Keeping a small sales business afloat in Latin America can involve long bus trips to find new products, lack of working capital and payment difficulties. These inefficiencies then trickle up to wholesalers who then have to raise costs and deadlines for deliveries.
This caught the attention of second-time entrepreneurs Bruno Ballardie and Fernando Zanatta, who started ZAX in 2019 to develop a platform that unites freight, delivery and payments tools to connect sellers and buyers in Brazil.
Prior to starting ZAX, CEO Ballardie was founder of eÓtica, a glasses e-commerce company that merged with Lema21 in 2018. CTO Zanatta was founder of Netlolo, a tool that connected clients with global experts, and was also previously CTO for Dafiti and COO for Buscapé.
They saw a direct-to-consumer market that was becoming huge thanks to technology and innovation, but a wholesale sector that wasn’t seeing the same kind of growth. Many people traveled to city centers like São Paulo to buy inventory, but were using pen and paper to write orders and WhatsApp to transact.
“We saw a huge opportunity to help people make a great business,” Ballardie told TechCrunch. “The market was lagging — there is only 7% of e-commerce penetration, and in the wholesale sector, it is 1% or lower. All of the area was underdeveloped in terms of logistics, payments and products discovery, so we created a tool for that.”
ZAX’s addressable market for B2B transactions, just in Brazil, is estimated to be BRL 2.4 trillion, or $445.6 billion, Ballardie said. ZAX’s platform was initially a clothing wholesale, but has expanded to shoes, electronics, toys, accessories and beauty items. Buyers come on the platform, choose their products, then the method of shipment and the form of payment.
Today, ZAX raised $6 million in Series A funding in a round that was led by Atlantico and included FJ Labs, Caravela Capital, GFC and Canary. GFC and Canary each led one of ZAX’s previous investment rounds. The new capital brings the company’s total funding to $8.3 million.
“ZAX has shown a great execution in a very short period,” said Julio Vasconcellos, Atlantico’s managing partner, in a written statement. “They have a lot of potential to help sellers and buyers not only in Brazil, but throughout Latin America, where wholesale and retail can grow a lot by using more technology.”
ZAX is working with over 700 suppliers — an increase from 100 prior to the pandemic — and since March 2020, its revenue has grown 10 times, Ballardie said. It has a team of 65 employees and has more than 50,000 buyers using the platform.
The new funding will enable the company to expand into two more regions in Brazil and add to its product lines in the beauty products and accessories categories. Ballardie also wants to hire additional technology and product development staff.
Next up, ZAX is investing in financial services, piloting some buy now, pay later initiatives and integrating financial partners to provide working capital for customers. The company now offers a 30-day line of capital and point-of-sale system and will follow up with a digital wallet and other payment tools in the future.