Cornershop: The Revolution of ‘On-Demand’ Groceries
What: We tell you how the grocery delivery startup Cornershop came about, and how it plans to grow its team.
Why It Matters: With less than a year in operations, this startup confirmed that it raised US$ 6.7 million to maintain its accelerated growth in Mexico and Chile.
Chilean Daniel Undurraga moved to San Francisco almost five years ago. He soon realized that daily life in the city had greatly benefited from the wide variety of on-demand services that exist, so that you don't have to leave home to buy groceries or pick up food from a restaurant. "I started buying services that bring you, for example, a box with food that comes directly from an organic farm every Monday, with fruits and vegetables in season," says Undurraga.
Little by little, the entrepreneur noticed how his daily behavior had changed, and when he traveled to Latin America, he missed all of the services that he could obtain from home with the click of a mouse. "The epiphany moment came when I realized that Latin Americans would surely enjoy these services, and that on top of that, nobody else was doing it."
Undurraga and his two partners, Oskar Hjertonsson and Juan Pablo Cuevas, already had experience as entrepreneurs thanks to the site ClanDescuento.com, which they sold to Groupon just six months after launching. It was the perfect moment to start a new project. With a US$ 2.5 million investment obtained through private capital, in July 2015 they launched Cornershop, an on-demand grocery delivery service in Mexico and Chile.
Through a mobile application that is available on iOS and Android, clients can select products from their supermarkets and nearby stores and even program the delivery times. The objective is for the platform to offer other services such as home repair or delivery of medications from pharmacies (which is already available in Chile).
“Mexico was the most obvious place to start the business, since it is the largest market in Latin America. It is a country that allows you to scale very easily," explains Undurraga. What's more, Undurraga and his partners worked for Groupon Mexico, so they know the market well and have a large network that helped them start the business. "We chose Chile because I'm Chilean, and we have our engineering team based there," he adds.
Cornershop has established alliances with various supermarkets (like Chedraui) through which the store pays a commission to include its products on the app. This allows them to charge only 69 additional pesos for the home delivery service.
With the stores that have not signed up for the business exchange, Cornershop establishes an increased price for the items, plus an extra charge for the delivery service. "We aspire to charge the same prices as the stores do in all cases, and to partner with all of them," admits Undurraga.
Plans for Growth
Cornership is currently made up of a few hundred shoppers that operate in four cities: three in Mexico (Mexico City, Guadalajara and Monterrey), and one in Chile (Santiago). The operations team is made of more than 50 people. "While an organization grows, the more complicated it is to operate it," says Undurraga.
Among its numbers, Cornership highlights that 80% of orders are done on cell phones, and that 70% of users return to the application, acquiring products from more than just one store.
The biggest challenge for Cornershop's business model, admits Undarraga, is that to duplicate sales, they have to duplicate their human capital. They can only satisfy clients' needs through more shoppers (people that go to the stores and make the purchases for you). On April 15, the company announced their fundraising round, through which they raised US$ 6.7 million. The round was led by Jackson Square Ventures and ALLVP, with the participation of Creandum, Accel, Endeavor Catalyst and other investors.
"We are going to use the capital to maintain the leadership position that we currently have in the market. The idea is basically to accelerate growth and improve the quality of what we do," says Undurraga.