-one, in a package that has 5 to 6 touchpoints with multiple carriers, (these products) might be damaged until reaching the final destination. We’re investing a lot in the beginning of the supply chain, developing products with MadeiraMadeira’s quality, so that the packaging also has superior quality and helps (in the improvement of) transportation,” Robson explains, pointing out that Madeira wants to be the” industry partner” in the development of these products.
The vector for this logistics investment is the company’s subsidiary, BulkyLog. Launched in July this year, BulkyLog is focused on delivering products over 15 pounds was born with the promise of being “the Loggi of heavy goods”, directly connecting suppliers and customers to enable the delivery.
“We don’t have a single truck, but we do complete management, from the (order in) application to the way we inform the customer about the delivery status. When you look at an operation that delivers throughout Brazil–our suppliers are usually in the countryside, while the demand is in the capitals–(this) is already complex. Our idea is to invest even more in BulkyLog next year to be increasingly efficient, from end to end,” he explains.
With BulkyLog, the company wants to reduce the average delivery time for furnitures from 15 to 5 days.
The concern with logistics, according to Robson, has to do with MadeiraMadeira’s main purpose: to give access. The entrepreneur explains that the main target audience of the company are C-class customers, and that MadeiraMadeira’s great asset was to show this audience that it is possible to combine quality and style at an affordable price, in a 100% online operation.
“A phrase that we use a lot here and that translates all of this is the motto ‘there’s no place like home’,”says Robson.
Building this mindset–that affordable home goods can be purchased through an end-to-end online operation– in Brazil is precisely one of Softbank’s goals with MadeiraMadeira. By debuting in an almost untapped industry with its $5 billion fund for Latin American startups, the Japanese group expects MadeiraMadeira to lead the digital transformation in this industry segment. “We’re going to be one of the engines of the shift from offline to online in our category,” points out Robson.
With mobile bringing most of the platform’s sales, the executive also reveals that MadeiraMadeira’s application, the company’s second major project for 2020, should be launched in the first quarter of next year.
“Our app is being developed thinking about the entire purchase and post-purchase journey, not only with product offering, but also with services and content. The goal is for the customer to choose where to buy: on desktop, laptop, tablet, mobile phone browser or in the app. But if he download the app, the idea is that he will have a different experience,”says Robson.
“What brought us here is not what will take us forward”
MadeiraMadeira’s VP of sales and marketing Robson Privado explains that what attracted the eyes of the Japanese fund in the Brazilian startup was a sum of factors. From sector leadership to highly scalable business, which has seen astonishing growth of 80% a year since its foundation.
“Today, less than 5% of our category’s sales are made online. When you look at it, you look at a (potential) market of BRL 250 billion just in products. If we look at products and services, we are talking about BRL 500 billion,”says Robson. It is because of this huge potential of e-commerce for home products that the company also does not think about operating outside Brazil for now.
By the end of 2017, with the dropshipping operation running stable, the company wanted to expand its product offering. “We realized that there were some categories that made dropshipping more complex to implement, because it depends on an integration with the supplier, with ERP, it requires a change in the operation model. For some categories such as appliances and decoration, which has a low average ticket, for example, it is much harder to operate on this model.”
It was to solve this issue that the company launched, in April 2018, the second format in which it operates, the 3p marketplace, with other sellers offering their products on MadeiraMadeira’s own platform.
“We started looking at this market and identified an opportunity: deliver a wider range of products to the customer through the 3p marketplace. As one of the largest home and decor sellers in other marketplaces such as B2W, Via Varejo, Mercado Livre and Magazine Luiza, we watched and learned to be a seller, and we saw that this was an opportunity. “
The result of this benchmarking was what led the startup to launch the marketplace operation that is also the fastest growing unit in recent years, according to Robson. “We are still learning how to work with both operations. By 2019 it has grown a lot, and by 2020 (the marketplace) will be our fastest growing business unit,”says Robson.
What brought MadeiraMadeira here, however, is not what will drive the company forward–both in terms of new projects and new positions.
“We’re actively looking at new talent around the world. In May, we brought Dan Davis as our CDO.” Coming directly from Silicon Valley, the American who now holds the position of Chief Digital Officer at MadeiraMadeira was responsible for helping to start, 16 years ago, Build.com, a pioneer retailer in the home e-commerce segment. “We never think we are complete or that we know everything. We always look for other people–either investors, mentors. We have to bring better people than ourselves,” says Robson.
With almost 800 employees, of which 200 are in the technology and product development areas, MadeiraMadeira was a pioneer in Brazil when it comes to the dropshipping model.
It was also the first Curitiba startup to raise venture capital in 2012, with the funds Monashees, Kaszek Ventures and Flybridge Capital Partners, playing a central role in the mission to put the Southern city in the map of Brazilian innovation.
Collecting milestones, when looking to the future, the goal is even more ambitious. “Today we are already the biggest (in home products) online, but we want to be the biggest online and offline.” Without revealing further details, MadeiraMadeira co-founder promises some good news for January next year.