The Colombian Amazon Nobody Saw Coming: $3M a Day, Zero Funding

The audio and video are in Spanish. These notes are a translation.

Today I interviewed Luis Ramos, founder of Dropi, the largest dropshipping platform in Latin America, with more than 5 million monthly orders across 10 countries and without having raised external investment.

Dropi started as the software Luis built to solve his own problems as a dropshipper. It went viral by word of mouth, with no marketing, and today it is the infrastructure on which thousands of sellers do e-commerce in the region.

The figure that surprises people most: they advance up to 3 million dollars a day to their users, with their own capital. His line for explaining why they can: Dropi has a bit of everything, but it owns nothing.

Structure and Key Highlights

The HTML Course in a Club Nintendo Magazine

• His mother had the monthly subscription for him, and one month an HTML course showed up, published in installments
• He was 12 years old, in 1997 or 1998, and he completed the whole course from Notepad
• His first website was about Zelda, with the story and the tricks he had found
• From then on he made websites for whatever crossed his path: the school, a coffee shop, a barbershop

The Sentence that Changed His Focus

• At an event at another university he met Mauricio Duque, from Seminarios Online
• What he told him: that his websites were useless, because they were not built to sell
• What he did with that: he became obsessed, learned Google AdWords, and got into the business of selling leads
• His first real business: monthly packages of leads for beauty clinics, surgeons, and real estate agencies
• Later he set up a digital marketing agency when almost nobody offered that model, and he resold software from India in Colombia
• His summary: of the business models on the internet, he has done almost all of them

How He Got to Dropshipping

• He was coming off the sale of a hosting company, an early exit
• What he saw: since he already knew how to do digital marketing, the model seemed simple and scalable to him
• The turn that changed everything: the products he was bringing from China were also carried by suppliers in the center of his city
• And those suppliers let people buy by volume, even on credit
• The context of 2015: anything you put on Facebook sold, with no competition and no bans

The Problem that Led Him to Build Dropi

• Putting together the shipping waybills was an Excel mess that had to be redone from scratch if it threw an error
• A customer would call you and you had no idea who they were
• When a supplier asked him how many units he had sold, he had to go and check waybill by waybill
• His conclusion: they could not grow any further, because growing made them less efficient
• What he built: software in PHP just for himself, taking advantage of the fact that the carrier had just released an API

How It Became a Product Without Him Meaning to

• He was in communities where people learned about traffic, Facebook Ads, and Google
• One day someone asked him how he managed his shipments, he showed them his system through an IP address, and they asked to have it
• In one week his two engineers added a users table and roles
• That person showed it to other people, and without him noticing it turned into enormous word of mouth
• The moment he understood the scale: he saw on Facebook that someone had made a tutorial of his platform, and he never met that person
• The figure that sums it up: Dropi’s traffic was 100% organic for almost its first five years

The Metaphor of the Children in the River

• You are calm on the bank and you see a drowning child coming downstream, you jump in and you save them
• When you look back, two are coming, then four, and each time twice as many
• What a normal person does: ask for help, but knowing whom to choose, because someone who does not know how to swim is no use
• How he applies it to his own story: every problem in his operation was a child coming down the river
• His general reading: the rivers are all the things you take part in, and sometimes those children become part of the scenery and you stop seeing them
• His conclusion: if you find those children in your river, you already have the basis for a company

What He Understood and Others Did Not

• His direct answer: he understood that this was not a technology business, it was a business of relationships, people, and communities
• What he did with that: he formed e-commerce communities that would use the platform
• His line: if nobody uses your technology or loves it, that technology does not exist
• Why he believes the global players did not see it: they were at their computers and they were not walking the city centers or talking to importers
• What he did know: that all of the product was already local and there was no need to wait for international shipments

The Trick for Getting the Ecosystem Started

• The chicken and egg problem: his suppliers came from a traditional market of physical warehouses
• What he did: he became the platform’s first supplier himself
• How he convinced them: by showing them how he imported, how the products sat in the catalog, and how he was pulling hundreds of orders a day
• What happened after that: the shops next door saw hundreds of packages going out and wanted to get in
• Within a few months he was no longer convincing anyone. His phone was full of people asking to be suppliers

Dropi Is Actually a Fintech

• In traditional dropshipping with cash on delivery, the seller collects 15 or 30 days later
• What Dropi does: it pays the full amount of what was delivered, immediately, every day
• How he got there: when he asked his users why they were not selling more, they told him that at a certain hour they ran out of money for advertising
• His conclusion: an efficient store is a store that never stops, and this model is more financial than anything else
• The extra piece: virtual credit cards so the money goes straight into advertising without waiting for a transfer
• The volume they finance: up to 10 billion pesos a day, close to 3 million dollars

Where the Money Came from with No External Investment

• They came from several earlier ventures, him in technology and his partner in the textile sector, with a base of saved capital
• The key decision: take no profit out of Dropi for almost the first three years
• Everything was reinvested, and they still keep the same discipline
• His personal explanation: they are simple people, they are not chasing excess or sports cars
• His frame: the purpose is to democratize electronic commerce, not to be an extravagant guy

Why They Can Stay So Light

• If he had to define Dropi in one word, it would be connect
• They do not own the carriers, or the suppliers, or the financial technology, or their community leaders
• What that avoids: buying 200 trucks or building warehouses when a destination starts moving a lot of volume
• On integrating vertically the way Mercado Libre did with its logistics: not for now
• On whether they came close to running out of money: never, thanks to financial planning that he attributes to his partner

What the Platform Includes Today

• E-commerce automation: logistics tools, financial tools, and traffic-generation tools
• Its most popular module connects thousands of local suppliers with sellers who do not want to buy stock
• What someone who is just starting finds: all the logistics contracts and suppliers already in place
• And a CRM with artificial intelligence to manage everything from the sale and the confirmation through to remarketing
• Plus payment gateways and import companies

Why It Works in the Region

• Enzo’s reading: in developed countries an entrepreneur has easier access to credit to buy inventory
• In Latin America that access is harder, and that gives dropshipping a natural fit
• Luis’s confirmation: most of his early users started with very little, leveraging what was being built

Shut Up, Step Away, Learn

• What he sacrificed: social life, relationships, family, and hobbies
• The quote that made sense to him, from Denzel Washington: shut up, step away and learn, then win, and then explain to other people how you did it
• How he understands that “shut up”: be humble, you do not know anything, focus
• What he sees when he looks at old photos of friends: he is in almost none of them
• Whether he regrets it: no, and he believes every entrepreneur has to do it

How He Sees Dropi in Ten Years

• His answer: he does not know, because if they had asked him seven years ago he would have missed by a long way
• What he does do every single day: work as if Dropi were small and as if the fridge were empty
• What he says he feels: that this life is not going to be enough for him to do everything he sets out to do

Whom He Thanks

• His mother, who always put the resources for learning on the table, starting with the computer
• Mauricio Duque, whom he has never thanked in person, for telling him that what he was doing was not enough and was not important
• What he does now with other people: he gives the most sincere opinion, even when it is not the one they want to hear

Silicon Valley Glossary

People, Companies and References

People Mentioned

• Luis Ramos (Lucho): founder of Dropi
• His partner and cofounder: from the textile sector, the person he credits with the financial discipline
• Mauricio Duque: from Seminarios Online, who told him that his pages were no good for selling
• His mother: who bought him the magazines and the resources to learn
• Denzel Washington: for the formula of shutting up, stepping away, and learning
• Julián Otárola: who told Enzo about Dropi
• Enzo Cavalie: host of the podcast

Companies and Organizations

• Dropi: more than 5 million monthly orders, 10 countries, 200,000 users
• Club Nintendo: the magazine where the HTML course appeared
• Google AdWords: his first customer-acquisition tool
• WordPress, WooCommerce, and Divi: what he used to set up his first stores
• Shopify: it existed, but it was not strong when he started
• Amazon, Mercado Libre, Alibaba, and Tienda Nube: the giants that did not occupy that space