Venezuela

How a Colombian billion-dollar delivery app became a lifeline for Venezuelan migrants

Venezuelan nationals working as bicycle couriers for the Colombian online delivery company Rappi ride their bikes in Bogota on October 11, 2018.
Venezuelan nationals working as bicycle couriers for the Colombian online delivery company Rappi ride their bikes in Bogota on October 11, 2018. AFP/Getty Images

If you’ve traveled through any large Latin American city lately you’ve undoubtedly seen Rappi at work.

The tech-driven delivery service, which was founded in Colombia in 2015, is now operating in seven countries and more than 40 cities. It has more than 100,000 delivery people weaving through traffic on bicycles, motorcycles and on foot — easy to spot as they tote bright-orange bags emblazoned with a shopkeeper’s mustache.

The company’s premise is simple: Users log in to the Rappi application and can have almost anything they want delivered — restaurant food, toothpaste, cash, groceries.

Last month that straightforward idea got doused with financial rocket-fuel as the Japanese conglomerate SoftBank Group announced it was plowing up to $1 billion into the company. In the process, Rappi consolidated its status as one of Latin America’s few “unicorns” — billion-dollar startups, which are almost as rare as the mythical creature.

But the company’s meteoric rise (its business grew by 20 percent every month in 2018) has also been propelled by another less likely source: Venezuelan migrants.

Rappi currently operates in Colombia, Brazil, Mexico, Chile, Argentina, Peru and Uruguay. And while it doesn’t keep track, many of its delivery drivers in the region are Venezuelans who fled their own country’s shattered economy, said Rappi co-founder Sebastián Mejía.

“From day zero at Rappi we’ve always had a social mission,” Mejía, 34, told the Miami Herald. “So we are very excited that Rappi has not only become a source of income for vulnerable communities — like Venezuelan migrants, who are the face of a dramatic humanitarian crisis — but has also given them the ability to send money home.”

Rappi was founded by Mejía, Simon Borrero and Felipe Villamarin, three friends who wanted to find a solution for two problems plaguing Colombian city-dwellers: nightmarish traffic and long office hours. Through the app, Rappi gives users access to a cavalry of personal assistants. But to consider Rappi just a delivery or concierge app is too narrow, Mejía said.

“Rappi is an application where you go to resolve all sorts of problems in your life,” he said.

When SoftBank CEO Marcelo Claure announced the fund’s $1 billion stake in Rappi on April 30, he called the application “the premier multi-service ‘super-app’ for Latin America, improving the lives of millions in the region.”

A growing number of Venezuelan migrants are dying in Colombia, and their families are too poor to afford a funeral. Sonia Bermudez, in Colombia's La Guajira, is offering them free funerals and a crypt in her cemetery.

Venezuela safety net

While the company’s target audience may be the time-starved middle class, it has also become a lifeline for many Venezuelans who have been shut out of the traditional job market.

The United Nations says more than 3.4 million Venezuelans have fled their country in recent years amid a collapsing economy and political turmoil, and most of them are ending up in South America. Colombia alone is now home to more than 1.2 million Venezuelans.

On a recent weekday, four Rappi delivery men were hanging out in front of a grocery store in Colombia’s capital, their bicycles leaning against the wall as they waited for orders to come in on their cellphones. All of them were recent Venezuelan migrants.

Wilander Jiménez, a 28-year-old from the city of Lara, had been a policeman back home. But since arriving in Colombia almost a year ago he hasn’t been able to land a job at a brick and mortar store or as a security guard, even though he has a temporary work permit, known as the PEP.

“People won’t hire you here if you’re Venezuelan, even if you have the PEP,” Jiménez said, “so Rappi has become a solution for many of us.”

To work for Rappi, people have to prove they can legally work, take a 45-minute class and have a smart phone. Many start making deliveries on foot or using bicycles before graduating to motorcycles, Jiménez said. On a good day, he can make 75,000 pesos, or about $23 dollars — roughly three times Colombia’s minimum wage. On a bad day he makes a third of that “or nothing at all.”

Wages fluctuate depending on demand and conditions. On this sunny day in Bogotá, Jimenez was making about $1 per delivery, plus tips. But when it’s raining — as it often does — delivery rates can spike to $2 or $3 dollars per run.

With a bubbly personality and her ability to fake a perfect Colombian accent, Sofía Guerrero seems like she would find a job easily. But she said that as soon as she presents her PEP and Venezuelan passport the doors start closing. She started working at Rappi out of necessity about three months ago and was struck at how it seemed to be a refuge for migrants.

“We’re all Venezuelans,” she said, pointing her chin at about a half dozen Rappi employees lounging in a park. “Maybe there are some Colombians working for Rappi but I’ve never met one.”

Mejía said it was impossible to know exactly how many Venezuelans work for the company because the organization is seeing such explosive growth. While Rappi had some 20,000 deliverymen in 2018, according to media reports, it now has four times that many.

Even so, he said Venezuelans represented “an important number” of their delivery drivers, particularly in Colombia, Peru, Argentina and Chile — which are also some of the top destinations for Venezuelan migrants.

“We’re excited that we can be the small part of a solution for an incredibly enormous problem, which is the Venezuelan humanitarian crisis,” he said.

Even so, Rappi — like other companies in the gig economy — gets heat for relying on contractors who aren’t eligible for social security payments and other benefits. In Argentina, Rappi drivers have been organizing to push back at what they see as exploitative work conditions.

For the moment, Rappi is the dominant player in Colombia, even as it faces off against UberEats, which arrived here in late 2016. But that can change quickly.

Jay Gumbiner, the vice president of research for Latin America at IDC, a global market research and consulting firm, said homegrown tech companies like Rappi often get a head-start.

“The local heroes always have the first-mover advantage but they have to stay ahead of the curve to compete with these global players,” like Uber and Lyft, he said. But they’re also vulnerable to being undermined by local competitors.

“If you come up with a really good taxi service in Bucaramanga [Colombia] that can compete with Uber, then — unless it’s an international traveler coming from somewhere else — you could essentially have the entire city of Bucaramanga to yourself,” he said.

Even so, Rappi is already enough of a regional player that it was cited by analysts as one of the factors that helped trip up Uber’s IPO earlier this month.

With the fresh SoftBank funding, Rappi plans to expand into three new countries this year (Mejía won’t say which) and dozens of new cities. One place they’re not considering is the United States.

There’s no need, he explains. Latin America has a population of more than 600 million people and almost half of them live in cities — Rappi’s target.

“Latin America has half the GDP of China and some of the most crowded cities in the world,” he said. “Sao Paulo is more densely populated than Hong Kong, and Mexico City is more dense than Shanghai, these are cities where Rappi can transform the lives of consumers.”

“What we’ve found in the seven countries that we’re working in is that the challenges and opportunities are very similar so we see huge opportunities for entrepreneurs in the entire region,” he added. “We see Latin America as a new frontier for innovation.”

Jiménez, the former policeman, said he’ll never get rich working for Rappi, but that he makes enough to pay for a room, keep himself fed and send some money home to his family in Venezuela.

“All of us want to go home some day when things improve there,” he said. “But this is one of the few opportunities we have now to survive…Rappi is growing because of us Venezuelans.”

This story has been updated from the original to include an analyst comment and more context

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