E-Commerce for a Fair Producer-Consumer RelationshipBy Gabriela Mastache | Wed, 06/17/2020 - 18:45
Q: What are the opportunities that Jüsto identified in the Mexican market?
A: We have endless opportunities. The Mexican online grocery market is nascent with less than 2 percent of penetration. In China, for example, penetration is around 25 percent. However, we believe that after COVID-19, the world will change. The penetration curve will steepen throughout the e-commerce space. In particular, the online groceries segment is ready to explode. The big consumer packaged-goods brands would much rather spend their marketing dollars on pressing customers to add their products to online grocery-shopping baskets than on ads for television or Facebook. That is because online shopping can guarantee sales performance.
Q: What is Jüsto’s added-value offering for Mexican consumers?
A: We can summarize our value proposition in four pillars. The first is frescos más frescos (fresher produce), meaning that we offer fresher and better-quality produce sourced directly from producers and farmers. The second pillar is best price, as our asset-light model allows pricing parity while improving margins. The third pillar is convenience and agility, with technology allowing us to optimize inventory turn, fill rates and a much better user experience. The fourth pillar is fair trade; we believe in supporting and promoting local producers, providing them with a platform to sell their products.
Q: What is the element of Jüsto’s offering that Mexican clients seem to value the most?
A: The supermarket model has not changed and it is not working anymore. It is time consuming, generates lots of waste and it is overpriced while offering low margins. Jüsto is solving all these problems. We are a young company. We represent the values of the next generation. Our brand is something that resonates with a broader demographic. For example, every Justiciero wears our logo with pride. This is something that is picked up by our users and customers every time we deliver an order. We are not only delivering healthier and fresher produce; we are delivering a new experience to a broader demographic.
Q: What are the strategies that Jüsto is using to position its brand among different client segments?
A: We disagree with the notion that the market is heavily competed. The traditional supermarket space is concentrated in very few players. Walmex accounts for over 60 percent of the market. Just to put it in perspective, Walmex’s market share is about the same as Uber’s worldwide. Yet, online groceries accounts for less than 2 percent of its revenue in Mexico. Traditional supermarkets are struggling to adapt their model based on foot-traffic to online delivery. And we can see all this throughout Latin America. Our “niche” is massive and untapped.
Q: Jüsto mentions that its offering is fairer not only with consumers but with suppliers. How does Jüsto’s relationship with suppliers differs from the one traditional supermarkets establish?
A: Our name is Jüsto, which means fair in Spanish. In short, fairness is in our DNA. The global problems we are facing today, such as global warming and pandemics, demand all of us to change how we do business. For example, we do not wait 90 days to pay our suppliers. We also provide smaller producers access to a platform that other supermarkets cannot provide. It takes us a few days to publish new products in our catalogue, while businesses like Walmart take longer.
Q: How has the company managed to reduce product losses to only 3 percent?
A: Waste reduction comes in multiple ways. We shrink the value chain, which means we turn inventory faster, inherently reducing waste. Thanks to technology, we are optimizing the supply chain sourcing directly from producers. In addition, we have no stores, which means theft is non-existent. Looking at other public online grocers like Ocado in the UK, waste is less than 1 percent against traditional supermarkets.
Q: How has the COVID-19 sanitary emergency impacted Jüsto’s operations in the city?
A: It has been humbling experience. We never imagined how much impact our day-to-day was going to have in such a short time. We launched operations in September 2019, so most of our process are still a work in progress. Hence, over the last couple of weeks, we had to iterate and evolve faster to keep operations going. We had a 300% increase in demand from one day to the next. However, we are stepping up to the challenge.
Q: After operating in Mexico City, what can Jüsto take into consideration for its expansion toward other cities?
A: Mexico City is one of the largest, richest and most populated urban areas in the world. We are fortunate to have started operations here. We call it our petri dish. Think about it as a massive laboratory for experimentation. If we can get it right here, we can get it right anywhere. So, we are fine tuning our model before we kick-off our expansion plans.
Jüsto is a Mexican online supermarket that started operating in September 2019. It offers a differentiated experience for users by eliminating intermediaries and offering fresher products at a fairer price