How do you describe an e-commerce platform that is a) built around providing consumers daily needed fresh, healthy produce at affordable prices, b) 80% of whose suppliers are small and medium-sized, local businesses, c) ensures practices that minimize waste and are environment friendly? Answer – an inclusive, robust and ‘just’ platform – that is what our portfolio company Justo is building. Let’s find out more.
Founded in 2019 in Mexico with the mission of disrupting the retail industry with fair practices and a consumer-centric approach, Justo (Spanish for just) is building a fair, responsible and sustainable digital-first grocery model. It is doing so by empowering small and medium farmers and producers by giving them the access and infrastructure to sell their products online through the Justo platform.
At the same time, Justo caters to a largely unmet need for consumers. For the average household in Mexico, food and associated transportation can represent more than 55% of their income – one in five people in the region cannot afford to have a healthy, balanced diet. Irrespective of income level, consumers are discerning. Many end up paying higher prices or having to deal with abusive business practices of large, entrenched incumbents in the sector. Justo solves this problem by offering high quality e-groceries at fair prices to its customers and providing a customer centric user experience versus traditional supermarkets and other on-demand grocery delivery solutions. It not only saves money for its customers, but also provides convenience and promotes wellness by having fresh, great quality produce and other staples delivered directly to their doorsteps.
By disrupting the traditional and historically concentrated grocery sector and building an essential supply chain around small and medium producers, Justo has successfully penetrated a mass market wherein demand has always existed and will continue to exist in the future.
The company is creating a highly differentiated brand, owing largely to its fresh produce focused basket, as well as its sustainable, ethical vision and business model. This is also creating attractive and long-term value for all its shareholders.
But how does Justo carve out and maintain a competitive edge in an industry characterized by high market concentration and the recent entry of new, well capitalized players deploying an aggressive pricing / discount strategy? Let’s look at it from different perspectives:
Perhaps the most salient characteristic that sets Justo apart is its focus on addressing the entire basket of a household with healthy, fresh, affordable and environmentally sustainable products.
By leveraging technology and sourcing directly from local suppliers, Justo is able to reduce costs significantly and deliver fresh food and other staples at great value for money to its customers. Justo has created a streamlined, fast and enjoyable shopping experience allowing customers to purchase groceries online and have them home delivered in less than 24 hours. Using the customer and purchase data it collects, Justo attempts to provide a personalized shopping experience to its customers. It is also introducing products in bulk/customizable sizes (i.e. beans and seeds), as well as artisanal, organic or environmentally friendly products that consumers are unable to find in traditional supermarkets.
While this approach can present higher operational challenges compared to business models that edge towards pure convenience e.g. faster deliveries of a reduced set of items and wait times of less than 15 minutes – it benefits from high customer loyalty and higher margins (60- 70% margins for fresh produce).
Most delivery platforms are aggressively competing for the market on the back of unsustainable, sheeny promotions and coupon strategies, while the supply-side is scrambling to ensure that the deliveries reach the customers in the nick of time. Justo has adopted a very different approach to customer loyalty – it aims for its customers to shift to buying all their groceries from its platform and that too, at predetermined time slots. And this model seems to be working! In all the conversations we’ve had with customers, what comes across is that they prefer Justo because it offers healthy, differentiated products with proper quality checks, sustainable packaging, top customer service and fair prices. Moreover, Justo has a 99% fill rate, so one can find all the standard stock-keeping units along with a variety of items such as artisanal cheese, fresher produce, farm products, etc.
Justo’s differentiated basket is accomplished with a focus on fresh produce supplied from small and medium producers, who represent 80% of Justo’s supplier base. These local SMEs make up 70% of the total gross merchandise value sold on the platform. This advantage has been painstakingly built over the years and cannot be overlooked. Justo has forged a bond of loyalty and mutual commitment with its SME suppliers by serving as a key partner to them. In contrast to having a simple ‘’transactional’ relationship with vendors, Justo has emerged as a key engine of growth (even survival, in times of crisis) for SMEs – their average sales grew by 5x in 2021, thanks to Justo.
In fact, during the peak of the global pandemic, Justo assisted local producers in navigating the crisis by facilitating access to new markets and clients. The company has developed a merit-based system for shortlisting local suppliers and aligning incentives as well as fair practices with them to generate meaningful and sustainable relationships. It has also negotiated strategic partnerships with some suppliers to launch Justo’s private labels ( for example, a dairy line in alliance with a Mexican business in Chipilo, Puebla).
Another important ingredient in building a robust platform is Justo’s micro fulfillment centers, which have resulted in increased efficiency of operations. Leveraging its hyperlocal business model and small but efficient warehousing facilities (“bodegas”), propelled by technology and digital connectivity, it has reduced the distance between producers and consumers significantly. The freshness of produce is maximized, as products reach the consumer’s doorstep faster, secured and safely packaged. Justo has also streamlined and eliminated intermediaries in the supply chain, allowing for competitive prices, lower transaction costs and improved margins that are shared with its suppliers.
With artificial intelligence, Justo forecasts demand to try to reduce food waste at its micro-fulfillment centers. As a consequence of streamlining the supply chain and accurately forecasting demand, waste is minimized, and ultimately so is the environmental impact. According to the World Bank’s “Food Losses and Waste in Mexico” report, approximately 20.4 million tons of the food that is produced is lost or wasted each year. That’s a staggering one-third of the country’s total food production, resulting in profound social, environmental and economic impact. For Justo, this number stands at just 3%.
Justo is also making continuous efforts in bringing down the energy consumption of its warehousing and cooling facilities by maintaining a high rotation of products, eliminating intermediaries in the supply chain and ensuring bulk deliveries (5 to 10 customers in one go). The company is constantly striving to improve the energy efficiency of its business operations.
Justo’s differentiated business model and sustainable business practices, paired with the operational excellence that it brings to the table, have resulted in solid growth for the company (both in terms of sales and customers), as well as attracting more than USD 200 Mn in equity as an early stage company. Justo can be realistically viewed as Latin America’s response to Walmart, FreshDirect, and GoPuff, but with an inherent inclination to doing ‘social good’. It is building a mindful brand that has embraced circular thinking for conducting business and is providing consumers with healthier, sustainably sourced and responsibly packaged products. It enjoys high loyalty and patronage from consumers who enjoy more conscious consumption at fair and affordable prices. It is also built on partnership with SME suppliers and goes above and beyond to honor arrangements and maintain fairness.
Justo is a brand that’s poised well for the future and is rooted in the principles of inclusivity and sustainability, as a means of driving scale and profitability.