Amazon Buys Stake in Latin American Delivery Startup Rappi
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Amazon.com Inc. has taken a stake in Colombian delivery company Rappi Inc., a strategic partnership that pairs the e-commerce giant’s retail and technology infrastructure with one of Latin America’s best-known last-mile delivery outfits.
Getting access to Rappi’s logistics network could help Amazon compete with regional e-commerce heavyweight MercadoLibre Inc. For Rappi, the partnership brings an endorsement from North America’s biggest online retailer and opportunities to tap into its logistics and cloud-computing networks.
The initial investment — a $25 million convertible note, according to a person familiar with the transaction — is small for Amazon. But the deal entitles the Seattle-based company to buy as much as 12% of Rappi via warrants if certain milestones are met, said the person, who requested anonymity because the deal’s terms were confidential. The numbers could potentially change.
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Spokespeople for Amazon and Rappi declined to comment.
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Amazon has made a habit in recent years of using warrants to make direct investments in partners including airlines, a grocery distributor and electronics manufacturers — a bid to grab more of the gains should Amazon’s business boost its partner’s fortunes.
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Rappi was founded in 2015 and has become ubiquitous from Mexico to Chile with its “Turbo” offering — a pledge to deliver everything from white wine and toothpaste in less than 10 minutes. The company also delivers from restaurants and has muscled into the financial sector, creating a digital wallet and winning regulatory approval in places like Colombia to offer credit cards and savings accounts.
Rappi is backed by a range of big-name investors, including SoftBank Group Corp., Sequoia Capital and T. Rowe Price. Last year, Simón Borrero, Rappi’s co-founder and CEO, said the company could go public in 2025, possibly in New York. Bloomberg reported last month that Rappi had secured a $100 million loan from Banco Santander and Kirkoswald Capital Partners.
Amazon’s investment in Rappi builds on existing commercial ties. Rappi is a customer of Amazon Web Services, the cloud provider. In Mexico, Amazon offers members of its Prime program a year of free shipping through Rappi.
Amazon.com Inc. ranks No. 1 on the Transport Topics Top 100 list of the largest logistics companies in North America, No. 15 on the TT100 list of the largest private carriers and No. 1 on the Top 50 Global Freight list.
Written by Kate Clark, Matt Day and Patricia Laya
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