WHY WE INVESTED
The social commerce platform bringing Brazilians together to save on household staples
Facily empowers consumers to get the best prices on items by buying in groups.
In May of 2018, Facily was a team of three co-founders looking to figure out a way to break into the ecommerce market in Brazil and make an impact. At first, the group — Diego Dzodan, Luciano Freitas, and Vitor Zaninotto — were inspired by the multi-service platform Go-Jek in Indonesia. They built a rudimentary app connecting consumers with beauty services, food delivery, and products. But they kept looking closely at other markets and apps, trying to pinpoint a more compelling need they could meet in Brazil, where 85% of the population is considered poor, and most families are forced to spend the majority of their income on food alone.
It was the discovery of the social commerce app Pinduoduo, a platform in China that connects farmers and distributors directly with consumers, that pointed them in the right direction. “We thought: Why not create a social commerce app in Latin America?” says Freitas. “Brazil is a social media country. People share a lot of things and we are an emerging economy. We saw this as a great opportunity to sell products for a better price through social commerce.”
This time their hunch was right. In the 12 months, Facily has raised more than $366 million and is nearing a valuation of $1 billion. What operated as a 12-person team for its first six months of business is now a 600+ people team with more than 7 million products delivered in the month of October alone. But the fast-growing social commerce platform comes from humble beginnings and a simple vision to tie Brazil’s strong social media culture with its increasing need to connect low-income consumers with affordable staple goods.
A pivotal shift
Eight months into launching Facily, the co-founders pivoted to focus on social commerce, with the new task of figuring out how to create an ecommerce platform that drove consumers to share and engage with their social networks in the shopping experience. Facily had to design a new app that changed the ecommerce experience so that users would share a purchase link with friends and family before buying. Once they got them on board, they could then complete the purchase experience for the group, with the incentive of securing a better price than they otherwise would if they’d bought on their own.
The COVID pandemic, which forced many small entrepreneurs to close their doors and drove unemployment and inflation up, caused Brazil’s middle class to shrink by 4 percent, pushing nearly 5 million more people into poverty. These dire conditions made it all the more urgent for consumers to find ways to save on basic staple items for their families. While shoppers on Facily can buy across different categories including electronics and beverages, 85% of the platform’s sales come from staple products like milk, rice, beans, cooking oil, pasta, and produce. Users come to the app weekly to check for new promos. When Freitas opened the dashboard at 4 a.m. one day, he was surprised to see 50,000 people active at that hour. “They are looking for deals,” he says. “We hear stories of tough times through the whole pandemic and Facily was there for people.”
How social commerce works
Users check-in on Facily for deals and share them with friends and family, gathering a group of friends who go in together on a group purchase. Groups tend to range in size from two to 10 people, with special promotions that attract bigger groups and discounts that go up to 70% on staple items like oranges, bananas, rice, and beans. “You end up creating a group with your friends keen to buy every month,” says Freitas. “People are interacting, sharing links, and becoming purchase friends.”
When checking out, consumers are given a range of payment options from bank transfer to cash, and the shipping is always free. To eliminate shipping costs for low-ticket items, Facily created specific pick-up points where consumers go to get their purchases. Facily has thousands of pick-up points across Brazil, typically located at small businesses like beauty salons, bakeries, shops, and small offices. “They are basically like an Airbnb for packages that they host. It might be a bookstore and people who come there to pick up their packages will also look to buy books,” says Freitas. “This was a huge opportunity to drive foot traffic to these places. It helped a lot of businesses get through the pandemic.”
Hacking the supply chain
With a pick-up location within one kilometer of every household, Facily is working toward the goal of having pick-up points as close as 800 meters from every home. Shoppers buy on the app and can pick up their fruits or vegetables within a day or two at a pick-up spot. On the backend, Facily is sourcing produce directly from plantations, cutting out the added cost of going through a distribution center, which also allows farmers to collect more money on their sale. “We cut out the middle part of the logistics,” says Freitas. “We used to say we are a supply chain hacking platform.”
Facily is working to establish a presence throughout all of Brazil before the end of the year and grow its number of SKUs offered. “We are 100% focused on improving our logistics capability and customer experience so we can continue our expansion plan,” says Freitas. “We want to bring the benefits of social commerce to everyone.”
Quona led Facily’s $12 million Series A in late 2020. Learn more about Quona’s Latin America portfolio.
Disclaimer: Quona portfolio companies were selected for profiles based on objective, non-performance-based criteria for the purpose of illustrating the types of investment made by Quona funds and their impacts. These profiles are being provided for illustrative purposes only, in order to provide examples of the idea generation, research, and thought process of Quona investment teams. No representation is made as to whether or if the investment ideas represented in these profiles have been or will be profitable. It should not be assumed that Quona will be able to identify similar investment opportunities in the future, or that any such opportunities will be profitable. The above statements include the opinions of the Firm and are for illustrative purposes only. There is no assurance that any trends depicted or objectives described in Quona profiles will continue or become successful.