Miferia, a Mexico-based business-to-business wholesale marketplace, bagged $7 million in seed funding to continue developing its curated website connecting independent retailers in Mexico with domestic brands in categories like cosmetics, food and beverage and home décor.
In 2021, nearly 300 million people were shopping online in Latin America; Mexico accounted for 27% of that e-commerce activity, according to Statista. E-commerce was a small percentage, about 6%, of all retail sales in Mexico in 2020, and is forecasted to grow to 15% by 2023.
However, Tariq Musa, founder and CEO of Miferia, notes that despite that growth, over 90% of retail in Mexico still takes place in just 2 million physical stores, and less than 1% of B2B transactions have moved online and are largely still dependent on cash transactions, which often requires retailers to pay upfront for merchandise.
Working in this way, retailers often give up too much margin, on average 20% to 30%, including markups, which makes offline options prohibitive to everyone but the largest brands. In addition, shipping is expensive, so many retailers pick up their own inventory from the distributor. And by relying on cash, brands spend much of their time chasing retailers for payments. This has uncovered a need for access to working capital so that retailers don’t have to sell out of their inventory before being able to pay for new inventory, he explained.
“In the traditional retail channel, all inventory purchases have been done the same way for generations — through offline distributors and sales reps,” Musa told TC. “This analog process requires a lot of manual labor and most often favors large distributors. When you combine these pain points, it is obvious that the market needs a central platform solving these issues around product discovery, inventory and working capital.”
That’s where Miferia, founded this year, comes in. This enables retailers to bring their inventory relationships online, expand their product selection and get more favorable credit terms.
Users register with the company by providing some details, and a few more financial ones if they want to apply for credit. Then they can access the wholesale pricing, which includes more than 5,000 SKUs from over 500 brands, add items to the cart and complete the transaction. Miferia also offers free shipping and handles payments so brands don’t have to worry about collections.
The seed funding is the first institutional round the company has taken. The investment was co-led by Bain Capital Ventures and Tiger Global, and included participation from Canary, Latitud Ventures and Asymmetric Capital Partners.
Merritt Hummer, partner at Bain Capital Ventures, said in an interview that she had been looking into the B2B marketplace for the independent retail channel in other regions after investing last year in France-based Ankorstore, a similar marketplace that connects retailers and brands in Europe.
Hummer saw quite a few B2B marketplaces in Latin America, but said Miferia stood out because it was focused more on higher-margin goods and merchandise curation versus others that catered to corner stores.
We’ve reported on some of those wholesale marketplaces recently, including ZAX, which connects sellers to buyers in Brazil, Morado for Colombia’s beauty industry, Novi, for sustainable goods, JABU in Africa and GudangADA, doing something similar in Indonesia.
Meanwhile, Miferia is still in its early stages. Musa has spent several months putting together a team, building a minimum viable product and working with customers. Now the company is ready to accelerate growth and will use the new capital to build liquidity in the marketplace and add to its team of 30.
“Our top priority is to get the flywheel network effect going in Mexico before we spread wider,” Musa said. “All shopkeepers talk to each other, as do distributors, so we feel we will grow on a concentrated basis.”
