Now a unicorn, Brazil’s MadeiraMadeira martketplace goes shopping to bolster logistics

RIO DE JANEIRO, BRAZIL – The furniture marketplace, which received a capital injection led by SoftBank and Dynamo in January, has just acquired startup iTrack.

For MadeiraMadeira, a furniture marketplace founded in 2009, logistics is the heart of the business. The company has been making investments since 2018 to improve the quality of its deliveries; after all, it’s not easy to transport sofas, tables, and closets across the country.

It is no surprise that the first acquisition in the company’s history involves this area. On Wednesday, June 9, the Brazilian unicorn announced it had bought 100% of logistics startup iTrack Brasil. The value of the transaction has not been disclosed.

The aim for further investment in logistics had been announced by Daniel Scandian, MadeiraMadeira’s co-founder and CEO, when the company reported the raising of its series E capitalization in January this year. At the time, the company was valued at over US$1 billion, conquering the unicorn title, after a US$190 million round led by SoftBank and Dynamo.

Scandian says that the decision to acquire iTrack arose from a logistics partnership. After 6 months using the startup’s delivery routing, order tracking and pickup services, the MadeiraMadeira team realized that it could leverage its partner’s technological development through an acquisition, which had no institutional investors.

“We need people who solve and make our problems simpler. In the case of iTrack, it hit us. We immediately had great empathy for their story and saw an opportunity to accelerate the core of our business with people who have the same values as us,” says Scandian.

Founded in 2017 by Daniel Drapac, iTrack Brasil offers logistics intelligence services and access to a marketplace with over 46,000 self-employed drivers for about 200 Brazilian companies. Since its foundation, the startup has helped track over 3.6 million deliveries. In 2020, the company grew 42% and projects 60% growth for 2021.

Despite the acquisition, iTrack’s founder and 20 employees will remain in the business, which will continue to serve other clients as well. “This operation is a recognition that we are on the right track by providing solutions that, in fact, solve problems and bring the supply chain closer together. Being part of the MadeiraMadeira group is very exciting for us, to continue building an even more promising future,” says Drapac.

Within MadeiraMadeira, the startup joins the operation of Bulky Log, the unicorn’s logistics arm. Founded in 2018 after issues with a partner carrier, Bulky Log operates 14 distribution centers and a 35,000 m2 fullfilment center in Jundiaí, in the interior of São Paulo.

“With iTrack, we have been able to save money on several fronts. A well done routing leads to savings in delivery time and cost. In addition, by centralizing everything in the startup we can cut costs with third party solutions,” says MadeiraMadeira’s CEO.

For clients, the great advantage is the increase in service quality, especially in the product tracking aspect. “Knowing what time the delivery will arrive is important for consumers; after all, you can’t have a couch sitting idle at the front desk,” says Scandian.

MadeiraMadeira is one of the e-commerce retailers riding the wave of digitalization brought on by the pandemic. With consumers spending more time at home, e-commerce sales have skyrocketed in Brazil since March 2020. The sector’s revenue last year grew 68%, exceeding R$120 billion, according to consulting firm Neotrust/Compre & Confie. In the furniture sector, the increase was even higher: 107%.

Leveraging the good moment and the million-plus investment, the company continues its expansion strategy. Since January, 33 physical MadeiraMadeira stores were opened in Brazil, up from 9 to 42 units. 500 workers have been hired in the past five months, bringing  the company’s workforce to 1,800 employees.

According to Scandian, investments have yielded results. In the first quarter this year, the company posted a 93% increase in revenues compared to the same period last year.

On the acquisition front, iTrack was just the beginning. MadeiraMadeira has an internal team analyzing potential transactions in the areas of logistics, technology, services, and development of new product categories.

“We want to use M&As as a tool for acceleration. We will not buy just for the sake of buying, we are very aware of the importance and the challenges of this type of transaction, it is like a marriage, it must be a win-win situation,” the CEO says.

Source: Exame