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Latin America’s Market Dynamics Can Help Nuvemshop Leapfrog Into Pole Position

Kushki Chief Executive Aron Schwarzkopf sees Latin America as one of the last frontiers in terms of digitization of payments. It’s a place that relies extensively on legacy technology, where everything remains fragmented and where there’s a total lack of standardization.

That absence of any robust payments infrastructure means the region is ideally suited for eCommerce startups such as Nuvemshop, which has often been likened to be “the Shopify of Latin America.” It’s an environment that will likely create a kind of “leapfrog effect” that helps Nuvemshop to grow far more rapidly than its U.S. namesake did, Schwarzkopf believes.

“Nuvemshop is doing everything from shipping to payments to helping with inventory management, logistics and even credit,” Schwarzkopf said. “That’s going to help it have multi-engagement with medium and large merchants and it will happen much faster than what you saw play out with someone like Shopify in the U.S. and Canada. I feel like in Latin America, it’s going to happen much faster.”

According to Schwarzkopf, there are some fundamental differences between the U.S. and Latin American ecosystems that will help propel Nuvemshop to much faster growth. He pointed out that in the case of Shopify, it started out in the states primarily with small and medium-sized businesses (SMBs). That’s not the case in Latin markets, where most of the incumbents, and consequently, many of Nuvemshop’s customers, are larger retailers.

“They will probably be a lot more open and require Shopify-like platforms compared to most players in the States, where they went and built their own,” Schwarzkopf said. “The Walmart equivalents of different industries in Latin America are so far behind in technology that they’re now trying to figure out how to play with, or against, Mercado Libre, or whether to play with Amazon. And a lot of them are opting for solutions like Nuvemshop instead.”

To date, Nuvemshop has already displayed impressive growth. Earlier this month it saw its valuation bumped up to $3.1 billion after landing another $500 million via a Series E round of funding.

Read more: LatAm eCommerce Platform Nuvemshop Raises $500M In Series E Funding

Amazon vs eBay 2.0

Schwarzkopf told Webster that Nuvemshop is leveling the playing field for merchants going after Latin America’s biggest eCommerce enterprises, and he said the situation resembles how large big-box retailers chased and eventually surpassed eBay in online sales in the U.S.

Schwarzkopf said companies like Mercado Libre are starting to blossom and show impressive growth. But he believes newer players like Nuvemshop are taking a much more pragmatic and technological approach to solving some of the very tough problems that persist in Latin American markets.

“These are problems that took Mercado Libre decades to fix, things like inventory management, taxation, different payment methods, accepting cash online, facilitating credit and making that work in multiple countries,” he said. “Nuvemshop has done all of that really well, it’s building a whole fantasy land. It’s chugging along and killing a lot of big ecosystem problems.”

More like this: Kushki Lands $86 Million To Fix LatAm’s Fragmented Payments Infrastructure

“I just feel there’s this leapfrog effect that’s going to allow companies like Nuvemshop to create more of an ecosystem and more of an embedded finance platform towards merchants than what happened in the U.S.,” he added. “It’s doing everything from shipping to payments to helping with inventory management, logistics and even credit.”

Further reading: The Roaring 20s: Installing Decentralized Trust For Global Commerce

Schwarzkopf told Webster that although Nuvemshop is often compared to Shopify, its path will likely diverge and that it will ultimately be less of a technology provider and more of an eCommerce network. One that powers everything merchants need to get their products to consumers and ensure they receive their payment.

He said the reality is that Latin America isn’t such a sophisticated market and there is no marketplace of application programming interfaces (APIs) to speak of. There are also far fewer reliable partners for companies like Nuvemshop to collaborate with. So many times the only option is to just knuckle down and do everything yourself.

“In emerging markets like Latin America, you have to be a network just to make things work,” Schwarzkopf said. “Most large companies just become networks out of necessity.”

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