Beyond the marketplace: Nuvemshop’s strategy to strengthen independent brands

While giants from different sectors — from retailers to pharmacies — race to become marketplaces, Nuvemshop follows a different path: to strengthen the retailer’s own brand.

For Alejandro Vázquez, co-founder of the company, excessive dependence on a single sales channel is the biggest risk an entrepreneur can take. “If the marketplace represents 80% of your revenue, an algorithm change could kill your business”, says Vázquez, in an interview with InfoMoney.

To achieve this, the company’s strategy is to offer a holistic platform that integrates e-commerce, physical stores and marketplaces, giving the retailer back control over their data, their inventory and, most importantly, their relationship with the end consumer.

This long-term vision has supported the growth of Nuvemshop, which today processes around 2% of Brazilian e-commerce and 5% of Argentinean e-commerce. With a solid capital structure, the result of robust investment rounds in 2021, the company has focused its efforts on profitability and efficiency, helping brands of all sizes, from small digital natives to large chains with million-dollar revenues, to optimize their margins in a challenging economic scenario.

In this interview, Vázquez discusses the pillars that support this ambition: integrated logistics, proprietary payment methods and the active promotion of the D2C (direct to customer) model. He also addresses the company’s future, including the vision for an eventual IPO in the medium term and the objective of reaching 1 million customers and processing 10% of Latin America’s e-commerce. Check out the edited interview below.

InfoMoney: You are one of the founders of the company. How did the company start in Argentina?

Alejandro Vazquez: Five founded the company almost 20 years ago, but two left, at different times, for personal reasons. Our story began in 2008, at university. My partners were studying Engineering, IT or Business and Systems and needed to do an internship. Instead, they asked the coordination if they could start a project from scratch, based on technology. At that time, e-commerce represented less than 1% of retail sales and there was a lot of distrust in buying online. We thought about creating a marketplace that connected social media (Facebook, Twitter, Orkut) to make commerce safer.

We didn’t find the right business model for that marketplace, but we discovered something bigger: there were many fashion, accessories and beauty brands that tried to have an e-commerce, but struggled when hiring web designers and developers. It was expensive, time-consuming and they had no autonomy. We understand that these people were looking for a simple way to sell online and directly to the consumer, without intermediaries. Between 2010 and 2011, we pivoted to create a platform simple enough for anyone, without technical knowledge, to set up an e-commerce store at an affordable price.

IM: Your search was for customers who were not yet on the internet.

OF: Exactly. We started in Argentina in 2011, going door to door to validate the idea and most of them didn’t sell online. Those who sold did so on marketplaces or started on social networks, but there was no Instagram or WhatsApp.

We participated in Intel and Buenos Aires Government programs, which opened doors for investors. We raised a US$300,000 angel investment round at the end of 2011 from people who understood the market, including one of the founders of OLX.

IM: The business started in Argentina, but today you consider yourself a Brazilian company. How was this change?

OF: With a mix of ambition and naivety, we looked at Brazil as the place where we should develop Nuvemshop. Argentina is a good market, but small. We needed scale. In 2012, right after the investment round, we started operating here. We went to an e-commerce event and went out to talk to the store owners and understand how they sold and whether they would be interested in selling online — and speaking much worse Portuguese than today.

We were convinced that we needed to build something on the scale of Latin America and Brazil was very evolved in terms of e-commerce. We saw the size of the opportunity and decided to come. It was like putting everything together from scratch, even the name. For Spanish speaking countries, we are Tienda Nube; here, Nuvemshop. From 2011 until 2020, we focused solely on being an e-commerce platform.

We were born in Argentina, but today we consider ourselves a Brazilian company that operates in other regions of Latin America, such as Colombia, Chile, Mexico and Argentina.

IM: Today, most of the team is in Brazil? How is the distribution of employees?

OF: Of the 1,500 people who work with us, more than 1,000 are in Brazil. I just returned to Buenos Aires, but I lived here in Brazil for 12 years. Much of the leadership is Brazilian. We strive for this.

IM: When the pandemic arrived, Nuvemshop was already a relevant size, but you experienced a moment of very strong growth. What was it like absorbing the growing demand and adjusting the team as the number of customers multiplied?

OF: It was a very complex moment. We already had more than 30 thousand customers, we were a team of almost 200 people, and we had raised several investments. This allowed us to invest very aggressively in products, technology, services and brand. When the pandemic arrived, a story we all know, e-commerce became the salvation for many brands in the physical world that closed their doors and needed to survive. And, in this context, demand for our services skyrocketed. And not just for small brands, but also for large companies.

As a result, we went from 30 thousand to 70 thousand customers in just one year. We were 180 people before the pandemic, we grew to 400 in the same year and, at the end of 2021, we were already 800. It was very aggressive growth. In 2021, we closed two investment rounds: one of US$90 million and another of US$500 million, with funds such as Tiger, Insight and Accel, in addition to Kaszek, which had already invested in 2014. It was one of the largest rounds in Latin America.

This allowed us to invest in the biggest pain points of Brazilian retail: logistics, payment experience and service. We launched Nuvem Envio to lower costs and Nuvem Pago, which offers one-click checkout, saving consumer data for the entire network.

It all seems very good, but operationally it was chaos, because every day was like Black Friday. It was a very big technical challenge.

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IM: What are the particularities of e-commerce in Brazil and Latin America?

OF: There is a point of difference that is not just in Brazil, but in Latin America, in relation to e-commerce in the United States or Europe: the concept of conversational commerce.

The fact that always shocks me is that 70% of online sales have some type of interaction with the brand at some point in the purchasing journey, in Brazil and Latin America. This means that we, as consumers, interact with the brand either on WhatsApp, or on Instagram, or on email, the channel in fact, in some way, before making the purchase, whether to ask questions or to evaluate the possibilities.

We want to talk to brands. And if the brand doesn’t offer an easy and agile service channel, it’s out of the game. It’s no surprise that marketplaces also evaluate not only delivery time, but how quickly you respond to the consumer when a question is published. This has a direct impact on the brand’s positioning within a Marketplace.

This is one of our big investments. We launched Cloud Chat with AI for Whastapp and Instagram, which speaks with the brand’s tone of voice and offers 24-hour service. Small customers, who do not have a team to respond, lose the sale if they do not respond in time.

IM: What is the company’s current scenario?

OF: Today, we are the largest e-commerce platform in Brazil and Latin America, with more than 180 thousand brands. Our biggest customers, in one month, receive more than 100 thousand orders and sell R$20 million in digital commerce alone, not counting the physical store, B2B, and marketplace.

We grew 75% last year, very well capitalized by these 2021 investments and with aggressive investment plans. We process almost 2% of e-commerce in Brazil and 5% in Argentina. In the next decade, we want to reach 1 million brands and process 10% of total e-commerce in Latin America.

These are numbers that obviously seem aggressive, but are possible given the size of the market. Today, e-commerce represents 15% of retail. When we started, it was 1%. There was an expansion, yes, but it is still very little compared to China, where the number is 50%.

And on the other hand, only 10% of formal SMEs in Brazil have their own e-commerce. Our mission is to really enhance all these brands.

InfoMoney: Many companies are heading down the path of becoming marketplaces. You seem to seek the opposite path. How is this really advantageous for customers, since marketplaces facilitate the path between sellers and customers?

OF: We are not a marketplace, nor are we going against them. The problem is dependence. If the marketplace represents 80% of your revenue, an algorithm change could kill your business. The brand needs to diversify and take control of customer relationships and data. Our mission is holistic: a platform for all channels, integrating inventory and catalogue.

IM: How do you see the future of e-commerce with artificial intelligence?

OF: AI is transforming everything. We see three phases: Phase 1 is conversational commerce (WhatsApp), Phase 2 is the new discovery layer via LLMs (ChatGPT, Gemini, Claude) and Phase 3 is the personal shopper agent. Our role is to allow the brand’s DNA and catalog to be read across all these channels. We are investing more than R$100 million in AI this year, developing “Lumi”, a co-pilot that helps retailers with business insights, content creation and operational efficiency.

IM: Does this investment come from the 2021 funding? Are you already at breakeven?

OF: Yes, we remain well capitalized. We don’t need funding now. We invest above breakeven to finance new fronts, but with great discipline. In the future, we see an IPO scenario, within a period of five years, more or less.

Starting or maintaining a growing business anywhere in the world is difficult. But in Brazil, and in Latin America, there is always a little more headwind. Our role is to increase the chances of success for brands.