The rapid adoption of digital tools in the daily lives of consumers has been accelerated by the pandemic. Latin America is no stranger to this change, consumers’ quick embrace of new digital habits grew at an unprecedented rate and this has also impacted the rapid growth of Quick Commerce apps in the Latin American region.
Local players like Rappi, Cornershop (recently acquired by Uber), and iFood have harnessed regional insights and consumer know-how to power this growth. Even Delivery Hero, one of the biggest companies worldwide -whose expected market growth is estimated at about 56 billion euros by 2030- has been investing in Latam food & grocery delivery apps like PedidosYa and iFood.
The surge of Dark Stores in LATAM Quick Commerce
As we explained in a previous post Quick Commerce is the evolution of eCommerce and this responds to convenience, since it is the ability of a seller to deliver an order -usually groceries- in less than one hour or in the shortest possible time. The use of this model is expanding to different countries in the Latin American region, such as Mexico, Brazil, Colombia, Chile, Argentina, Peru and Ecuador.
To achieve this expansion, “dark stores” are surging all over the main Latam cities. These are groceries storage facilities that are not open to the public and that are dedicated only to the fulfillment of grocery deliveries.
In 2019 Glovo opened one of the first dark stores in Latin America. Then PedidosYa took over the operations in Latin America, launching a new service called “PedidosYa Market” that seeked to deliver groceries in 10 min.
At the end of 2021, Rappi setup dark stores that helped them to launch their Rappi Turbo service, with which they were able to deliver orders quickly. Currently, Rappi has more than 330 dark stores, located in more than 25 cities in Latin America and they plan to close the year 2022 with 150 dark stores in Brazil, 60 in Mexico and 40 in Peru and Chile.
After that, many Quick Commerce companies have been opening dark stores across Latin American markets, like Cornershop in Chile with the help of supermarket chain Cencosud and Jokr in Perú and Brazil (with Ifood), as Daki and Nana delivery in Brazil. In 2021, PedidosYa had 22 dark stores set up and they plan to have a total of 60 by 2022.
Which are the Quick Commerce Apps succeeding in Latin America?
Explaining the Quick Commerce landscape in Latam is not an easy task. Mainly due to the recency of the entire Q-Commerce phenomenon in the region and its rapid expansion. Almost every 6 months a new player enters the landscape or current players expand their operations to more countries. For this reason we will discuss the leading brands and their main characteristics.
Rappi is a Colombian company founded in August 2015 with an established leadership in the operating markets. It started as a food delivery company and in 2021 they launched the Rappi Turbo service (their Q-Commerce spinoff) almost simultaneously in Colombia, Brazil and Mexico.
Currently, Rappi has a coverage of 1,500 to 2,000 different products in its dark stores, the range of products mainly consists of consumer goods, personal care and other categories items. To define their catalogue of products, the company segments its audience into micro-zones, where each one has a tailor-made portfolio, which is then adjusted according to users feedback.
PedidosYa is an Uruguayan multinational delivery company that belongs to Delivery Hero. They began to operate under the PedidosYa brand after Glovo left the Latin American market by selling its operations to Delivery Hero.
Currently, the company operates in 15 markets and plans to be a leader in all Spanish-speaking countries across Latin America.
Cornershop was founded in Chile in 2015. In October 2019, Uber announced that they were acquiring a majority stake in Cornershop. By 2021 the company aimed to deliver one million orders in Peru.
Currently the company is focused on consolidating their operating networks in Mexico, Chile, Colombia, Brazil, the United States, Canada, Peru and Costa Rica.
iFood is a company based in São Paulo, founded in 2011. Ifood has operations in Argentina, Brazil, Colombia and Mexico, and will be the first Latin American company to use drones as part of their operations. The company has been testing the system since 2020 when it has made hundreds of deliveries using drones as part of their pilot project, but now it will be able to offer the service commercially.
Jokr is an instant grocery delivery startup based in New York also operating in Latin America. Today they service Bogotá, Colombia; Lima Peru; São Paulo and Rio de Janeiro, Brazil.
Jokr has what they call "hidden stores" where the supermarket product line is stored to facilitate deliveries within 15 minutes upon order payment confirmation. In Mexico, there are 1,500 different products available on average. However, in each store this inventory varies by 30% because products from local producers are also sold.
The staff working in the Jokr warehouses and the delivery personnel are all employees of the platform, having legal benefits privileges and a monthly salary. This is a different model from the ones used by many of the Q-Commerce Apps.
Merqueo was founded in Colombia in 2017. The company operates a full-stack, on-demand delivery service in Latin America and has landed $50 million in a Series C round of funding.
Merqueo offers more than 8,000 products, including fresh food, packaged goods, home essentials, beverages and frozen products. It currently operates in more than 25 cities across Colombia, Mexico and Brazil and has over 600,000 users.
Founded in January 2021, Daki is a 100% digital marketplace that makes home deliveries in 15 minutes. They operate in São Paulo, in western, central and south central parts of the city. The company does not want to exceed a 10,000 items mark in their selection portfolio when compared to a portfolio of a conventional supermarket; they're looking to analyze user consumption data as well as the emerging market trends to define their product offers.
Recently Daki and JOKR joined forces and merged, which has made them more agile in targeting different markets and becoming more attractive in the eyes of the investors.
Profile of the Quick Commerce shopper in Latin America
Typical consumer values are centered around immediacy in delivery. This shopper "persona" will usually make small purchases through the app, mainly purchasing the items that cannot be obtained due to lack of time.
The typical user of these apps in Latam is a young adult who lives in urban areas, where the Q-Commerce apps provide full coverage. In many cases they are digital enthousiastes with virtual bank accounts and a good income.
Most popular purchases are FMCG items, beverages, fresh food, personal care, medicine and others. Among the most frequently bought products, items such as ice cream, soft drinks, beers, toilet paper, water, ready-to-eat meals, snacks and vegetables can also be found.
Some challenges for Quick Commerce development in LATAM
- Digital payment
The acceleration of eCommerce and the financial inclusion through digital applications and platforms have become especially important in recent times for Latin American consumers giving rise to many alternatives such as partnerships between quick commerce apps and banks, prepaid cards and others.
Rappi, per example, has signed various agreements to offer innovative digital payment solutions. As an example in this case, one can consider an agreement signed with Visa to promote digitalization in the region, to prevent cyber fraud. They will also launch the RappiPay Visa debit card, a new card that was initially offered to the first time users of Rappi in Colombia having used the app the most.
New ways and methods of digital means of payment aim to provide a higher inclusion of a larger part of the population providing individuals with payment options and therefore stimulating further launches and developments.
- Logistics efficiency
Q-Commerce companies are constantly looking to offer shorter delivery times, as a result, they have to synchronize different stages of the process.
Given the context , many companies are opting to open dark stores as we mentioned previously to minimize time dispatch and reduce problems related to traffic. However, this is still in an initial phase since in many countries these companies have limited service coverage.
Similar to the rest of the world, in Latin America there’s a true online grocery shopping revolution going on, which is characterized by the emergence of local players: innovative startups securing impressive financing rounds or simply proceeding with big capital acquisitions.
The Q-Commerce landscape in Latin America will continue to evolve and change. Close monitoring will become increasingly important for brands. If you need a technology solution and a data partner that can evolve along with your Q-Commerce needs. Get in touch with our team of experts to learn more.