Brazilian Daki offers more than 1,000 products in its app; Deliveries take place in 20 districts of São Paulo, and business should reach Rio de Janeiro.

The Covid-19 pandemic made Brazilians ask for more food for delivery. Between March 2019 and March 2021, the number of Brazilians with smartphones who have already ordered a meal per-app jumped from 58% to 80%, according to a Mobile Time/Opinion Box survey.

Behind the scenes, the dispute between home delivery applications has escalated. The Daki Digital Market hopes to grab a slice of the Brazilian market – dominated by companies like iFood, Rappi, and Uber Eats. But it will also expand its operations in other cities, such as New York (USA), Mexico City (Mexico), Bogotá (Colombia), Lima (Peru), Warsaw (Poland), and Vienna (Austria).

The ambitious plans first came from a merger with JOKR, a competing startup that operates in international cities. The merger made the two companies more agile in attacking different markets – and more attractive in the eyes of investors. On July 20, 21, the group announced the raising of a series A contribution of US$ 170 million.

Part of the money will be used for Brazilian expansion, through the Daki brand. The national plans were detailed in an online press conference.

Digital market without intermediaries

Daki was created in January 2021 by entrepreneurs Alex Bretzner, Rafael Vasto, and Rodrigo Maroja. The business started with a pilot store in Sao Paulo, after an angel investment of US$385,000.

“The goal is to deliver a superior delivery experience in the Brazilian market. Even with the digitization caused by the pandemic, we understand that customer satisfaction still needs to improve. The penetration of online purchases in the country is still low in comparison with other aspects of Brazilian e-commerce and with online supermarket purchases in other countries”, said Vasto at the press conference. Daki estimates that the food and beverage industry has global sales of US$8 trillion and that only about 3% of the amount is online.

The delivery startup puts as differentials for consumers the delivery in 15 minutes, free shipping, the operation from 7:00 am to 2:00 am and the assortment with more than 1,000 products. As a business model, Daki installs small closed-door distribution centers (dark stores). The warehouses have a reduced delivery radius and their stock.

“We are a technology company and we work with data. We have a product limit to ensure we have the right product for the right person and in the right neighborhood. The goal is to fill needs in each category with the most optimized inventory possible.

For example, instead of 20 brands of tomato sauces, we will only have one more popular sauce and one more premium sauce,” says Bretzner. “We don’t add depth that could complicate the customer experience, nor our operation. We will never reach 10,000 products because we want a more fluid experience”, added Vasto.

With fewer brands per category, Daki was able to expand into verticals such as mobile and grocery accessories without much impact on the number of SKUs. The products are currently separated into the categories of Groceries, Vegetables, Meat & Frozen, Bakery, Eggs & Dairy Products, Beverages, Cellar, Beer & Spirits, Tobacco Shop, Snacks, Sweets & Ice Cream, Home & Cleaning, Pharmacy, Personal Care, Pets and Baby.

The founders claim that this business model allows for a profitable operation. “It’s a market with tight margins and one that asks for efficiency. That’s why we adopted the cut of intermediaries”, said Vasto.

In the comparison between the first and the second quarter of operation, Daki grew eight times in the number of orders. The investment of US$170 million received by the brands will be used for geographic expansion, including in Brazil; to improve product assortment; to improve the in-app browsing and purchasing experience, and to expand the team.

Daki has 10 dark stores in the city of São Paulo. It serves 20 neighborhoods in the west, center, and south-central zones. Daki should also arrive in the city of Rio de Janeiro. The goal is to end 2021 with 100 closed-door distribution centers, focusing on the two cities.