Is it better for Rappi to focus on urban market saturation or rural area expansion?

Introduction

The trade-off question at hand is whether Rappi should focus on urban market saturation or rural area expansion. This scenario involves balancing the potential for deeper penetration in existing markets versus broadening the company's reach into new territories. I'll analyze this trade-off by examining market dynamics, user needs, operational challenges, and strategic implications for Rappi's growth.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about Rappi's current market position. Could you share some insights on our market share in major urban areas compared to our competitors?

Why it matters: Helps assess the potential for further urban growth Expected answer: Strong in some cities, room for growth in others Impact on approach: Would influence the focus on specific urban markets

• Business Context: Based on our revenue model, I assume urban areas contribute significantly more. Can you confirm the revenue split between urban and rural areas?

Why it matters: Determines the financial impact of each strategy Expected answer: Urban areas contribute 80-90% of revenue Impact on approach: Would affect resource allocation decisions

• User Impact: Considering user behaviors, I'm curious about the differences in order frequency and basket size between urban and rural users. Do we have data on this?

Why it matters: Indicates potential value of each market Expected answer: Urban users order more frequently but rural orders might be larger Impact on approach: Would influence marketing and product strategies for each market

• Technical: Regarding our last-mile delivery infrastructure, how scalable is it for rural expansion?

Why it matters: Assesses feasibility of rural expansion Expected answer: Challenges in rural areas due to lower density and longer distances Impact on approach: Might require different operational models for rural areas

• Resource: In terms of our current team capacity, how equipped are we to handle simultaneous urban intensification and rural expansion?

Why it matters: Determines if we need to choose one strategy or can pursue both Expected answer: Limited resources, need to prioritize Impact on approach: Might lead to a phased strategy rather than simultaneous execution