Peixe Urbano Buys Online Reservation Company Zuppa

By Sarah Lacy , written on February 16, 2012

From The News Desk

Brazilian group buying site Peixe Urbano has purchased Zuppa, an online reservation service in Brazil. It's an important step in Peixe Urbano's development from a mere Groupon-clone, to a multi-service company connecting users with experiential small businesses throughout Latin America.

Zuppa currently operates in 17 cities across Brazil. It's sort of like a mash up between Yelp and OpenTable, allowing users to reserve a table for free, search restaurants across a variety of metrics, and read reviews. It also offers software to help merchants manage reservations and run their businesses.

It's a natural fit, since Peixe Urbano focuses on experiential deals like restaurants, beauty treatments, hotel stays and travel packages. Groupon's Brazilian arm is increasingly focusing on goods-- an area that Peixe Urbano is wary of getting into.

I spoke with co-founder Alex Tabor when he was in town to pick up the company's Crunchie for Best International Company. "We focus on exploring the city," he said. "Products are a big opportunity, but there are a lot of issues with inventory. We try to avoid it."

We talked about what types of deals work and which ones don't, and I asked Tabor if there were certain service businesses who wanted to use Peixe Urbano that they'd turned down. "Funeral homes," he said. "We focus on getting merchants repeat business, so we have a very low attrition rate of advertisers." Yeah, I guess that's not a category where you want a lot of repeat business...

While Groupon clones exploded in Latin America in the last two years-- like every other place on earth-- there's been a sharp winnowing since, according to Tabor. "More than half of them are dead now," he says.

Zuppa has a much smaller footprint than Peixe Urbano, which operates in more than 100 cities across Brazil, Argentina, Mexico and Chile. The team will have to invest a lot of resources to scale Zuppa for this to be a broad fit across the two business lines.

And as both Yelp and OpenTable can attest: These are not easy businesses to build and scale. They require a lot of pounding the pavement and building mini-network effects in each city. But it would be considerably easier for Zuppa to enter new markets where Peixe Urbano already has those merchant relationships.

In the US, we tend to write companies like Zuppa and Peixe Urbano off as copy cats, but this deal is a good example of how a similar idea can evolve differently in younger markets where decades of Web development is happening all at once.

OpenTable, Yelp and Groupon all represent different eras of the Web, so rather than join up, they awkwardly overlap and compete with each other. Really, as a consumer you need all three. OpenTable has never been able to equal Yelp's reviews or personality. And I've long wished Yelp would get more into reservations and have better search functionality. Meanwhile, Yelp has had mixed results on offering daily deals.

Not only does a consumer need three apps to find restaurant, make a reservation and get a deal, but its a nightmare for time-pressed, over-taxed restauranteurs. They buy software for OpenTable, and agonize over whether they should advertise on Yelp or offer Groupons.

But because these categories and ideas are all developing at the same time in a market like Brazil, a tie-up like this one is natural. And you could see a way that the OpenTable equivalent could evolve to include reservations for hair appointments and spas, not just restaurants since Peixe Urbano's sales people are already calling on those kinds of companies too. Frankly, it makes me a little jealous as a consumer.

Peixe Urbano is well-funded by Benchmark, General Atlantic, Tiger Global Management, Morgan Stanley Investment Management, T. Rowe Price Associates and Monashees Capital-- the top Internet venture firm in Brazil in my experience. There are some deep pockets around the table. I'd expect more deals like these in Peixe Urbano's future.

[Image credit:Macro Head of a Fish via ShutterStock.]