After entering the Nigerian and Ghanaian markets earlier this year, Glovo is on track to conquer the African continent, and is aggressively investing in The Spanish on-demand delivery startup, has announced on September 7 its intention to double its investments in Africa and expand its activities to other countries on the continent. It is already present in 6 African countries: Nigeria, Morocco, Ghana, Ivory Coast, Kenya and Uganda.
“Our expansion to Nigeria, Ghana, and our upcoming launch in Tunisia is something that we have been considering for some time now. So it’s great to be able to formalize it, ”said William Benthall, Managing Director of Glovo in Sub-Saharan Africa.
Here Is What You Need To Know
- Glovo wants to invest $60 million to expand its business into other markets. Countries like Tunisia are on the front lines as the company plans to launch operations in Tunis by next month.
- The startup is already available in more than 40 cities, and has more than 300,000 users, 8,000 restaurants and 12,000 couriers in Africa. With its expansion plan, its services will be accessible to more than 6.5 million people.
- The firm also plans to double its workforce, with 200 additional employees before the end of next year.
“We look forward to making food, grocery, pharmaceutical and retail products available to our new users at the push of a button,” says Benthall.
- Note that the startup works thanks to an application comparable to Uber Eats or even Deliveroo, which allows users to obtain the best products from their cities in a few minutes.
- It should be remembered that it withdrew from the markets of Latin America and the Middle East to strengthen its presence in Africa, which represents around 30% of its geographical footprint.
‘‘Become obsessed about being profitable’’
Earlier on in the journey, Glovo CEO Oscar Pierre had hinted that the most important factor that has guaranteed the startup’s continuous growth is its quest to remain profitable.
Read also:Glovo on-demand Delivery Startup Plans to Set Shop in Nigeria
‘‘Only those who focus on profitability get funding,” he said. “We make sure we are not only growing, but that the cities are not in negative numbers for many months. We know there are cities that need only six months to show losses and others, 12 months, because it all depends on size; but we know that sooner or later we will get good numbers. In Spain we have seen more than 10 proposals similar to ours and many of them have failed. The margins are small and if you do not look after them well, it will not work,’’ he said.
Focusing on profitability has helped the startup to steer clear of loss. In 2016 Pierre said the startup obtained 1.1 million net euros in profit, which represents the commissions from their partners and shops along with what the user paid for the service, and that meant tenfold growth. In 2017, barely two years and two months old, the startup took a millionth order. The number has since doubled, with a turnover of $91m in 2018.
This perhaps informs Glovo’s preference for Africa over Latin America and the Middle East in its latest expansion drive.
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“Our revenues are lower in Africa, but the amount of money we have to spend to achieve our goals is lower,” William Benthall was recently quoted as saying.
Timing Right Is Crucial; And Africa Adds To Timing Advantage
Getting into a crowded market could be easy but staying successful would remain the toughest game startups will face. To this Oscar Pierre agrees, stating that getting the timing right is more crucial. This is an important factor that has most possibly influenced the startup’s further expansion across Africa.
Glovo doesn’t come on board a country where there are already two dominant players (which is the case in Mexico, Colombia, and the UK), Pierre said.
As a hint, the eight cities Glovo recently exited collectively generated 1.7% of Glovo’s gross sales in 2019, indicating that those markets would not have a significant impact on the company’s revenue.
‘If we went to the UK today it would be super tough or impossible to become one of the main food delivery companies. It’s a snowball effect; as you don’t have the volume, you don’t reach to the top chains or restaurants which doesn’t give you the growth,’ Oscar told Sifted.
The startup mostly succeeded in Spain mostly because it brought big brands such as McDonald’s and KFC onto its app and this led to ‘massive growth’. Before then, competitors like Deliveroo refused to meet the big companies’ demands. This was an opportunity Glovo held onto. ‘‘We literally built anything they wanted,’ Pierre said.
Today, Glovo is the biggest food delivery service in Spain (where it is profitable and takes around one million orders per month)
‘Every single city needs between six to nine months to reach operational break-even. Structure-wise, it’s been super interesting. You have to delocalize — otherwise the company stops. You need to find super strong regional teams. In Buenos Aires, Argentina, we have a very senior team, with almost a CEO and CMO, and they take all of the decisions,’’ Oscar said.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer