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  • The Seville Reporters

IPOs 2022: Retail and Delivery

  • Food delivery companies got a major boost from the coronavirus pandemic.

  • Two delivery companies, one in Latin America, the other in the U.S., could test the waters of the public markets this year, in spite of Deliveroo's terrible public debut.

  • An Indian online retailer that's going toe-to-toe with Amazon could provide investors another way to invest in India's growing economy.


I remember a time when the only thing that got delivered to your home was mail and pizza, for anything else, you had to leave the house. Today you can order almost anything and have it delivered within an hour.

The delivery space is hot and the competition is plentiful. Companies are pulling out all the stops to be your go-to delivery choice. Included in those trying to be the go-to delivery app in their respective markets is Instacart and Rappi. Both companies could go public this year, and provide investors with an opportunity to share in their success or failure.

In the online retail space Amazon has been king for a long time. That could change, at least in India. Indian retailer Flipkart, has been growing its market share and expanding its services in an attempt to be India's number one online retailer. A Flipkart IPO could happen this year, providing investors another way to invest in India's emerging economy.


Founded in 2012, Instacart became a go-to delivery company during the early stages of the pandemic. By partnering with local grocers and retailers, Instacart made itself the delivery-arm for stores without delivery systems in place. The service was originally designed for groceries, but now services 700 retailers and operates in 65,000 stores. Instacart delivers groceries, pharmaceuticals, wines and spirits, sporting goods, office equipment, and health and beauty supplies among other items. The company generates revenue by collecting a delivery fee and service fee for each delivery.

Instacart’s last funding round came in March 2021, when it raised $265 million. After the last fundraising round Instacart was valued at $39 billion.

What’s to Love About It

The coronavirus pandemic played a big part in the growth of online delivery during 2020, but Instacart has been able to generate growth even after the worst of the pandemic. According to insiders revenue for Q3 2021 increased 20% year-over-year.

In addition to its delivery business, Instacart has a growing advertising business. Instacart’s advertising platform provides brands the ability to promote their products in search results. Furthermore, the company has nearly 10 million active users, which has allowed Instacart to collect data pertaining to consumer shopping habits. This data could help brands enhance their advertising on the Instacart platform. Instacart believes it could generate $10 to $20 billion in annual revenue from advertising.

According to, Instacart lost nearly $25 million a month in 2019. But things turned around in 2020 when it managed to net $10 million in profit in April 2020. It’s reported that Instacart brought in $1.5 billion in revenue during 2020,.

Market Threats

Instacart is facing competition big and small. Amazon Fresh ($AMZN), DoorDash, Uber ($UBER), Jokr, GoPuff, and Gorillas are a few Instacart competitors.


Rappi is a delivery company operating in nine Latin American countries and 250 cities. Similar to Instacart, Rappi delivers a myriad of products.

Rappi was founded in 2015, and is currently valued at $5.25 billion. Its last money raise occurred in July 2021, when the company raised $500 million. Big private investors like SoftBank, Y Combinator, Andreessen Horowitz, Sequoia Capital, and others have collectively invested over $2 billion into Rappi.

What’s to Love About It

Coming in at over $6 billion in 2020, the online food delivery market in Latin America experienced a 30% increase from 2019 due to COVID-19. Statista estimates that online food delivery sales in the region will hit $9.3 billion by 2026. At just 11%, Latin America has one of the world’s lowest e-commerce penetration rates, trailing North America’s 20%, and well behind the Asia-Pacific region's 50%. There is a long runway of growth for Rappi as Latin America’s e-commerce penetration catches up with more developed markets.

At first glance Rappi may appear to be the Latin American Instacart, but its management has much bigger ambitions. What started off as a beverage delivery company, is now transforming into a super-app, similar to China’s Meituan ($MPNGY) and WeChat ($TCEHY).

RappiPay, Rappi's money management and payment solution has around 750,000 users in Colombia. Last year the company launched RappiBank in Brazil, with the intent to provide lines of credit to Rappi partners. There’s also Rappi Entertainment for music streaming, and Rappi Travel for booking hotels, airline tickets, and other modes of transportation.

Rappi boasts 5.5 million monthly active users. The company’s revenue hasn’t been made public, but there’s an estimate from 2018 showing $220 million in revenue, and another from 2020 indicating over $700 million in revenue for that year.

Market Threats

Rappi faces competition from Uber Eats ($UBER), PedidosYa, Cornershop, and iFood to name a few.


Flipkart hit the radar of U.S investors in 2018, when Walmart outbid Amazon for the Indian online retailer. Walmart acquired 77% of Flipkart for $16 billion, and it is now looking to make Flipkart a public company. Flipkart’s last funding round came in July 2021, when it raised $3.6 billion. Now sitting at a $36 billion valuation, Flipkart has been Walmart’s best response to Amazon’s online dominance.

Flipkart was founded by two former Amazon employees in 2007. It initially focused on the sale and nationwide delivery of books, now the company sells everything from apparel to home appliances.

What’s to Love About It

Size. At 1.3 billion people, India has the second largest population in the world. India also has the second largest number of internet users with nearly 700 million, trailing only China. Internet penetration within India continues to grow, with smartphone penetration expected to grow from 42% in 2020 to 51% in 2025. India generated $50 billion in e-commerce in 2020, making it the eight largest e-commerce market behind France. The United States, with a much smaller population than India, but deeper internet and smartphone penetration generated $759 billion in e-commerce sales in 2020. Few companies private or public have the growth potential that Flipkart has.

Before going public, Flipkart is making a push to better its grocery store operations. Insiders state that a significant portion of the $3.6 billion raised last July will be put into expanding the grocery business. Flipkart's plans include expanding Flipkart Grocery as well as Flipkart Quick - the 90 minute local delivery service - throughout the country.

With 100,000 sellers and 100 million registered users, Flipkart is the largest online retailer in India. Reports from local outlets indicate that Flipkart’s 2021 revenue grew 25% year-over-year, but that the company is still not profitable.

Market Threats

Flipkart’s threats are Amazon, Snapdeal, and local retailers. CB Insights reports that 90% of commerce in India is still done in corner stores, mom-and-pop shops, and small local markets.

One Big Winner, Two Question Marks

Of the three companies discussed, one has the potential to be a big winner. The company with the best potential to win big is Flipkart. The size of the Indian market is just one factor that makes Flipkart a potential big winner. The other factor is Walmart hasn't screwed it up, yet. There are a number of international failures under Walmart's belt, but the company seems to have learned from those failures, and has put what it learned to use with Flipkart. Forrester Research reported that Flipkart held a 31.9% market share in 2020, with Amazon just behind with a 31.2% market share. Flipkart isn't just set up to compete against Amazon, it is set up to win in India.

Instacart and Rappi get question marks for similar reasons. Last year's IPO disaster, Deliveroo ($ROO.L), made me question if the stand alone food delivery business can be a profitable business. In 2022, I'm still wondering. Uber ($UBER) lost $496 million in 2021, Lyft ($LYFT) lost $1 billion in 2021, and DoorDash ($DASH) lost $368 million in 2021.

The amount of competition in the food delivery space causes me to shy away from industry. And the amount of competition within the food delivery industry has created a lack of brand loyalty by the customer. Looking over my last few orders of wine and liquor, the orders have been split between Drizly and Instacart. The company that could get the delivery to me the quickest was who I was loyal to on that day. The competition and the lack of brand loyalty is what would keep me away from investing in an Rappi and Instacart IPO.

However, investors should keep in mind that Amazon ($AMZN) was once just a bookseller, but now it's a super platform (Amazon Retail, Prime, AWS, Fire, Kindle, Alexa, Twitch). Block ($SQ), formerly known as Square was an updated spin on the cash register, now it's a collection of businesses, and a super app in the making. At one time Apple ($AAPL) only sold computers, and Microsoft ($MSFT) only sold software. Knowing that companies change over time, the door is not permanently closed on Rappi or Instacart. Rappi possibly becoming a South American super app and Instacart's advertising business, make both companies worth keeping an eye on.

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