Josie and Tommy met as young chefs in 1994, when they catered a wedding together. That collaboration ignited an entrepreneurial journey and led to the creation of Eat Catering, which, for more than 25 years, has been providing a superb gastronomical experience at large social and corporate events. Employing 114 full-time people, including 60 cooks and support staff, this successful business had grown and built a beloved brand in Argentina. But in early March, when the government implemented a full lock-down in response to the COVID-19 pandemic, it was clear to the founders that many catering events were going to be cancelled. What’s more, there were no clear answers to the difficult question of “when, if at all, would large events be restarted”? Josie and Tommy immediately knew they had to reinvent themselves, not only to preserve their business, but to support their staff.
For some time, Eat Catering had been planning to launch a new catering experience that addressed smaller gatherings, but with the crisis, they knew that a different solution was needed – so a new product offering was developed for delivering to nuclear families at home. Gastronomy being their core, developing such an offering was easy. But the challenge lay in marketing it, collecting payments and shipping to hundreds (or thousands) of consumers. It was then that they turned to Nuvemshop, an e-commerce platform that offers a suite of solutions to small and medium enterprises (SMEs) in Argentina and Brazil to simplify the process of creating, running and growing their stores online. Within 3 days, Eat Catering had developed an e-commerce shop called Eat Box, and in less than 2 weeks they had successfully delivered close to 500 orders and made enough revenue to maintain staff and cover fixed costs. Till date, they have not laid off a single employee.
Josie and Tommy’s experience is not unique. With the COVID-19 pandemic upending businesses across the board, SMEs are scrambling to adapt to the new reality, innovating on business models and delivery channels to stay afloat. With stay-at-home mandates, many businesses have been forced to close their physical locations and since customers are unable to venture out, having a digital presence is more important than ever. Unsurprisingly, there is a technology gap between large enterprises and SMEs. As a result, companies like Nuvemshop – all-in-one digital integration solutions for SMEs – have seen a dramatic increase in growth rates.
Elevar’s Impact Thesis on SMEs
SMEs, frequently an individual or a family-owned business, are typically defined by their low headcount and small balance sheet size. Often, there has been a perception that SMEs are less impactful within local economies than larger corporations. But Elevar’s experience working with communities in Latin America and India disproves that assumption – SMEs are often the largest providers of employment within their communities, and help to drive efficient, competitive markets. SMEs act as catalysts for the private sector and create crucial linkages between raw inputs and manufactured products. They are also pioneers of innovation, harnessing an entrepreneurial spirit to develop tailored services relevant to their communities. They are an effective strategic channel to reach a large number of individuals in underserved communities at scale. Perhaps most notably, SMEs are a key poverty mitigant as they tend to employ low-income workers.
Given their size and level of informality, SMEs operate in a constrained environment and have continued, critical, untapped needs. Primarily, they lack access to capital with affordable terms and / or lack access to technology or market linkages, which also prevents economies of scale and synergies with ancillary services that could make operations more efficient. Thus, there is an important productivity gap between SMEs and larger enterprises. Closing these gaps can have massive, positive implications for economic growth, employment, and poverty reduction. Elevar seeks to support the SME ecosystem through investments that compound their scale and / or increase productivity. For the last decade, Elevar has invested in companies that provide affordable financing to SMEs, such as Vistaar and Credijusto. Elevar has also invested in companies that provide SMEs with technology, platforms or marketplaces that introduce new sales channels (i.e. e-commerce) and allow them to improve their revenue and / or reduce their costs; portfolio companies that fall into this category include Nuvemshop, The Better India and Canasta Rosa.
Nuvemshop was founded in 2010 by a group of tech entrepreneurs in Argentina who were inspired to empower small merchants to set up, promote and manage a digital business on every possible sales channel. Today, the company employs over 200 people and enables over 50,000 SMEs across Argentina and Brazil, with over 100 million monthly unique visitors in merchants’ stores, positioning it as one of the largest and fastest growing “commerce as a service” ecosystems for merchants in the region. Previous to the pandemic, Nuvemshop had exhibited healthy high double digit growth across its key performance indicators. Since March 2020, week by week, the number of new stores joining the platform, the gross merchandise volume and revenues continue to accelerate at an unprecedented triple digit growth rate, while merchant churn and customer satisfaction remain steady.
Of course, one could argue that the tailwinds from the offline to online movement would drive any similar business. Yet as we look across the market in Latin America, we observe that only a few companies have been able to truly rise to the challenge and adapt quickly to massive spikes in demand. The ability to quickly scale technology, processes, logistics, payments, customer service and other support areas – while keeping the pulse on shifting consumer demand – cannot be built overnight. In fact, it took Santiago Sosa, Nuvemshop’s CEO, and his team, years of building for scale and impact.
Elevar’s belief in Nuvemshop and their ability to excel not only during crisis but also over the long term, arises from these fundamental strengths:
Following the customer
In these uncertain times, with customer behaviour undergoing massive shifts, companies cannot rely on past truths and need to continually re-evaluate their customers. Over the years, Nuvemshop has been deepening its understanding of customers through one-on-one conversations, interviews, surveys, and data analytics. Having these robust relationships, communication channels and a deep understanding of customers, it is easy for Nuvemshop to form a clear view of customer habits and behaviours, and recalibrate its value proposition to adapt to today’s needs.
Building a value adding ecosystem
Entrepreneurs in Latin America often operate under capital constrained environments, market inefficiencies, immature ecosystems and regulatory roadblocks. Furthermore, SME needs are growing in complexity and diversity, and irrespective of capital or effort, Nuvemshop cannot address all these needs alone. For that reason, Nuvemshop has positioned itself as an enabling platform that acts as an interface between two modularized pieces of a value chain. It focuses on solving the biggest pain points of SMEs with its native products, and allows third party partners to integrate with its platform to close out any gaps in the offering. As Nuvemshop grows, it becomes more interesting for partners to integrate with as they can access thousands of SMEs through the collaboration. With more partners, the product offering for Nuvemshop’s customers gets better, creating a virtuous cycle that accelerates growth and better solutioning for SMEs. This also allows flexibility and pace in introducing new services in response to shifts in demand and scale.
Using data to drive decisions
In order to be able to make effective and timely decisions, high end tracking and analytical capabilities need to be in place to understand what’s working and what’s not. Since inception, Nuvemshop was built to be a data driven organization. For years, Nuvemshop automated and incorporated marketing attribution models, data analysis tools, and continued close monitoring of key performance drivers, as well as leading indicators. With access to minute-by-minute information as the COVID-19 pandemic unfolded, the team at Nuvemshop has been able to make quick and informed decisions on a weekly and even daily basis, and work shoulder to shoulder with their merchants to share relevant insights and trends.
Staying local with world-class technology
Competing with global and massively funded companies can be an uphill battle, in particular for companies that try to replicate business models without contextualizing them in a local environment. The same way a David outsmarts a Goliath, rather than compete on size, Nuvemshop has built its success around a hyperlocal strategy, supported by a world class platform and technology team, an effective matrix organization and scalable processes. Nuvemshop has a remarkable ability to integrate and curate local ecosystems. This is evident from its merchant acquisition – Nuvemshop is viewed across entrepreneurial forums as a thoughtful community builder with relevant local content – and its customer service, which not only speaks the same language as merchants, but is also able to relate to their context and tailor conversations accordingly.
A testimony to the quality and reach of the platform – when Facebook launched its initiative, Facebook Shops, for helping small businesses get online in the crisis, Nuvemshop was mentioned as one of the 8 key partners in the effort, and the only one from LatAm. Today, more than ever, Nuvemshop is generating significant impact by supporting SMEs that are key to Argentina and Brazil’s economies and are the backbone of local communities. Elevar is happy and honoured to be a part of this story.