Space in Your Suitcase? App Turns Travelers Into Paid Couriers
(Bloomberg) -- If you’ve ever visited friends or family in Brazil, chances are they’ve asked you to ferry something into the country -- be it vitamins, the latest iPhone or even a kitchen faucet.
Now there’s an app that aims to expand that practice beyond friends and family and turn complete strangers into couriers. And profits.
Grabr, a three-year-old San Francisco-based startup, puts travelers in touch with consumers and helps them work out the logistics of buying and handing over goods. In the simplest of terms, it’s both a rental agency for spare luggage space and a delivery service. Or it might be considered a newfangled courier service.
Taxes and import fees are high in developing countries like Brazil, and access to goods is limited. Recently, to make matters worse, airlines imposed tougher weight limits for luggage. International travelers must now dig into their wallets if their baggage exceeds 50 pounds, versus the prior cutoff of 70 pounds.
"People will wait for family or friends to travel and bring things back for them,” Grabr’s Brazil head Michele Chahin said in a phone interview. “We are bringing technology to something that comes naturally for Brazilians.”
How It Works
The platform is designed to protect both sides. The traveler makes the purchase, the buyer pays, and the app holds onto the funds until both parties meet up and confirm all is correct. The buyer pays a previously agreed-upon price to the traveler, and Grabr takes 7 percent off the top as a fee.
Buyers typically save at least 30 percent on goods compared to local prices, said Chahin, who is the only Grabr employee in Brazil.
Grabr, which competes with other apps including PiggyBee and Backpack, has overseen the ferrying of more than 350,000 deliveries globally since operations began, from Moscow to Ho Chi Minh City. Last year, 40 percent of deliveries went to Argentina and 30 percent to Brazil, Chahin said.
The market is bigger in Argentina, for now, because residents there have less access to certain products. In Brazil, goods are more readily available but taxes on imports can be painfully high. The most in-demand products are electronics, including anything made by Apple Inc. Makeup, hair products and collector’s items are also popular.
Grabr wants its clients to adhere to local regulations and pay necessary customs fees. The app has links to websites of customs agencies around the world. “Users are expected to work within the limits,” Chahin said.
Last week, Grabr received $8 million in funding led by Foundation Capital and said Foundation general partner Charles Moldow will join the board. Prior investors include Founders Fund and SignalFire. The company said in a statement that it plans to use the new funds to introduce new features and hire more staff.
Sao Paulo resident Allan Castellon loves the app. During the holiday season, the 35-year-old used Grabr to buy Megablast speakers that he says aren’t sold in Brazil. He paid $159 plus a delivery fee of about $20. Castellon, who works at Triple S Cloud Solutions, estimates that a similar product sold locally would cost around $900.
“Our taxes are so high here, it makes things so expensive,” said Castellon. “Maybe the government will pick something up from this and realize things need to change.”
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