Our Company of the Month for May has been defined as the Latin American SuperApp and was one of the first startups to offer large-scale logistics services. Rappi, created in 2015 by Simón Borrero, Felipe Villamarín and Sebastián Mejía in Bogotá, Colombia, started as a solution to connect small businesses and quickly became Colombia’s first unicorn.
Rappi has reached 60 cities and 72 municipalities in Colombia and is also present in Argentina, Brazil, Chile, Costa Rica, Ecuador, Mexico, Peru and Uruguay.
To date, the company has 2,000 direct employees, 2,000 people in charge of offering support and assistance in the customer service area and 60,000 independent delivery drivers in Colombia alone. Thanks to its wide offer of various products and services, Our Company of the Month continues to be a very powerful SuperApp in Latin America valued at the end of 2023 at 5.25 billion.
It should be noted that after almost 6 years, former Rappi employees were leading startups in several sectors. According to Forbes Colombia in 2021, Rappi was the Latin unicorn with the most founding alumni. Among the most successful startups are Tributi, Frubana and Truora.
Important Rappi milestones
2015: Borrero and Mejía spent two years working at their e-commerce company Grability and realized that there was a bottleneck in shipping products. When they launched Rappi, the main objective was to buy and deliver products in less than an hour.
Five months later Rappi had received more than 200 thousand orders.
2018: Rappi achieved a valuation of US $2 billion, thus becoming the first unicorn created by Colombians.
2019: It was one of the first startups to enter Peru.
2020: It exceeded 10 million monthly active users at the beginning of 2020. Rappi has more than 6 thousand employees, 600 thousand registered stores and more than 100 thousand different brands throughout Latin America.
2021: Achieved a fundraising of US $500 million after closing a Series G investment round and the market value had quintupled, raising its value to $5.2 billion.
2022: Rappi reached more than 30 million active users per month and the mobile application had been downloaded more than 100 million times.
Geographic expansion
Rappi was one of the pioneers in providing large-scale last mile logistics services. It was one of the first startups in this sector in Colombia and one of the first to enter Peru in 2019.
7 years after its launch, Rappi’s mobile application had been downloaded more than 100 million times. It became a multinational company active in nine Latin American countries (Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Peru and Uruguay) and covering more than 250 cities.
Rappi is considered critical to the Latin American entrepreneurship ecosystem and is among the 10 most valuable companies of YCombinator, the most relevant accelerator of technology companies in the world.
Growth strategy
Rappi’s main strategy is to dominate the large cities of Latin America and then strengthen itself in those countries. In addition to being based on this strategy, it has focused on two fundamental pillars:
Initial go-to-market: The initial strategy was to start with services with high frequency of use, such as delivery from restaurants and supermarkets. Afterwards, it has launched more functionalities to complement its portfolio of services. In the next post we will delve into the additional products.
Blitzscaling: The company was the first to grow in a blitzscaling dynamic, which is used to quickly build a company to serve a large and usually global market with the goal of becoming the first to scale.
In five years, this strategy allowed it to exceed 10 million monthly active users at the beginning of 2020.
Thanks to its exponential growth speed, Rappi has been able to create Network Effects, a competitive advantage that occurs when the value of a certain good or service increases for both new users and existing users as the number of users increases. of the good or service increases.
Rappi has been defined as the Latin American SuperApp and one of the fastest growing companies in the region. Its founders were included in the 2019 Bloomberg 50 list and the company continues to grow.
An on-demand multi-vertical service
Rappi started with the food delivery service to generate retention and high recurrence that allowed them to build loyalty among their users. Then, thanks to its wide range of products and services, it managed to transform the way people shop in Latin America.
At the beginning of Rappi, its great differentiator was including the “Rappi Antojo” button that allowed users to order anything with the application. Thus, in a matter of just a few months, it added to its portfolio the options of the most fashionable restaurants, the largest food chains or options such as pharmacies, supermarkets, music and games. Some of the company’s most used products and services include:
RappiFavor: A vertical that offers delivery services, from collecting keys to delivering food.
RappiGames: A Rappi feature that allows users to play different games weekly. The featured game of the week allows users to compete for prizes totaling $900 distributed across different positions and it is estimated that more than $25,000 has been awarded since the start of operation.
RappiRestaurants: A system that allows restaurants to manage their operations. In addition to meal delivery, the platform expanded its offering to include pharmacies and supermarkets.
Supermarket: It is the vertical that showed the most growth globally during the pandemic due to people’s need to avoid leaving their homes. They have large supermarket chains and in Colombia they have the exclusivity of GrupoExito, the largest in the country.
E-commerce: Within the Rappi application, you can find a wide variety of clothing stores, pharmacies, beauty products, pet accessories, among others.Rappi Mall is a one-hour delivery service for products from shopping centers.
Fintech: Rappi has an electronic payment platform called RappiPay with which payments can be made in physical establishments through QR codes.
The growth of Rappi and the company today
Rappi does not yet have its capital open, which makes access to financial and operational data difficult. According to specialized portals, Rappi has been making movements in preparation for its IPO. One of these moves was the hiring of a new financial director, Tiago Azevedo, who has experience in companies such as Mercado Libre and The Hershey Company. According to Tiago, his mission is to leave the company ready for the “moment when the IPO makes sense” and emphasizes that, despite the movement, “there is no rush.”
Rappi has had rapid expansion in Latin America since its founding in 2015, reaching Breakeven at the end of last year. Despite having reached Breakeven, the company continues to inject capital into its operations in Mexico and Brazil, where in the first half of 2023 it made the acquisition of Box Delivery, the largest purchase in its history.
The company has shown stability in profitability and cash generation after a cost reduction plan that mainly affected the marketing department and after making improvements to the delivery algorithm.
Rappi has also undergone big changes since its founding in 2015, going from a purely food delivery company to a SuperApp, creating revenue lines by expanding the services offered, such as travel packages and credit services.
As Rappi isn’t a public company, it isn’t obliged to disclose its balance sheets to the market, which makes our analysis task very difficult, and even impossible due to the difficulty of finding reliable data. The information we have comes from news sites specialized in covering the sector. We understand from the movements that Rappi is preparing for something bigger. In the recent past, there were rumors about the sale of Rappi to the North American DoorDash and, more recently, about the long-awaited IPO.
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