ZUBALE – Revolutionizing retail execution in LatAm

Founded in 2018 by two HBS grads, Zubale is the leading platform crowdsourcing on-the-ground people for retailers to address retail execution tasks. How sustainable and scalable is their platform?

Zubale’s co-founders, Allison Campbell and Sebastian Monroy (both HBS class of 2018) shared a similar path in retail in emerging markets before starting their MBA’s. Campbell had nearly 8 years of experience working with Walmart as a merchandise manager and as director of international strategic initiatives (in India & China), while Monroy spent over 7 years working in a variety of sales roles with Procter & Gamble in Mexico. Seeing a large opportunity to revolutionize how brands go about driving retail execution and achieve higher sales in Latin America, they launched Zubale in Mexico City in 2018 during their EC year.[1]

Simply put, Zubale provides a platform that crowdsources contractors for retailers. They connect large corporations (“companies”) looking to address retail execution tasks with people (“contractors”) looking for short-term work assignments. The jobs can range from conducting market research for a brand to stocking shelves, checking prices and building displays in retail stores. Since its launch, the company’s contractors have completed over 170,000 tasks for consumer brands and in 2019 their permanent workforce has quadrupled from 10 to 40 full-time employees[2].

Zubale’s approach to value creation is twofold. Even though the retail industry across Latin America generates approximately $2 trillion per year, companies are spending close to $40 billion on retail execution, which includes employees who complete in-store tasks like the ones mentioned before. This said, for companies, Zubale creates value in offering a simple, flexible and agile alternative to tackle retail execution tasks with larger coverage than before, thus saving them time and money.

On the flipside, the company offers contractors the promise of incrementing their income up to 40% by providing flexible employment on an on-demand basis. In addition, while 85% of Mexico’s population has access to a smartphone, only 10% have a credit card and 35% have a checking account. Zubale fills in this void by offering contractors payment in the form of mobile phone credit or digital rewards that can be redeemed for online purchases, thus creating additional value for them[3].

Zubale is currently operating throughout Mexico in 32 states and 94 cities. They raised $4.4 million in seed funding through well known VC firms and notable investors, which they plan on further using to continue expanding coverage in Mexico and later scaling into other Latin American countries such as Brazil, Peru and Chile[4].

However, given these plans to scale aggressively in the future, how well positioned is Zubale’s platform in terms of scalability and sustainability?

Strength of network effects

  • Same side: Medium. Zubale displays stronger same side network effects on the company side, since more well-known companies con the platform will attract other companies to join the platform. On the side of workers, these are weak given that more workers won’t necessarily attract other workers.
  • Cross side: Strong. More companies will attract more workers and vice-versa.

Network clustering

  • The large retail corporations that Zubale targets usually operate at a national scale, thus deriving a lot of value from having a national cluster of contractors they can tap into. This creates a high degree of defensibility and lowers the vulnerability of the business for Zubale with regard to competition.
  • Moreover, as Zubale expands throughout Latin America, they will be able to add a regional cluster on top of their national cluster in Mexico, thus creating additional value for large retail corporations that operate in the whole region or who have plans to do so.
  • In terms of contractors, they will care about how many companies are in their local city cluster but won’t derive value from having a range of companies available on a national scale. It doesn’t matter much given that having companies on one side of the platform will attract contractors.

Risk of disintermediation

  • Low given that the main benefit for contractors is having a constant flux of tasks from different companies on a daily-basis and vice-versa, for companies to have a constant flux of contractors to carry out a variety of tasks for them. The value of this relationship is not one-on-one between companies and contractors, but rather network to network given that companies need a range of contractors and contractors need a range of companies to carry out several tasks per day.
  • Moreover, contractors are very sticky given the payment options that Zubale offers in the form of mobile credits or online vouchers, which enables them to access online shopping they would not be able to otherwise without a credit card or checking account.

Vulnerability to multi-homing

  • Should another platform enter the same market, Zubale would be vulnerable to multi-homing. They have a first-mover advantage in terms of scale and network effects to some degree, but they would be vulnerable nonetheless if the entrant signs up enough companies and users. Nothing would prevent companies or users to use the competitor’s app to source missions in parallel (i.e. Uber vs Lyft).

Network bridging

  • Zubale has interesting options for network bridging
  • Currently they are focused on retail execution for brands, but there is scope to offer a service that matches freelance labor to a wider variety of tasks. They are on their way to build a large enough network of companies and users to do so, and they also possess the data needed to drive their actions.
  • Another vertical they could explore is financial services, given the fact that they are currently being used by a large number of users as a payment alternative via mobile credits or online vouchers (given that they don’t have a checking account or credit card)

[1] https://techcrunch.com/2019/10/17/zubale-founded-in-mexico-city-last-year-by-two-hbs-grads-just-raised-4-4-million-to-put-locals-to-work-over-their-smart-phones/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAL7nQD7d9aNqg7LIysSbKpSVnc4P8dL4emH5BX1xQlTFRzPeATpXkECXERDStR3FWNcilTizDPw6Dz4obG2idsHQk6XMgcNS0ynJVohdkNe5mcUFVGKO5lmLPSDJtmgrnHLIxrI98EWfReKvsnO9hgf0n0xO7J22GkIuRSTGIszQ

[2] https://mexiconewsdaily.com/news/zubale-crowdsources-contractors-for-retailers/

[3] https://www.revistaneo.com/articles/2019/12/04/zubale-una-app-para-generar-ingresos-extra

[4] https://mexiconewsdaily.com/news/zubale-crowdsources-contractors-for-retailers/


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Student comments on ZUBALE – Revolutionizing retail execution in LatAm

  1. Great post James, thank you for sharing!

    They seem to create a solution for a very cumbersome interaction of companies with their distributors. Nevertheless, on top of the factors you mentioned about their business sustainability, it would be also interesting to analyze what would be the regulatory reaction to this market. As with other platforms businesses, low-skilled workforce flexibilization usually tends to generate a regulatory backlash (such as Instacart or Uber) and in this case, it should be even more exposed since there are big companies on the other side of the platform.

  2. Thanks James for sharing this interesting post! I completely agree with you that the company has strong network effects while it has relatively low risks of disintermediation. This company remembers me the ZBJ case. Although ZBJ has much higher disintermediation risks, both companies have challenges in terms of domestic competition and potential international expansion of the company.

    Regarding the former, as you mentioned in the blog, the entry of another platform to the same market is an important threat since customers can do multi-homing. I believe that although it is very difficult to face that problem, the company should strengthen its value proposition and analyze alternatives to secure exclusivity with companies. In addition, involving users in improvements is a way to strengthen the relationship with customers and improve the service. Higher competition will impact how the company monetize the service, and the only way to reduce that impact is by differentiating from the competitors.

    Regarding the later, ZUBALE can learn from the initial failure of ZBJ in its expansion to the US. When analyzing the potential entry into new markets, ZUBALE should understand the competitive landscape as well as assigning the correct resources to support the growth outside Latin America.

  3. Great post James, thanks for sharing! I found very interesting Zubale’s business model and one of the questions I have is if this platform could be expanded to attend small retail businesses as well. Why only big retailers? maybe a driver for growth would be providing this additional workforce/free lancers with some expertise in retail operation to small stores as well. Small businesses have less capacity to hire workers and usually have to rely on overtime of existing workers, owners or family members. By using the platform they would be able to ramp up service quickly when demand requires to (for example, holidays, weekends, etc). On the flipside, I see also a risk of regulatory backlash for them in some Latam countries with very strict labor regulations (as Argentina and Brazil).

  4. Thanks James! as a former investor in Zubale I agree with many of the points you mentioned. The demand side (CPG companies) is strong and stable and supply side (contractors) is highly fragmented so it makes a lot of sense for Zubale to exist and grow as a platform. One threat I imagine on the supply side is the increasing alternatives to Zubale for gig economy workers. Multi-homing already exists. Maybe it’s not exactly the same task as sorting merchandising for CPG companies, it could be last mile delivery (Rappi, Mercadoni, Cornershop, Glovo etc) and others. And over time Zubale might need to increase incentives to keep contractors on the platform – would mobile phone credit and digital rewards still be enough?

  5. Great article and awesome to get an in-depth perspective on a successful LATAM startup! As mentioned in a prior response, this does sound similar to the ZBJ case we discussed but I think they are better positioned to handle the disintermediation problem due to the network to network connections being addressed by ZUBALE.
    However, I believe there is some additional value being left on the table, which can be captured and in turn reduce the leakage of off-platform activity. ZUBALE should consider playing the role of a staffer and project manager on large scale projects which requires several users to participate for longer periods of time. In essence, ZUBALE can have two business models with the first being it’s current matching activities but the second a little more similar to traditional consulting and staff augmentation roles. This could potentially be a path forward to continue to scale and remain sustainable.

  6. Great Article! This is a very interesting business model. I think ZUBALE choosing to focus on a narrow segment of the market, retail execution, is a great decision. They are able to leverage the experiences on the founders and create a value proposition that is unique to consumer companies. I am not sure if Mexico is like other emerging market, where informal retail is big part of retail. If it is, I can understand how strong the value proposition is for consumer companies, who may find it expansive to expand into less dense cities

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