Meet ‘Kangu’, New Brazilian Logistics Startup Powered by Mercado Libre

RIO DE JANEIRO, BRAZIL – Mercado Libre won’t stop during the pandemic. In addition to growth in the operation, which doubled in size from one year to the next, the Latin American giant invested in six innovation companies during the pandemic – five of which were Brazilian. The latest capital contribution, announced by the company this week, was to the Kangu startup, one of its logistic partners. The transaction amount was not disclosed.

According to Renato Pereira, Mercado Libre‘s corporate development director, the investment in Kangu was driven by its high performance as a logistics partner over the past twelve months. “Kangu stood out as a partner that can adjust to the changes and growth that Mercado Libre demands. In one year, we grew from 500,000 orders per day to one million,” says the executive. The company’s strategy is to depend less on the Post Office.

But what is the Meli Fund’s new investment? The Brazilian startup was founded in January 2019 by partners Marcelo Guarnieri, Ricardo Araujo, and Celso Queiroz. The entrepreneurs left their careers as FedEx executives to embark on entrepreneurship. After setting up their own logistics consultancy, they decided it was time to innovate and create a solution for last-mile deliveries – which make the products reach the final customer’s home.

The solution is neighborhood trade

The startup then decided to work in partnership with small neighborhood retail businesses: stationeries, clothing, and pet stores. These commercial locations, called points, become Kangu’s partners and operate as a collection and withdrawal point for goods. As a result, the stores become collection centers for consumers who cannot receive their orders at home during business hours. The strategy also works for reverse logistics, so customers can return items through Kangu points. Currently, there are 1,450 establishments registered in the states of São Paulo, Rio de Janeiro, Minas Gerais, Paraná, and Rio Grande do Sul.

One year ago, the startup became a Mercado Libre partner. Thus, the company’s network is able to act as a point for sending goods to sellers using the Argentine company and as a place to pick up orders for some of its customers. “Kangu’s points are a way to get physically closer to the vendors. They leave the packages in Kangu points and from there our vehicles collect them and take them to our distribution chain,” says Renato Pereira.

One of the startup’s concerns is not to disturb the routine of the usual neighborhood trade. Therefore, the pick-ups are made daily, so that the storekeepers do not need to keep a large stock to store the products. Moreover, if a certain selling point begins to record a high flow, the company understands that it needs to look for other stores in the region to also become partners. “We don’t want clients to have a poor experience. The delivery and retrieval of products must be quick,” says Ricardo Araújo, Kangu co-president.

To its partners, the startup offers a commission per package dropped off and picked up at the store. In addition to direct compensation, the partners highlight that the service ultimately attracts potential customers into the partner establishment. “People can pick up their new cell phone that came in and find other products that they need at the partner’s store,” says Araújo.

Before the Meli Fund’s capital contribution, Kangu had received a R$6 million investment in March, led by the Argentine fund NXTP Ventures. The capital, together with the e-commerce boom during the pandemic, favored the startup. Over the past five months, the company’s operation has grown fivefold. For the partners, this growth proves the potential of the model created. As a result, they are starting to outline an international expansion plan for the next few years.

Source: Exame