Mexico City-based last-mile logistics platform Cargamos wants to own same-day delivery in Latin America. The company has announced a $7 million raise in follow-on funding, bringing its total seed round to $11 million, which it will use to create a nationwide distributed warehouse network so regional retailers can compete with giants like Amazon.
Cargamos intends to use the funding to build a large fulfilment facility in Mexico City. It also wants to expand its network of mini distribution centers which it calls points of delivery, AKA "pods," where packages are sorted and sent out for final delivery. The company currently has about 50 pods, but wants to more than double that number in the next six months so that it can cover a service area around Mexico City of up to 75 additional cities, according to Ivan Ariza, founder and CEO of Cargamos.
Ariza told TechCrunch that while Cargamos was founded in 2019, this is his second attempt at starting a last-mile logistics business. When he first tried around 2013, e-commerce wasn't yet popular enough in the region to succeed. Now, Latin America is expecting powerful growth in the e-commerce market, with a forecasted 29% growth in volume between 2020 and 2024 and a projected market size of $580 billion, with Mexico and Brazil leading the way, according to Americas Market Intelligence (AMI) analysis from its 2020-2024 LatAm E-Commerce Datapack.
"The problem in Mexico is the orchestration of optimization," Ariza told TechCrunch. "The networks are not connected, they're basically a mess and have really poor technology. Right now we believe that e-commerce exists, but the only blocker for Latin America is the lack of logistics here that makes it very expensive and difficult for people of low income. That's why Cargamos exists. We want to increase the speed and decrease the cost in the region, and open the door for e-commerce across LATAM."
Currently, Cargamos works with three of Mexico's largest retailers, including Liverpool, Mexico's largest chain of department stores, as well the top 50 companies with an e-commerce channel in the country, according to the company. When it builds its fulfilment facility, it will be able to expand its service to smaller and medium-sized businesses that don't have their own fulfilment centers, opening the door for expanded e-commerce in Mexico.
Retailers can access Cargamos' pod network via its cloud-based software platform, which includes smart routing and an ability to get a bird's eye view of the different points of logistics, from fulfilment to pod to front door.
Cargamos' pods are created out of unused spaces in parking garages and shopping malls and are strategically located in urban areas to shorten the distance to the end-customer, allowing for what Ariza calls "quick commerce" or delivery in around two hours. Cargamos has its own fleet of delivery vehicles and drivers, but its platform allows for third-party carriers to connect to the network, as well.
The company says 25% of its delivery fleet is made up of zero emissions vehicles like electric cars, bicycles and electric motorcycles. Eco-friendly transport and multiple pod locations allow Cargamos to reduce the carbon footprint of each package by 80%, according to the company.
As Cargamos seeks national expansion with this funding round, it also announced plans to enter the U.S. and Colombian markets in the mid to long-term. Investors in the seed round include Kavak CEO and founder Carlos Garcia Ottati, Jüsto CEO and founder Ricardo Weder and Mercê do Bairro founder and COO Guilherme Bonifacio, as well as VCs like Nazca, FEMSA and Kayyak Ventures.