Business Latin America: The biggest
food delivery apps are moving
into Latin America
The global food delivery mobile app market is
expected to hit $16.6 billion by 2023. India's Swiggy, Germany's Delivery Hero,
the UK's Deliveroo, and San Francisco's Postmates and DoorDash are among the
delivery companies expected to attain VC-backed valuations of $1 billion or
more in the past two years, according to Pitchbook. So how are all of these
food delivery apps continuing their growth? In many instances, the answer is
international expansion, and more recently, expansion to Latin America.
The technology industry in Latin America is
booming. Millions of consumers are coming online via mobile devices, and
entrepreneurs are seizing the opportunities that increased connectivity offers.
In the first half of 2019 alone, VC investment in Latin American startups
totaled $2.6 billion, a significant uptick from the less than $2 billion raised
in all of 2018. Technology is disrupting everything in Latin America, from
banking and education to travel and food delivery.
The food delivery market in Latin America is now
one of the most competitive in the world. In the early 2010s, Germany's
DeliveryHero expanded aggressively across the region through a series of
acquisitions. The food delivery giant arrived in Latin America almost overnight
through its acquisition of Uruguayan PedidosYa, which at the time was the
leading online food delivery service. In the same year, DeliveryHero also
acquired Colombian startup ClickDelivery, helping to solidify its Latin
American presence.
These early players introduced Latin America to the
concept of on-demand food delivery, but it was the next generation of food
delivery services that created the current battle for market share and regional
dominance.
The global players placing bets on Latin America
In 2015, the on-demand courier service, Glovo,
launched in Spain. Food delivery quickly became its most popular service, and
the startup set its sights on international expansion. Glovo began recruiting
people to attend its ‘school of launchers' - a two-month training program that
prepares managers to set up Glovo operations in a new market. Launchers are in
charge of building local teams and setting up operations quickly, before moving
on to the next city.
Using this expansion strategy, Glovo became one of
the fastest-growing players in the food delivery space. With a fresh injection
of venture capital investment and a joint venture with mobility company Cabify,
Glovo entered Latin America by launching in Chile in 2017. Cabify supported
Glovo's Latin American launch by providing access to its existing network of
messengers, which helped the app to become a regional leader from the start.
Glovo now serves more than four million monthly orders worldwide, with a large
percentage of those orders coming from Latin America. Glovo recently reported
that Peru will be among its top three markets by the end of 2019. And while
Glovo has been wildly successful in Peru, it has struggled to find its footing
in other Latin American countries.
In 2019, Glovo abandoned its operations in Chile
and Brazil following fierce competition with direct competitors Rappi,
Cornershop, iFood, and UberEats. UberEats began it international expansion in
2016, which included Mexico. Over a two-year period, the company launched its
food delivery service in more than 60 cities across 11 countries. Although
UberEats now has a presence in 40 Mexican cities, the country is completely
saturated with food delivery options. UberEats is fighting against Rappi,
SinDelantal (owned by JUST EAT and iFood), Postmates, among others in a market
that is estimated to reach $750 million in sales in Mexico alone by 2021.
Postmates launched in Mexico City around the same
time as UberEats, with more than one thousand local merchant partners and
couriers. And while the company does not operate in any other international
markets aside from Mexico City, local players are keeping an eye on its growth
strategy, which also focuses primarily on food delivery. Meanwhile, Amazon,
Walmart, and other grocery retailers are also experimenting heavily with
on-demand delivery services in the region.