Business

Rappi bets on dark stores for delivery in 10 minutes

The new business model works with warehouses optimized for picking and packing express and selected inventory

Rappi App
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  • Currently, there are 26 dark stores spread across strategic neighborhoods in São Paulo, Rio de Janeiro and other capitals;
  • Rappi plans to reach 100 dark stores by the end of 2021;
  • The average weekly order is 4,000;
  • Rappi bet on the dark stores after the purchase of the startup Avocado, which developed a technology that allows knowing where the products are in the shed and when they ended – this is what essentially depends on the efficiency in preparing the customer’s basket.

In order to do deliveries faster and meet the growing demand for grocery items, Rappi bets on dark stores: warehouses optimized for picking and packing express of selected products. The promised result? Deliveries in 10 minutes.

The dark stores are similar to the dark kitchens launched by Rappi last year and which already have 100 units across the country: they are physical structures designed to optimize logistics – be it the production of a meal or a delivery. While dark kitchens are closed kitchens focused on delivery, dark stores are like closed stores that only deliver.

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The warehouses of up to 200 square meters are organized according to the output of the products so that it is possible to prepare the order in up to three minutes while the courier waits for pick-up and delivery. Also, they only serve customers located within a 2-kilometer radius, so that delivery in such a short time is possible.

“We developed a picking and packing solution and integrated it into the Rappi app. When an order arrives, the picker sees the position of each item within the store, picks up the bag and starts picking. Then, he scans the products for inventory control and the order goes to the courier to deliver. This lasts up to 3 minutes and delivery, 7 minutes ”, explains Mariam Topeshashvili, co-founder of startup Avocado, which launched dark stores in 2018 and was later acquired by the Colombian giant, and today director of dark stores for Rappi.

Mariam Topeshashvili dark stores Rappi
Mariam Topeshashvili, co-founder of startup Avocado and today director of dark stores for Rappi. Photo: Rappi/Courtesy

For now, there are 26 dark stores spread across strategic neighborhoods in São Paulo, Rio de Janeiro, Curitiba, Recife, Fortaleza and Campinas. The debut cities of the new service were chosen based on the combined analysis of the volume of demand from Rappi users and the distance radius compatible for delivery to take place within the promised time.

Rappi plans 100 dark stores by the end of the year

Considering the good adherence to the “turbo mode”, as the delivery in 10 minutes of the dark stores is called, Rappi plans to reach 60 dark stores in the first semester at 100 by the end of the year.

The average order placed in the dark stores per week is 4,000 and the average amount spent by each consumer is BRL 67.00 – not bad for a service that currently reaches 16,000 users in São Paulo, the city with the largest number of dark stores.

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There is no minimum limit for the number of items or the order price, but if the customer adds more than 15 items in his basket, the app warns that the delivery may take a few minutes over 10. The freight charge is the same as charged in common purchases and, for subscribers of the premium service, it is free for orders over BRL 30.00.

Dark stores offer food, drinks, personal hygiene items and cleaning products. The next category to be possibly included will be Drugstore items.

Custom and high turnover inventory

Unlike the Rappi core business, which works as a delivery marketplace, that is, it offers on its platform an endless number of products and suppliers but does not own the products, the dark stores operate with a consignment inventory. At first, Rappi is dealing with retailers that operate exclusively with the platform.

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To avoid losses, dark stores operate with a limited inventory – in variety and quantity – even so that the purchase can be organized and dispatched for delivery in just 3 minutes. The offer is selected and defined based on data from the Rappi app, from which the company can know which type of item has the most output per location.

According to Mariam, this kind of curation ensures that the inventory is renewed weekly, that is, the products do not stay on the shelf for a long time.

READ ALSO: Colombian startup unicorn Rappi: why the company wants to be the first Latin American super app

“The great challenge for dark stores is the inventory of each warehouse. Customization is essential. We analyze which products sell the most in each region based on Rappi‘s app data and curate them. We have few units of each product, on average the inventory of dark stores is 1.200 SKU [Stock Keeping Unit].”

The business idea came from Avocado – literally

Rappi decided to bet on the dark stores by buying the startup Avocado, co-founded by Mariam. The idea came from a triviality: she wanted to buy an avocado for guacamole and received unripe fruits.

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“Avocado came up intending to create an integrated inventory, with greater control over the products available and the output. We wanted to optimize the end-to-end supply process, from the moment the product arrives at the store until the moment it goes out to the end-user,” she explains.

In June 2020, Rappi bought Avocado and incorporated its operations.

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