Ralf Wenzel is the CEO of Jokr, a grocery delivery company that has pulled back from its operations in the U.S., Mexico, Peru, and Colombia in the past year.

This interview has been edited for length and clarity.

How have Jokr’s goals and expectations shifted during the past year?

Our team, which has always built businesses for the online consumer, has learned a lot about e-commerce companies [since Jokr launched]. We know they can be very inefficient — most are not profitable nor ecologically sustainable, and the majority just showcase the big brands and reduce the exposure to small brands. We wanted to build a more successful e-commerce company, so we discovered that the innovation to achieve all that falls on the supply side. Can you work directly with them or do you have to go through the same supermarkets, wholesalers or retailers? [These intermediaries] were the fundamental reason we had problems in all the countries we were operating.

The reason we are now focusing entirely on the Brazilian market is related to the supply side, not on the consumer side. Brazil is very fragmented when it comes to supply — very different to how Mexico operates, for example. Mexico has local production but there are a lot of American or foreign brands. The Brazilian market is very fragmented but produces most of its food domestically, which to us means we can reach the producers, farmers, and brands directly and make agreements with them. We don’t have to go through the distributors or supermarkets. That gives us a possibility to control the supply chain process, to buy more efficiently, and to unlock higher margins, no matter if we make instant or scheduled deliveries.

It’s difficult to win in markets like Mexico. After two years operating our business in Brazil, almost 80% of business was concentrated in that country. We saw there are still so many neighborhoods and cities we can expand into, given the profitability and long-term growth potential. Brazil is where … every dollar invested [today] comes with the highest return.

In Jokr’s early days, the company employed all of its delivery workers, which contrasts starkly with other platforms that hire third parties to sustain their business model. Will Jokr keep operating with fully employed delivery workers in Brazil?

We deliver with all kinds of engagement models and we’re always reevaluating them. The cost of delivery, whether it’s a contractor or full-time employee, is not too marginally determining for us. Our main difference is whether or not we have a high procurement margin, and cost of delivery has a small influence on our margins. We have flexible work arrangements with our delivery staff, but we don’t want to squeeze every single margin point. We have to work structurally on building a more efficient way of procuring our products, which is where most platforms are deficient. 

Were you always planning on becoming a larger grocery-shopping experience or is this strategy an evolution from the quick commerce model?

It was planned from the beginning, but very early on, we  focused on building the underlying supply chain infrastructure. Our app is just a tiny piece of our business. About 80% of our effort has gone into building a completely new way of organizing the supply chain for groceries. With what we’ve built, we could become suppliers for big supermarkets, small convenience stores, and other types of consumer businesses. We are still completely focused on consumers, but everything we’re doing contributes to opening up a business-to-business market as well.