Vying for Customer Proximity in Latin America: Transforming the Spaces around Us.
By Malcolm Grba, Investment Analyst at Angel Ventures.
The rise in internet penetration across Latin America continues to drive consumers’ adoption of new technologies. When paired with high rates of urbanization, rampant congestion, and relatively low labor costs, the value of being physically close to consumers for many tech-enabled businesses is greater than ever.
These factors, among others, have solidified the appeal of e-commerce, food and grocery delivery, and last-mile fulfillment throughout the region, and the ongoing pandemic’s impact on mobility has greatly accelerated their growth. Within this landscape, every second and every meter that divides consumers and companies matters.
With a focus on proximity, efficiency, and convenience, both startups and more mature tech companies are employing unique strategies to reinvent existing spaces throughout our communities. Here are a few examples:
Convenience Stores become our Banking Partners
Known by many names across Latin America, the mom & pop shop is a staple of almost every block. This traditional and often informal channel has been complemented by and sometimes replaced with growing modern convenience store chains such as OXXO. Whether traditional or modern in form, this channel is increasingly used as a means of making payments and has seen its relevance in the fintech sector continue to grow. For example, almost all popular payment gateways in Mexico enable their customers to accept voucher payments made at OXXOs.
Given that mom and pop store owners are often regarded as trusted members of their communities, they have significant potential to continue influencing the consideration and adoption of different products and technologies. A number of fintechs are already leveraging this trust to acquire and activate new customers, especially those at the base of the pyramid that are often unbanked.
Parking Lots double as Delivery Optimized Restaurants
Parking lots in Latin America generally contain fewer than thirty spaces and are often nestled in cities’ densest areas. As consumers move away from owning or using their own vehicles to commute, existing parking lots with excess capacity are serving as an enticing opportunity for companies in different industries to move their product creation or distribution closer to their consumers. Specifically, many food and grocery delivery companies see immense potential in activating networks of dark kitchens and storerooms in these locations.
Shopping Malls reinvent Themselves and their Role in Retail
While shopping malls will likely recover much of their lost customer traffic once we reach an approximation of post-pandemic normalcy, e-commerce’s increasing relevance is here to stay. Already, a variety of startups in the region are focusing on how they can leverage malls’ strategic locations and access to a wide variety of consumers and their data to complement and facilitate improved retail experiences. Especially as companies such as Mercado Libre and Amazon scale their same-day delivery guarantees and continue to push expectations toward immediacy, these rethought malls and their embeddedness in existing value chains will prove increasingly advantageous.
While these three examples are unique, they are each grounded in a fundamental transformation of existing, legacy spaces and their proximity to the people and communities that have shaped them. Through constraint and opportunity alike, Latin American startups are seeing the structures and spaces around them with the fresh eyes of innovation.
About the author:
Malcolm Grba was selected as one of sixteen grantees for a ten-month program Fulbright-García Robles Scholar (2019–20). His expertise focused on helping innovative, impactful businesses find access to responsible capital and partnerships throughout Latin America.
He became an Investment Analyst at Angel Ventures collaborating with startups through each stage of the investment process (initial contact through investment) for Angel Ventures’ Pacific Alliance Fund (AV PAF II), with a focus on process optimization, business model synthesis, emerging market synergies, and research.
