What makes a delivery app like Rappi successful in Latin America?

Contxto – The Colombian delivery app, Rappi, is making headlines for many reasons. Whether because it raised US$1 billion in funding from SoftBank or because of their booming footprint, this on-demand delivery platform is setting an example for a new generation of entrepreneurs.

Undoubtedly, Rappi has taken Latin America by storm. It is a very common sight to spot their biker gangs swarming over an area, delivering almost everything to the customer’s doorstep. From fresh and delicious food to booking concert tickets, it serves to be Latin America’s everything store. 

It is turning omnipresent, and this has raised the interest of budding entrepreneurs around on-demand startups. So, we should probably shed some light on a growing question.

Why are on-demand delivery startups gaining popularity in Latin America?

If you are wondering why delivery apps are raising funding and fame, the answer is due to the present market conditions. Let’s have a peek on the factors contributing to their rise:

Wealth Inequality

Being one of the most unequal regions in the world, Latin America has an economic class system where a small section (constituting upper and middle economic echelon) is served by a sizable working class.

And this economic model creates a huge space for on-demand services. While the class being served is comfortable paying service providers, the servers are happy to maintain a living doing so.

Increasing Migration

Another reason behind the phenomenal growth of delivery app platforms is the rise of migration throughout the region. As per the reports, around 2.3 million people have fled from Venezuela to Colombia, Ecuador, Brazil, and Peru.

This has led to a group of people looking for any kind of job. In such a scenario, delivery app companies serve to be a pretty good option. On the contrary, on-demand platforms like Rappi benefit from the availability of an abundance of service providers, ready to serve their customer base.

Transport Infrastructure

The poor traffic conditions and lack of public transport infrastructure add another reason to the list. Bicycles and motorbikes turn out to be the most efficient modes of transportation due to congestion. This has benefitted the delivery companies significantly.

As Rappi’s fleet is fully two-wheeled, they are able to deliver orders speedily and in a cost-effective manner. Simply put; two-wheeled modes of transportation cut down on operational costs, which is definitely higher in places where there are car-based deliveries (like the U.S.).

Mobile Technology

Do you know Latin America is the world’s second-fastest-growing market for mobile subscribers?

It goes without saying that mobile evolution has made apps like Rappi win over customer’s hearts. On-demand delivery platforms leverage technology to give users total visibility and traceability of what they order or book. Being highly reliable, these apps are greatly trusted and referred by users.

So, it is the combination of the region’s income inequality, adoption of mobile technology, and the healthy supply and demand for on-demand services, which make apps like Rappi popular.

But that’s not all you need to make a startup idea successful, isn’t it? There are many reasons which altogether are responsible for the exponential growth of their business.

What are the reasons behind the success of Rappi?

Advance tech-suite to start & scale an on-demand delivery app

The need for a comprehensive technology stack is indispensable for growth in any delivery business. It is a reliable and robust suite which makes ordering simple, delivery on-time, and management a piece of cake. Firstly, check out the working used by Rappi:

To run its online delivery business efficiently, Rappi has a suite which is comprised of:

• Customer app: It simplifies the process of ordering for their customers.
• Driver app: This serves to be a highly useful tool for the agents to ensure on-time deliveries.
• Merchant panel: Designed for the store owners, it helps managing orders & their business.
• Admin panel: A feature-rich, one-stop place to control, manage, and track every business activity

Each of these modules holds its own significance. Plus, these are feature-enriched to deliver excellent results.

Customer app	Driver app	Merchant panel	Admin panel
Social Login Facilitating easier login to the application through social media accounts	Easy Registration Agents/ drivers can register adding some details and documents for verification	Profile Management The providers can update & manage their profiles by adding relevant images & information	Manage Users Full control to add, remove, view and manage all the details of the customer profiles
Search & Filters Customers can apply filters & search for the most desired product/service	Delivery Requests Prompt requests from the providers to pick up the ready-to-deliver orders with details	Manage Categories Effortless management with advanced set of features to edit and update the menu items	Analytics & Reporting Admin get real-time reports on deliveries, earnings & more to take better business decisions
Push Notifications Customers get notified for updates on their order status, new offers & discounts	Accept/Reject a Request Agents have the flexibility to accept or reject a delivery request, as per their availability	Order Management The panel comes with various features to let providers handle multiple order requests with ease	Add/Remove Stores Completed control to add, delete, run and manage multiple stores from a single place
Live-Tracking After successful placement of their orders customers can track their order in real-time	Navigation Integrated GPS services to facilitate drivers with optimized routes for on-time deliveries	Sending Delivery Request Just with a few clicks the store providers can ask the nearby drivers to accomplish deliveries	Order & Fleet Tracking GPS tracking views real-time status of fleet and track delivery procedures on map
Rating & Reviews Customers can leave their feedback about the services provided or the order received	Track Earning Providers can easily keep track of their daily, weekly, or monthly deliveries or earnings	Reports Store owners get insightful reports and analytics graph stating the present and future business conditions	Payment Gateway Integrations Receive payments through multiple options via an in-app integrated payment gateway

Customer-centric marketing strategies drive long-term value

It isn’t just the technology that makes Rappi a huge success. Marketing its offerings to the right people and at the right time helps it stand out. With a laser-like focus on the user experience, there are multiple advertising campaigns have worked miraculously for them.

We always listen to the user and we adapt to the needs of the market. We are service-based, not technology-based.

Director of Marketing, Rappi

• Experimentation is key: They have been constantly working on how to boost communication with their users. The experimenting and risk-taking endeavors helped them gain new customers and retain old ones.
• Add-ons & Offerings: Occasional discounts, offers, loyalty points, and more are added to increase the number of orders and customers. Similarly to Amazon Prime, Rappi introduced the “Prime” customer loyalty service. And the results were astounding—a 45 percent increase in spending by the Prime members.
• Regional Targeting: The diversity of cultures and customers in Latin American markets was a big challenge. What works in one area might not work in another. Operating in different countries, the best approach taken by Rappi is to focus on the region-specific language and terminology.
• User Segmentation: For every business, it is essential to understand that every user is different. Rappi conducted segmentation of users on the basis of region, age, user device, etc., followed by its usage for marketing purposes. While it helped them boost engagement drastically, it further improved sales and revenue manifold.

Intelligent insights to optimize and improve customer experience

In order to succeed, it is important to take quick and informed decisions. It is here when a startup needs a comprehensive analytic report.

Rappi too utilized data-driven insights to understand how their product experience impacted their unique user segments. Drilling deep into their conversion metrics assisted them in understanding what types of users were converting through critical funnels and why.

• Improved number of conversions: With the help of intelligent insights, they could optimize their strategies for better ROI. They could pull cohorts of new users on an hourly basis, segmenting them based on different factors to help them define first-time user experience. Later, the data was used to create customized campaigns.
• Increased retention rate: Rappi wanted to increase the number of users who place a specific number of orders. For this, they used Cohorts, Funnels, AB Test View and Retention analyses to track the impact of the different experiments they conducted. And this helped them increase the number of purchasers.

Besides, the actionable insights were useful in real-time targeting, which led to a 10 percent increase in the number of users. It also resulted in a 30 percent decrease in their cost of acquisition.

Expansion adds to the potential to grow

The expansion of business is something all good entrepreneurs aspire to. Rappi shares a similar story. Currently, this on-demand delivery app offers more than 50,000 products and services. It is now operating in seven Latin American countries, with more than 1,500 employees. However, in the beginning, it was just a grocery and food delivery app.

Over the last four years, this startup has created a whole ecosystem and now it delivers almost everything. Rappi is planning to almost double its reach across South America.

We’re close to 55 cities now, eight countries and we plan to accelerate that.

Sebastian Mejia, Rappi co-Founder & President

Lots to learn from Rappi

Today, Rappi stands next to globally recognized models like UberEats.

From choosing the right technology partner to investing in the right type of marketing strategies, and analyzing them for better business decisions, there is a lot involved in the success journey of Rappi.

Throughout their journey so far, they have seen their fair share of startups. However, the triumph of this on-demand delivery app inspires entrepreneurs to transform their ideas into reality.

On Code Brew Labs

What are your thoughts on the on-demand delivery business model? Are you aiming for a startup like Rappi? Now is the perfect time to start.

Empowering more than 3,000+ businesses so far, Code Brew has the right blend of expertise and experience to help you create the next successful delivery app in Latin America.

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