Many people who do business in the United States don’t realize that there are burgeoning and viable markets in Latin America. After being educated outside the country, my guest, Alejandro Freund saw that his homeland of Ecuador was ripe to become the hub for a leading ecommerce company in Latin America.
This conversation with Alejandro is a look into the start of a Latin American ecommerce company from zero, including how Alejandro and his partner raised capital, what they did to find products to sell through their ecommerce platform, the tech challenges, beating local competition, the governmental regulations, and more. Anyone who’s interested in ecommerce will learn a lot from his ground-up journey.
Opening up an E-commerce market in Latin America from a base of zero.
With the start of any company, there are many foundational pieces that need to be put in place. But for Alejandro Freund, it was truly a journey from square one. Ecuador had no ecommerce presence other than large retailers who were selling their own products online, so he saw an excellent opportunity to beat the competition into a very lucrative market.
In spite of the tremendous learning curve, that’s exactly what he’s done. YaEsta is now the leading ecommerce platform in Ecuador and continues to build momentum as it continues funding rounds to focus on marketing and building its infrastructure and team. You’ll hear Alejandro’s lessons-learned on this episode, so be sure you take some time to listen.
A different way that the riches are in the niches: local artisan communities.
As YaEsta began its growth, one of the uphill battles was that of marketing. How could the first ecommerce company in the country become known and trusted when the marketing budget was not very large? Alejandro and his team realized that the small artisans who provided their initial product base had engaged followings already and that they could tap into those communities to build momentum for those products on their platform. It’s a non-intuitive way of reaching the masses that worked. Find out more on this episode.
Product fulfillment is difficult in any country. Ecuador presents even greater challenges.
Many Latin American countries have burgeoning ecommerce businesses already. But Ecuador did not, which is the main reason Alejandro Freund first began his ecommerce company, YaEsta. One of the reasons ecommerce had never taken off was because the delivery of products was not as economical as in other countries. Whereas Chile has major cities that are close to each other, Ecuador is not situated similarly. The delivery areas are spread out across the nation which makes the cost of delivery higher and the process more difficult. You can hear how Alejandro and his team continue to deal with the difficulty of product delivery, on this episode of Crossing Borders.
Advice for those in a competitive market: Let your competition drive you toward excellence.
When I asked Alejandro if he had any advice for founders who are starting companies in competitive niches, he said that they should not let the crowded market scare them. Instead, use the competition to drive you to do things better, to make a better product, to improve your customer experience. In his eyes, without competition things become stale and nobody is served well.
I hope you enjoy this episode with Alejandro. He’s a Latin American entrepreneur who is doing world-class work and leading a company that is poised to shape the ecommerce niche in Latin America.
Outline of This Episode
- [1:44] What it’s like to do ecommerce in Ecuador.
- [6:22] Closing the deal with a small business supporter to build out the company.
- [8:54] How the team decided which products and brands to launch with.
- [12:42] Tapping into the artisan communities surrounding their suppliers.
- [15:30] Fundraising after a successful trial-and-error first year.
- [20:27] Understanding Ecuador as a country and as a place to do business.
- [22:22] Why are the big retailers in Ecuador so far behind those in other countries.
- [35:16] Dealing with the logistics and shipping in Ecuador.
- [41:08] The reasons Alejandro decided to return to Ecuador to build a company.
- [45:55] Why Alejandro believes he’s been able to raise the funds he has.
- [52:00] Advice for other entrepreneurs getting into competitive markets.
- [56:00] Why yield is a great reason to invest in Latin American companies.
- [59:32] Surprising things about doing business in Ecuador.
- [1:00:45] Alejandro’s advice to himself as a beginning startup founder.
Resources & People Mentioned
- Alejandro on LinkedIn
- Ernesto Kruger
- Vtex: a Brazilian e-commerce platform
- Falabella Large Latin American retailer
- Garbarino Large Argentine retailer
- Jumbo Large Latin American retailer
- Carrefour French retailer with Latin American presence
- Kushki payment processor in Ecuador
- Rocket internet – German owned international company builder
- Linio – Rocket internet owned ecommerce in Latin America
- Warby Parker