Kevin Melgarejo, co-founder of Zonngo.com, a real-time price indexation engine for used goods in Latin America, shares with Leaders League his own experience, as well as his insights on the technology and the innovation environment in Peru and the whole continent.
How did the idea behind Zonngo first appear?
Kevin Melgarejo. In Peru and Latin America there is a strong culture of informal retail commerce. The three founders at Zonngo, used to change mobile phones every six months and came to realize how difficult it was to put a price on used items that corresponded to the market. What we used to do was check online sales websites to have a guide price and then we decided that this was something that needed to be automated. With this idea we created Zonngo, a real-time price indexation engine for used goods. Thanks to our technology we index prices from a variety of different websites and propose a unified intuitive fair price for the object.
How does the technology you’ve been developing make it easier to sell products?
Technology at Zonngo is vital. What sets us apart from other startups is precisely our prices indexation engine. At the moment, our engine offers two possibilities: to the public, a free web engine that proposes a fair price for used goods; and for corporations we have another algorithm that monitors changes of competitors’ prices. We have now solidified our position in Peru as a price reference system: in our first month we indexed one million prices per day, last year the numbers achieved the 10 million index prices per day mark and our goal is to expand to other Latin-American markets achieving 250 million indexations per day.
What has been the greatest obstacle you have found while developing and implementing the technology?
The biggest challenge in Peru and Latin America is fighting the culture of informality. We discovered that a great number of sales between individuals are carried out through informal commerce, and this has an impact on how much people trust services. Formal retail commerce doesn’t suffer from a lack of trust but transactions that happen via Facebook, blogs and others do, because they cannot guarantee a fair price. We offer a service that guarantees a fair price for used goods, and now that we’ve become well known in Peru our aim is to eradicate any distrust that might still exist about our service.
What other market could your technology be applied to?
Soon we will hit the pharmaceuticals market through an app, which allows users to find the best prices for both generics and traditional brands. This is a significant issue in Latin-America where a lot of people live on a tight budget. We have also started to expand into different markets such as Colombia and Chile. The technology is definitely beginning to catch the attention of different type of investors we recently got the support from three angel investors from Spain interested in our technology.
How do you see the innovation environment in Peru and Latin America?
We at Zonngo consider that innovation can only be measured by how fertile the innovation ecosystem is. This ecosystem consists of five elements: Government support, incubators, entrepreneurship, investors and corporations. The differences between fertile ecosystems like USA, or Europe and less fertile ones like Latin-America reside precisely with investors. The start-up culture in developed countries has been developing for quite some time, whereas for countries like Peru we only saw a real development of the innovation ecosystem take place begin five years ago. In this quite young innovation culture, even though it is possible to find Angels, investors are more inclined to support traditional industries than startups and it isn’t uncommon for Latin-American innovators to travel to the US to find funding for their projects. In Europe there is also a quite active venture capital scene that helps young innovators to develop their technologies.
Given the state of Peru’s innovation ecosystem, how did you manage to get your seed funding?
Zonggo started at the international model business competition, an open academic contest which offered $4,000 to the most promising business. After winning this, we applied to a program for start-up development launched by the Peruvian government that granted us an additional $15,000 which has allowed us to develop Zonngo this far.
Find more analysis articles & interviews in our 2017 Innovation, Technology & IP Report.