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GoApp.pet

We are Brazil's largest pet shop network

Brazil
Market: Another
Stage of the project: Operating business

Date of last change: 13.11.2020
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Idea

GoApp.pet makes life easier for pet owners. In Brazil (the 2nd largest pet market in the globe) we allow users to shop for pet products. We are Brazil's largest pet shop network (+260 pet shops). We have neither inventory nor physical stores; we coordinate last mile logistics with local pet shops. As a result, we are the only player in Brazil able to offer free same-day delivery in +40 cities. In our Community app we allow users to connect with thousands of pet owners and pet service providers from +50 countries based on pet's needs and interests.

Current Status

In September our (i) GMV was R$28,074.00 ($5,600.00), (ii) average take rate was 7.2% and (iii) clients placed +170 orders with an average order size of about R$170.

As of today, we have +360 subscribers (clients that shop regularly at GoApp.pet and +260 registered pet shops.

Since April (when we launched our pet product marketplace MVP) we have been growing steadily every month while ensuring that we scale our operations with quality.

Our goal is to reach 2000 subcribers in Brazil by February 2021 and 3 million by December 2025.

Market

100% of our client base consists of pet owners, of which 65% are women, ages 25-44, tech enthusiasts, classes A and B.

Pet products in Brazil represent roughly 64% of the pet industry (which accounted for approximately US$6 billion in 2019). Approximately 40.4 million households have pets in Brazil. Our current +260 registered pet shops cover about 75% of the regions where Brazilian households with pets live.

Based on average order prices at GoApp.pet and input fr om our customers, households in Brazil spend on average R$100 ($20) per month on pet products. As a result, households in our current target regions spend on average R$93.3 million (US$19 million) daily on pet products.

Our current take rate is 7%. We want to reach a market share of 15% in our target regions given our ability to provide same-day delivery in cities wh ere our competitors cannot. As a result, we could be making about R$975 thousand (US$194 thousand) daily in sales of pet products in Brazil.

We will need to add many more pet shops to our network in order to be able to fulfill this many orders. We believe this is 100% doable. There are +25,000 local pet shops in Brazil and we want to reach +500 registered pet shops by March 2021.

Our business model is easily expandable to other cities in Brazil and elsewhere in the globe as we have active users registered in +50 countries. We always say that our most valuable feature is having the world's pet distribution map through our community and being able to explore it commercially.

Problem or Opportunity

All of us have had pets since our childhood. Marcela (my co-founder) has always been crazy about animals and came up with the idea of creating a pet adoption platform to help rescued animals. As we were conceiving our MVP, we interviewed +100 pet owners to learn about their pains and needs. What we learned was that we could use technology to offer a better solution for a problem that affects +40 million households in Brazil: buying pet products really sucks. E-commerces usually take days (if not weeks) to deliver products and local pet shops are not convenient. It was clear to me that I was standing in front of the most important business of my life.

By partnering up with local pet shops (the Brazilian pet market is the 2nd largest in the world and it is highly fragmented; there are +25,000 local pet shops), we offer free same-day delivery in Brazil's largest cities. We use our registered pet shops as inventory holders and distribution centers and offer them an additional sales channel.

As a result, we quickly became the largest pet shop network in Brazil and the only player in Brazil's industry capable of providing free same day delivery across the country.

Solution (product or service)

We use a data-based approach that allows us to better understand the pet-related needs of our users.

We are the only player in Brazil's pet market able to provide users with free same day delivery of pet products in +40 cities. As a marketplace, we provide local pet shops with an additional sales channel.

At our community, we want to continue to grow and scale and allow pet enthusiasts with revenue generating opportunities in the industry.

What is unique about us is our business model: we combine (i) our users’ given location and pet type and (ii) our registered pet shops’ inventory and operators to fulfill orders.

Countries like Brazil have distribution gaps that make e-commerces expensive to operate. Logistics are inefficient and shipping costs are high. On the other hand, Brazil has +25,000 local pet shops looking for additional sales channels in order to compete with the big players. Through local pet shops, we are able to provide pet owners with the simplest solution to their main problem: having pet products delivered within a few hours from their order without shipping costs.

For not knowing about us (yet), pet owners resort to regular e-commerces (when delivery time is not an issue) or local pet shops (that may not have all the products they are looking for).

Competitors

In the pet product segment, we understand that our main competitors comprise of three categories: (i) leading pet shop chains; (ii) delivery service providers; and (iii) other pet brands.

Brazil’s leading pet products retailer are (a) Cobasi (that has reached more than US$250 million in revenue in 2018); (b) Petz (that as Cobasi combines both an online store and own physical shops); and (c) PetLove (an online pet products retailer).

Rappi, the Colombian delivery service provider, has partnered with Petz to provide pet products delivery and with DogHero (Brazil’s leading dog walking app), in an attempt to, through a generalist approach, become “the app of all apps”.

Finally, other pet brands include Zee.Dog, one of Brazil’s main dog wear brand. In April 2019, Zee.Dog launched “Zee.Now”, a pet products delivery app that is currently available in certain locations in São Paulo and Rio de Janeiro.

As in the U.S., smaller pet products chains in Brazil such as (i) Bicho Bacana; (ii) Pet Fun and (iii) Patas e Penas (all of which are registered pet shops in our pet product marketplace) have high market penetration particularly in more densely populated areas.

We strongly believe that our business model is smarter than our competitors’ for two reasons: it (i) allows us to source products locally and generate economic efficiencies with free same day delivery; and (ii) uses artificial intelligence to tailor the user’s online shopping experience to the user’s pet needs.

We want to rapidly scale our user base and market penetration through new partnerships with small and medium pet shop chains, which will allow us to further expand our free same day delivery policy to other regions.
We believe that our community-driven approach combined with our AI-powered pet-centered product marketplace is more in line with the current trends driving the growth in Brazil’s pet industry.

Furthermore, we understand that customers are increasingly sensitive about buying what is right for their pets. Hard selling does not work. This means that products should reflect the pet’s breed, age and characteristics and be locally available. Pets are like family members and pet owners must buy the right supplies to keep their pets well. Our role is to help users in this process.

Other companies in Brazil are unable to provide a shopping experience that follows this logic. Incumbents continue to push increasingly informed customers to buy what is more beneficial for them through a generalized customer experience not focused on pets’ wellbeing. We know this by heart and have embedded this into GoApp.pet's business model.

Advantages or differentiators

We know our users’ location and we are better capable of allocating resources and generating economic efficiencies. The navigation at GoApp.pet starts from the user’s preferred location. Based on the user’s input our service algorithm displays the pet-related resources (e.g. other pet owners, pet products and pet service providers) available nearby. As a result, our business model is more efficient than general e-commerce websites that need to carry inventory, have a dedicated warehouse and deal with long distance shipping and complex logistics. Our lean business model is also smarter than physical stores’ as we can easily expand our geographical reach according to the location of our userbase. We are Brazil's largest pet shop network and the only player in Brazil capable of providing free same day delivery in +40 cities across the country.

We know our users’ pet-related behavior and we are more assertive than general marketplaces. Our free features provide us with significant information about our users’ pet-related habits. When users register a pet at GoApp we learn their location and pet type (e.g. species, breed, age and gender). Our platform can then customize the users’ experience by displaying more relevant pet-related resources (e.g. other pet owners, pet products and pet service providers) according to our users’ location and pet type. As a result, our pet-centric business model is more assertive than general marketplaces.

Our Community-driven approach allows us to benefit from organic growth and revenue-generating opportunities in the pet industry. We provide users with tools that allow them to (i) connect with each other based on their pet interest and (ii) keep track of their pets’ needs at our proprietary pet care calendar. These tools reduce our user acquisition costs in comparison with online shops, inform us about our user’s pet-related behavior and help creating revenue-generating opportunities to local pet shops and pet enthusiasts that want to start their own businesses in our marketplaces.
Furthermore, we believe that our community-driven approach will allow us to scale the services provided by our marketplaces’ participants with higher quality than pure pet-related marketplaces.

Our business model allows us to benefit from ancillary opportunities in the pet industry yet to be explored. We currently monetize through commissions received out of every transaction done at our pet product marketplace. We understand that there are many additional opportunities to monetize through GoApp yet to be explored, including by (i) promoting pet brands; (ii) featuring pet friendly businesses at our Community (iii) integrating services with our marketplace and (iv) developing devices that would further assist pet owners to take care of their pets.

Finance

Our main metrics are (i) GMV (our last month's GMV was R$28,074.00 ($6,000.00); (ii) take rate (our last month's average take rate was 7.2%); (iii) average order size (our last month's average order size was R$170); (iv) subscribers / recurring clients (as of today, we have about 360 subscribers); and (v) registered pet shops (as of today we have about 260 registered pet shops).

We aim at keeping our (i) average order size and (ii) average take rate as they are and increasing our active client userbase to (i) 50k by the end of next year and (ii) 3 million in 2025, reaching a 10% market share in Brazil.

This will allow us to reach a GMV of R$3.2 billion, a net revenue of R$200 million and a net profit of R$63 million in 2025.

We would be happy to discuss our business model and 5Y budget, financial plans and projections in further detail.

Business model

As a marketplace we monetize through comissions made on the sale of pet products at our platform.

As we continue to scale we intend to benefit from additional revenue opportunities in the industry yet to be explored, including by (i) promoting pet brands; (ii) featuring pet friendly businesses at our Community (iii) integrating services with our marketplace and (iv) developing devices that would further assist pet owners to take care of their pets.

Money will be spent on

Further development of our platform and growth

Offer for investor

SAFE (Simple Agreement for Future Equity) issued by GoApp.pet LLC (post-money valuation cap US$2.5 million and 25% discount rate).

Team or Management

Risks

1. Competition and further developments in the market. We understand that the future of online shopping will be driven by highly personalized and meaningful experiences. Competitors can try to replicate our business model and develop their own proprietary service algorithms that would allow them to be more assertive than they current are (for example, by displaying pet-related resources based on their users’ location and pet interest). We understand that timing is of the essence for us – and we want to continue to move quickly in the execution of our business plan. We also understand that we must continuously innovate and deliver smart solutions to our users’ real needs relating to their pets combined with a fun and reliable app experience in order to be acknowledged as the best pet-focused platform and scale our userbase globally.

2. Key members of our team may leave us. As of today, two members of our team have left us: our prior chief technology officer and our chief design officer. We understand that team changes are a part of our lives as entrepreneurs. Using my experience rowing the Atlantic in a team of eight rowers to help cancer research, the toughest part of rowing 3000 nautical miles in 44 days was not dealing with days of bad weather or sleepless nights, but rather sharing the boat with crew members that did not have the right motivation to be out at the sea. At GoApp, we love what we do, we truly believe in cooperation and diversity and we are driven by our common goal of creating the best pet focused platform in the globe. We have dealt with the departure of our prior CTO and CDO by bringing highly motivated new members to the team that fulfilled the gaps left by our departing members, creating processes that will assist us further expanding our team and strengthening our core values.

3. Variations in foreign exchange rates and economic downturns may adversely affect our financial condition and operating results. Local economic conditions may impact pet-related expenditures. Due to the nature of the products and services sold through GoApp.pet, we understand that we are relatively better protected from economic downturns than business models more heavily dependent on the availability of disposable income. For example, Brazil pet market registered double-digit value CAGR of 10.2% between 2013 and 2018 despite headwinds like slowing economic growth and weak consumer sentiment during the same period. Additionally, our lean business model supports our scalability and expansion (from which we can reduce our risk exposure to a single market or foreign exchange rates fluctuations).

Incubation/Acceleration programs accomplishment

We presented GoApp.pet as an Alpha Startup at the WebSummit 2018, where we learned about 360Lab's acceleration program (https://www.360-lab.com/).

We were chosen out of 1038 startups worldwide and decided to join the program because of its unique global approach (Phase I in Austria, Phase II for fundraising and Phase III in San Francisco) which seemed very fitting to our product (as we were born with a global presence).

Unfortunately, the program was shut down earlier this year.

Won the competition and other awards

Top 10 retail tech solutions of the year (LATAM Awards 2019)

Photos

Photo 1 - We are Brazil's largest pet shop network

Product Video

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Idea
Current Status
Market
Problem or Opportunity
Solution (product or service)
Competitors
Advantages or differentiators
Finance
Invested in previous rounds, $
Business model
Money will be spent on
Offer for investor
Team or Management
Mentors & Advisors
Lead investor
Risks
Incubation/Acceleration programs accomplishment
Won the competition and other awards
Invention/Patent
Photos
Product Video