Disrupting Latin America’s Final Mile
By on Feb 11, 2016
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Even though Latin America’s economic situation is certainly not the best, there are pockets of optimism across the region. Among the biggest is the growth of e-commerce. While it is not on the same scale as in Europe, the US or China, it is, nonetheless, growing at a fast clip.
According to research group, eMarketer, e-commerce sales were expected to reach $50 billion in 2015, an increase of almost 24% over 2014. Most of this growth was attributed to Brazil, Mexico and Argentina with Argentina growing the fastest at 40% year-over-year in 2015. However, despite a growing middle class, Latin America, shipping has been cited as a major problem for e-commerce providers. DHL Supply Chain’s Latin America President has further noted that logistics costs are high, averaging about 15% of the cost of sold merchandise.
ShipNow, an e-commerce logistics startup based in Argentina is looking to lower such costs for e-retailers. Logistics Trends & Insights recently chatted with Tomas Allende, founder of ShipNow to learn more.
According to Mr. Allende, e-commerce has grown quickly but at an uneven pace. Online stores and payment gateways have developed quickly however; fulfillment, delivery and customer service have not kept up. For many e-retailers there is no control on visibility or tracking of packages. Many local carriers operate on either antiquated technology or none at all and in many cases, dealing with carriers can be quite difficult thanks to government and labor union regulations.
As a result, Mr. Allende and a few former colleagues from Mercado Libre, one of the largest online marketplaces in Latin America, founded ShipNow to address some of these issues. ShipNow acts as a gateway, integrating with shipping and logistics companies as well as such platforms as Shopify.
Described as a “Match.com” between orders and carriers, ShipNow’s cloud-based technology identifies the best carrier for each retail order. This way, as noted by Mr. Allende, shipping rates are more competitive allowing small players to compete better and tracking of the package is provided as well.
Returns and any changes to an order are also handled via ShipNow’s customer service solution. No emails, no SMS, but instead, the company utilizes Whatsapp for much of its customer communication. An order is not finalized until the customer is satisfied.
The majority of ShipNow’s customers are in Argentina but the company is growing with customers located in Peru, Costa Rica and elsewhere. Its technology allows for cross-border and multi-carriers but as Mr. Allende indicated, cross-border e-commerce is not popular in the region because of customs and little, if any, assurance from governments.
In addition, ShipNow has a fulfillment center in Argentina that about 35 of its clients uses. Because of the way the company has structured the pricing, the popularity of the fulfillment took them by surprise. Three different rates are offered based on the size of the package, minimum number of shipments per month as well as cubic meters used by each client, and includes pick and pack, labeling.
Because of the unexpected success of this part of its business model, ShipNow is currently evaluating the possibility of placing warehouses in other countries. Meanwhile, its core product, its technology platform, is subscription priced based on monthly number of orders and bundles of transactions. There are no markups on shipping.
For the growing e-commerce market in Latin America, technology companies such as ShipNow are providing much needed opportunities for growth as well as more control and visibility into shipping, fulfillment and customer service.