Rappi’s Rapid Rise
“Rappi1 is a Latin American super-app offering a variety of digital consumer services that began with food delivery and has since expanded to provide e-commerce, travel, and banking services[,]” according to an analysis published by Contrary Research which states further that “Rappi’s core offering is its delivery service, which allows customers to order a wide variety of goods across more than eight categories of products as of May 2024, including restaurant orders, groceries, pharmaceuticals, clothing, drinks, travel bookings, and electronics.”
In 2023, Rappi’s growth rate was 37 percent year-over-year, according to Sacra, and as reported in Statista, with a market value of $5.25 billion, the Bogotá-based on-demand delivery service is Latin America’s second most valuable unicorn.2 Reuters reports that Rappi operates in nine countries across Latin America; that it is backed by Japan’s SoftBank; and that according to cofounder Simón Borrero, it could be ready to launch an initial public offering on the New York Stock Exchange within 12 months, but that the company is in no rush to launch an IPO, taking into account its better earnings figures reported last year.
As stated on the company website, Rappi “was created in August 2015 by Simón Borrero, Felipe Villamarín and Sebastian Mejía […] as the solution to connect small businesses or ‘neighborhood stores’ with users in a few city blocks.” Rappi’s growth and success has had economic reverberations in Latin America. According to a CSIS report, in Colombia,3 more than 110 companies have been formed by Rappi alumni across a wide range of industries. “These companies have collectively raised more than $2.1 billion in [venture capital] funding and employ more than 14,000 people[,]” according to the report, which also cites a GSMA study stating that “every 10 percent increase in digitalization has the potential to generate a 1.9 percent increase in GDP growth for LAC [(Latin America and the Caribbean)] countries.”
Rappi’s rapid rise brings some risk, according to the analysis published by Contrary Research, which states that “[t]he company’s expansion strategy and diversified service offerings aim to increase user engagement and market penetration but also complicate resource allocation and management.” Rappi also faces issues related to labor rights and working conditions.
Rappi uses micro-fulfillment centers/“dark stores”4 to store inventory and enable rapid delivery. Micro-fulfillment centers and “dark stores” are small-to-medium-sized storage facilities that are used by the e-commerce industry to store inventory closer to the end user so as to reduce cost and transit/delivery times.
- According to Startup Savant, Rappi takes its name from (and is a play on) the Spanish word “rápido,” meaning fast. ↩︎
- Unicorn is the term used in the venture capital industry to describe a privately-owned startup company valued at over $1 billion. ↩︎
- According to the company, Rappi has 150,000 registered delivery drivers in Colombia, of which 52 percent connect regularly. ↩︎
- Although the terms micro-fulfillment center and “dark store” are sometimes used interchangeably, “dark stores” are usually retail spaces that are closed to the public and used exclusively for e-commerce order fulfillment whereas micro-fulfillment centers are typically small warehouses (~10,000sf) that serve a function similar to “dark stores.” ↩︎
Last Updated on October 27, 2024 by Ramin Seddiq