Since 2015, Latin America has experimented an upgrowth of Last Milers or, in another words, companies specialized in guaranteeing products a safe ride home from distribution centers. Even though most of these platforms started delivering meals from restaurants, during this last year, consumers witnessed a huge expansion not only geographically speaking, but to new services and categories. FMCG industry’s growth in particular become evident in the amount of official stores that popped up in these apps. Last Milers became key to retailers since they can sort out delivery issues -such as high costs or delays- which is essential to improve online sales. Walmart’s acquisition of Cornershop and the increasing variety of store within Last Milers, highlight the crucial role they are playing in the eCommerce world.
The way from distribution centers to homes is key to assure a successful online sale and delivery still is a challenge to overcome in the region. Traffic jams, weather, insecurity, or possible accidents or technical failures are some of the main decisive factors that increase delivery costs and make it an expensive service. An efficient delivery can go a long way in the building of prestige and consumer loyalty. By incorporating lightweight vehicles that improve efficiency in short distances, Last Milers offer Brick and Clicks a great solution.
With a business model strongly based on technology as an enabler, the principles of collaborative economy and the aim of offering a superior shopping experience, Last Milers became a catalyst for online sale, accelerating the integration of new users to eCommerce
The case of the initial alliance between Cornershop and Lider in Chile represents a clear example of this phenomenon. In very little time, the last mile platform was able to double Chile’s main retail online sales.
Growth and challenges: Rappi
As we mentioned before, the progress made by last milers in Latin America is outstanding. Rappi is an iconic example: with a growth of 20% per month, it represents a milestone by becoming the first unicorn Colombian enterprise -and one of the very few that exist in the region- after reaching a market cap of USD 1000 million dollars .Simón Borrero, Rappi’s CEO and Co-founder, announced that they plan to start 2019 with 12000 active “rappitenderos”. In addition, Borrero highlighted the great expansion they experienced in the region. Brazil was the highest growing market -30% per month- and the goal for Rappi is to become leaders in Argentina and Mexico. They already have presence in cities that represent 32% of the market, which is above the average for Last Milers in Latin America.
Nevertheless, the company will have to sort out some obstacles. One of the most important are “rappitenderos” complains about labor conditions. Despite Rappi already experienced their first strikes in some cities, their CEO downplayed all critics arguing that they come from complete ignorance about Rappi’s system: Rappi is a platform that connects people that need to order something to people that have the time to deliver it.“Rappitenderos” are not Rappi’s employees
Last Milers will have to find concrete solutions to this and other issues that can come up in order to guarantee a sustained and long term growth. If they succeed, their future prospect looks encouraging.