Rappi is a Colombian on-demand delivery and financial services company that was founded in 2015. The company offers a wide range of services, including food delivery, grocery delivery, pharmacy delivery, and even errand running. Rappi is available in over 90 cities in Latin America, and it has over 100 million downloads.
It was founded in 2015 by Simón Borrero, Sebastian Mejía, and Felipe Villamarín. The three founders were all experienced in the technology industry, and they saw an opportunity to create a more convenient and affordable way for people to get the things they need.
Rappi’s business model is based on the commission it charges merchants for each delivery. The company also generates revenue from advertising and from its own financial services offerings.
Rappi has grown rapidly since its inception. The company has raised over $1 billion in funding, and it is one of the most valuable startups in Latin America. Rappi is also one of the most popular on-demand delivery companies in the region.
Here are some of the key features of Rappi:
- Wide range of services: Rappi offers a wide range of services, including food delivery, grocery delivery, pharmacy delivery, and even errand running. This makes it a one-stop shop for all of your on-demand needs.
- Convenient and affordable: Rappi is a convenient and affordable way to get the things you need. The company’s delivery fees are relatively low, and you can often get free delivery if you spend a certain amount.
- Easy to use: Rappi’s app is easy to use and navigate. You can easily find the products and services you need, and you can track your order in real time.
- Secure and reliable: Rappi is a secure and reliable way to get the things you need. The company uses industry-leading security measures to protect your data, and it has a team of customer support agents available 24/7 to help you with any problems you may have.
Rappi is a leading on-demand delivery company that is disrupting the retail industry in Latin America.
How Rappi has achieved such a popularity?
In 2015, a group of entrepreneurs in Colombia – Simón Borrero, Sebastián Mejía, and Felipe Villamarín – embarked on a mission to enhance the shopping experience, particularly for food and groceries. Thus, Grability was born with this vision in mind.
However, something interesting happened as they implemented a feedback section within Grability. Users started making unexpected requests, like asking for help with tasks such as visiting the ATM or delivering pet food. This revelation led the founders to realize that Grability was more than just a platform for food and grocery shopping; it had the potential to become something greater.
Seeing the opportunity and listening to their customers, the founders decided to rebrand and chart a new course. This marked the birth of Rappi. With a modest team of only ten employees and a basic shopping app, Rappi was ready to take off. The challenge was to attract users, and they came up with a clever tactic involving free donuts.
Setting up two tents in Bogotá, Colombia, Rappi offered a complimentary donut to anyone who downloaded their app, drawing inspiration from a reference to “The Simpsons.” The strategy paid off, as thousands of people eagerly signed up for the app. While giving away donuts might not guarantee massive numbers, it proved to be an effective and engaging approach, which was all Rappi needed to start making its mark.
How Rappi became so popular
Rappi emerged as a distinct player in the delivery platform industry, offering more than just groceries, setting it apart from pre-existing services. Its unique selling points included not only a wide range of items for order but also a commitment to deliver within thirty minutes at a cost of approximately one dollar per delivery. The business model allowed Rappi to generate revenue by charging around 17% of each retail transaction.
Moreover, Rappi introduced an entirely new concept to the Latin American countries it operated in, presenting businesses with an opportunity to reach previously untapped customer bases. The convenience of not having to leave their homes made deliveries through Rappi immensely popular among users and customers, resulting in a resounding success.
Beyond being beneficial to consumers, Rappi created employment opportunities for delivery personnel, a factor that added to its appeal. The combination of these factors made Rappi a promising startup, and within just a year of its founding, the company participated in the prestigious Y-Combinator program and expanded its operations to multiple countries outside Colombia.
From 2015 onward, Rappi experienced explosive growth, attracting significant investment and garnering widespread attention with impressive year-to-year growth rates claimed by its founders. Such hype and potential prompted investors to pour substantial sums into the company, with a staggering $200 million raised in 2018 alone. This infusion of funds marked a critical turning point in Rappi’s history, propelling it further on its path to success.
The Rappi founders take the company to the top
Securing a whopping $200 million in investment was a remarkable achievement for Rappi, propelling it to become the first Colombian startup to attain Unicorn status.
Following this milestone, Rappi displayed relentless momentum in its growth trajectory. Within the same year, it had expanded its operations to five countries, and the founders, driven by ambition, began exploring opportunities in the fintech sector.
In 2019, Rappi collaborated with Davivienda, one of Colombia’s major banks, to introduce RappiPay, a digital wallet that gained immense popularity. Within just two years, RappiPay boasted an impressive user base of 660 thousand, handling 20 million transactions annually. The company then ventured into credit cards with enticing features like cashback, preferred interest rates, and other attractive benefits. Its services extended even further to include air ticket sales, and renowned beauty brands like Avon decided to exclusively offer their products through the Rappi platform.
The impact of Rappi’s success was so significant that it garnered attention at the highest levels, with Colombian President Iván Duque bestowing the “Entrepreneur of the Year” award upon Simón Borrero in 2019. The President himself acknowledged Rappi’s transformative effect on society, underscoring the scale of its accomplishments.
By 2020, Rappi had expanded its footprint to nine countries, encompassing places like Perú and Costa Rica, spanning across 250 cities. Impressive as it was, all this growth transpired before the pandemic struck.
Subsequently, the lockdowns during the pandemic triggered a massive surge in demand for Rappi’s services. In 2021, the company initiated a Series F funding round, yielding astonishing results. The total funds raised now exceeded $500 million, with Rappi’s valuation soaring to $5.25 billion, cementing its status among the major players in the industry.
These achievements were particularly notable, considering that they emanated from Latin America, a region witnessing the dawn of a startup revolution. In light of this, Rappi’s accomplishments deserve utmost commendation.
Business Model of Rappi
Rappi boasts an incredibly efficient and distinctive business model. Functioning both as a mobile store and an online food delivery marketplace, Rappi delivers a wide array of products and services right to the customer’s doorstep. The core focus of Rappi is centered around delivering maximum value to its customers. Additionally, the platform has played a significant role in empowering unemployed individuals by offering them employment opportunities, leading to personal growth and socio-economic development.
Value to the customers:
Learning about how Rappi operates is truly fascinating. The app is meticulously designed to prioritize the utmost comfort of its customers. As the pioneering on-demand delivery service in Latin America, Rappi revolves around providing unparalleled convenience to its users. It has revolutionized the daily delivery of essential items, making it significantly easier for people to access their basic necessities.
With Rappi, customers can receive their food orders within an hour and groceries within just thirty minutes, ensuring swift and efficient service. The platform’s reach extends to over 40 cities in seven Latin American countries, making it accessible to a vast audience.
Among the distinctive features tailored for customers is “Rappi Pay.” This innovative addition functions as a banking service, enabling users to transfer money to one another and facilitate various payments directly through the app.
Rappi has a business strategy that combines multiple services delivered by multiple apps:
Food Delivery
Rappi initially focused on creating online meal delivery apps, establishing itself as a frontrunner in the food delivery services, which set it apart from its competitors. In the beginning, Rappi’s primary service revolved around meal delivery.
Deliveries of groceries
Over time, Rappi expanded its offerings to include grocery delivery, although the selection of listed supermarkets on the app was initially limited. However, the company gradually broadened its reach by forging partnerships with prominent retail companies, enhancing its grocery delivery capabilities.
Errands
Rappi’s versatility extends beyond food and grocery delivery, as it empowers users to complete various errands through its app. Whether it’s delivering packages or facilitating merchandise exchanges, Rappi facilitates these tasks efficiently.
Online Payment Tranfers
To further enhance convenience, Rappi introduced “RappiPay,” allowing users to perform online payment transfers from their bank accounts to others. This digital wallet feature enables easy credit card or credit-based transactions without incurring additional fees when transferring money through the bank. As a result, RappiPay has gained significant popularity among users.
Micro-Mobility
In a strategic move, Rappi ventured into the micro-mobility sector in 2019. Collaborating with Grin, a well-known scooter startup, Rappi incorporated scooter rental services within its app, offering users a seamless way to rent scooters for their transportation needs.
Rappi lets couriers earn every order and work as long as they want through the app. Rappi can also be used by those who do not have higher education for many reasons. Rappi’s couriers are self-employed and make money through tips and fees, so the company doesn’t have to pay for employee benefits.
Value to the businessmen:
The success of Rappi’s business model can be attributed, in part, to its extensive network of partnerships. Rappi has formed collaborations with numerous restaurants, grocery stores, and consumer packaged goods (CPG) companies, enabling these businesses to reach a broader customer base in their respective towns. In return for these partnerships, Rappi publishes advertisements for the companies and receives a commission from them.
Moreover, Rappi goes beyond just promoting the businesses; it also aids in spreading mass awareness about their products by facilitating the distribution of free product samples. For example, Coca-Cola sent approximately 100,000 bottles of gift samples through Rappi within a single month. This stands as one of many examples that illustrate the effectiveness of Rappi’s business model in increasing brand visibility and consumer engagement.
Rappi continuously refines its business model by experimenting with newer services and offerings. For instance, it partnered with Sony to deliver Playstations to customers in Colombia, highlighting its adaptability and willingness to cater to diverse customer needs and preferences.
Value to Couriers:
Rappi boasts an impressive fleet of 50,000 couriers, collectively handling over 30 orders each month. The company places a strong emphasis on the well-being and comfort of its employees, known as “Rappitenderos” or courier men. Rappitenderos enjoy the flexibility to work for as many hours as they desire, at any time of the day that suits their schedule.
This model is particularly beneficial for those with limited educational backgrounds, as even full-time work as a Rappitendero allows them to earn a substantial income. By empowering its couriers with such opportunities, Rappi contributes significantly to the betterment and upliftment of society as a whole.
Revenue Model of Rappi
Rappi employs several revenue streams to generate income and sustain its operations. As a multi-service delivery platform, Rappi leverages various monetization strategies to generate revenue. Here are the key revenue streams of Rappi:
Commission:
Rappi functions as an online store specializing in delivering a wide range of products to its customers. The platform establishes collaborations with numerous stores, restaurants, and companies, ensuring a diverse selection of products available to the customers. When a customer places an order through Rappi, the platform earns revenue by charging a small commission on each order from the partnering restaurants and store owners.
Customers:
Rappi benefits from the generosity of satisfied customers who appreciate the app’s quick delivery service and product availability. These content customers often show their appreciation by giving tips to the delivery personnel, and this is one of the ways through which Rappi earns from its deliveries.
Advertising and Marketing:
Rappi notifies users about suggested items available from different stores that they can order. The platform generates revenue by charging the respective businesses for displaying their products to customers through these advertisements.
Overall, Rappi’s diversified revenue streams contribute to its financial success and ability to expand its services across multiple countries and industries. The company’s focus on convenience, innovation, and customer-centric offerings has allowed it to solidify its position as a prominent player in the on-demand delivery and services market.
Valuation, Funding and Investors of Rappi
Here is an explanation of the valuation, funding, and investors of Rappi:
Valuation: Rappi’s valuation has been placed at $5.25 billion after it has raised over USD 500 million in a Series F round led by T. Rowe Price in 2021.
Investors: Rappi has raised over $2.3 billion in funding from a variety of investors, including:
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- SoftBank Vision Fund
- Andreessen Horowitz
- DST Global
- Y Combinator
- Sequoia Capital
- Thrive Capital
- Square
- Baillie Gifford
- Third Point Ventures
- Octahedron Capital
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In conclusion, Rappi stands as a trailblazing success story in the world of on-demand delivery and services. From its humble beginnings as a food delivery app, Rappi has swiftly transformed into a multifaceted platform, redefining convenience for millions of users across Latin America. The company’s unique and efficient business model, fortified by strategic partnerships with various businesses, has been a driving force behind its meteoric rise.
Also Read: Mambu – Founders, Business & Revenue Model and Funding
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