Understanding Rappi, the Colombian Unicorn

Softbank just invested $1 billion in the delivery startup, what makes it so special?

Colombian delivery startup Rappi raised “up to USD 1 billion” from SoftBank, just a few weeks after the Japanese giant announced plans for a USD 5 billion fund that would focus on Latin American startups. The investment also comes less than a year after the company reached unicorn status, by raising more than USD 200 million from DST Global.

While many people still talk about Rappi as an “on-demand delivery startup”, to understand why Softbank, Andreessen-Horowitz, and Sequoia have invested in it you’ve got to realize that it is much more. To be fair, Rappi did start as a grocery and food delivery app, but over the last 2+ years the startup has created a whole ecosystem inside it’s app unlike anything that probably exists outside of China.

The Colombian startup likes to market itself as Latin America’s everything store, and, to be honest, it basically is. You can use the app to do everything from grocery shopping, food ordering, transferring money, and much more. All the services available on the app make it one of most valuable apps you can have on your phone, if not the most.

The easiest way to understand what makes Rappi so special, is to show how the app has managed to aggregate many of the services that multiple apps offer in the US in just one platform:

1) Grocery Delivery (Instacart): Grocery shopping was the first functionality that the app had. Initially, the number of supermarkets available on the app was small, but since taking off they’ve been able to close multiple interesting partnerships. Nowadays, both Éxito and Carulla, two of Colombia’s largest supermarkets, can be found on the app. Likewise, PriceSmart, Colombia’s Costco, and multiple specialty stores selling all types of products (healthy, vegan, etc.) are also available.

2) Food Delivery (Uber Eats): Another of Rappi’s first available services, food ordering was probably what made Rappi stand out against its first competitors. While its competition focused on just grocery delivery (i.e. Mercadoni) or just food delivery (i.e. Domicilios.com or Uber Eats), Rappi was able to provide an added value to its users by offering both services on the same app.

The app’s Home layout

3) Mobile Money Transfers (Venmo): One of the newest services the startup added to its platform, but one that shows how Rappi is aiming to become the only app you need to have on your phone. RappiPay allows users to transfer money from their accounts to another user’s, either by using their credit card or the credits (RappiCreditos) they have on their app’s digital wallet. The ease of use, and the fact that there are no transaction fees, unlike when transferring money to someone’s account at a different bank, have made it into one of my favorite features of the app so far.

4) Errands/Package Delivery (Task Rabbit): Another of Rappi’s first features was the ability to allow you to ask them to do almost anything for you. Need someone to deliver a package? Rappi can do it. Need someone to go to Zara and change the shirt you bought for a different size? Rappi can do it. Need that 4th player for your FIFA game? Rappi can do it.

5) Micro-mobility (Bird/Lime): Another of the platform’s newer services, but one that adds a ton of value to it. Around September of last year, Rappi closed a partnership with Grin, Latin America’s leading scooter startup. The partnership will allow Rappi to help Grin scale through the region while letting Rappi offer its users the ability to rent scooters inside the app.

While I’ve only mentioned the top five services I use the most, there are probably another 15–20+ services like cash delivery (they go to an ATM, take cash out and bring it to you, a valuable service in a cash-based economy), over the counter drug delivery, and paying for Colombia’s mandatory vehicle insurance (SOAT) that you can buy inside the app.

For example, here are just a few of the things I’ve used Rappi for over the last few months: Bought tickets for Estéreo Picnic, Colombia’s largest music festival, and had them delivered to my office. Payed at a restaurant with my phone using RappiPay’s QR feature. Bought a new TV and had delivered to my house in just 2 hours (!!!).

Love or hate it, Rappi has been able to do what probably no other Latin American startup had been able to do since MercadoLibre’s rise more than a decade ago. It currently operates in 7 countries (Colombia, Mexico, Brazil, Argentina, Chile, Uruguay and Peru), and more than 13 million users. Rappi has put Latam’s startup ecosystem in the spotlight and is, at the very least, partially responsible for the investment boom the region is experiencing.

Personal Disclosure: The opinions presented here are strictly my own and do not represent those of my employer. The information presented here is taken from my own experience using the app and/or articles I’ve read online (which I’ve linked). I do not have any type of relationship with Rappi, or any of the companies mentioned in the post, aside from being a user.

Rafael Tihanyi Feldman

Written by

Caracas-Tel Aviv-Bogotá. Digital Transformation @CoronaInspira | Aceleradora Sodimac Corona | Previously: @Homecenter_co, CoFounder @IsraelWTF1

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