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.
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.
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.
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.
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.
- 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).
- 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)