Claims from Citron Research’s Andrew Left that Alibaba or Softbank are likely future investors in African e-commerce retailer Jumia have left analysts scratching their heads. “There is no doubt that Jumia will need more capital to fund its expansion,” Left writes in research this week. “Citron believes that Alibaba and/or Softbank will come in as a strategic partner/investor, which will simultaneously validate the business model, put Jumia on the radar of the world’s largest investors and provide a direct channel for Chinese goods into the African market.”
Jumia co-CEO Sacha Poignonnec
“Jumia is now shipping over 20 million packages a year to cities and rural areas across 11 countries,” according to the latest Citron note. “Nigeria is benefiting from the logistics network, technology and product offerings that Jumia has brought.” “The only way that this does not work is if this young, tech-hungry population of Nigeria decides that they do not want e-commerce.” So Jumia stock, according to Citron, is set to advance to $100, from its current level of $17.27. Last year, Left was short-selling Jumia shares and claiming they were worthless. But in early October, he announced he’s buying the stock. Asian corporate investors take a more stable approach to valuing companies. “The better timing would have been before Jumia’s IPO if Alibaba ever planned the investment,” says Ming Lu, head of Chinese equities at Aequitas Research in Shanghai. “It’s unlikely that they would do it now or in the future.”
“Softbank seems very unlikely,” says Kirk Boodry, founder of Redex Research in Tokyo. “There is no strategic rationale at all. The company has transitioned almost completely to private equity investment and Jumia as a listed company is probably too late stage for them.” “Alibaba has demonstrated an interest in expanding globally and there is synergy potential but Africa is one of many regions it could go to,” adds Boodry. COVID-19 Citron now argues that the COVID-19 pandemic has “quickly shifted the purchasing habits of Africans and accelerated the acceptance of e-commerce”. But the pandemic has not increased African Internet penetration and has reduced rather than increased the purchasing power of consumers. Jumia co-CEO Sacha Poignonnec was cautious on the second-quarter earnings conference call of 12 August. The four African countries where lockdowns were implemented represent only about 24% of the company’s market, he said. Localised lockdowns and partial curfews led to “less drastic changes in consumer lifestyles and behaviour,” said Poignonnec. “In other words, in those countries, we have not seen a surge in demand.” “My view is that Citron’s report dramatically overstates the market and market potential for Jumia,” says Vicki Bryan, CEO at bond research shop Bond Angle, which publishes on Smartkarma. She questions why Alibaba and Softbank have not already invested in Jumia if they are interested. “For Alibaba I would expect target regions to be Asia, Latin America and the Middle East before they expanded into Africa,” says Mio Kato, an analyst at LightStream Research in Tokyo. “For Softbank, they generally look for players they think will go global on a grand scale.”
“The idea is plausible but pushing plausible ideas as highly likely is a good way to try and pump a stock,” adds Kato. “I would personally take this with a grain of salt.” Bottom line Investors shouldn’t expect Alibaba or Softbank to bail them out of a risky punt on Jumia stock.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Alibaba Group and the World Economic Forum have widened their search for partners to combat widespread issues such as unemployment in Africa, calling again for governments, the private sector and civil society to take up the cause.
Jack Ma, founder and chairman, Alibaba group
Alibaba, the WEF and five other founding members in September launched the Africa Growth Platform to help 100 million startups and SMEs in Africa scale their business operations by 2025. The underlying goal is to create jobs for the two-thirds of Africa’s 420 million young people who are currently out of work. A.T. Kearney, Dalberg Group, Export Trade Group, the Africa Development Foundation and Zenith Bank are the other founding members.
This year, as global thought leaders gathered for the annual meeting of the World Economic Forum in Davos, Switzerland, they have created the Davos Friends of AGP to draw still more partners to the initiative, which aims to increase access to funding and create better business environments for Africa’s startups. So far, the presidents of Botswana and Ghana have agreed to join as member countries of the AGP.
“The AGP recognizes that one of the most compelling ways to create new economic opportunities and support Africa’s digital transformation is to invest in the capacity building and empowerment of entrepreneurs and small businesses,” said Brian Wong, vice president of global initiatives for Alibaba Group, at a press conference in Davos.
WATCH: Alibaba’s Brian Wong explains the Friends of AGP initiative
The AGP aims to enhance funding prospects for young African entrepreneurs in three ways. Firstly, the platform will work with governments to bring about policy reforms that will stimulate and accelerate business growth. Secondly, it will work to create a diverse community of investors as a way to bring together resources to facilitate future funding. Finally, the AGP seeks to build a startup community itself to foster collaboration and idea sharing.
To support the AGP’s 2025 goals, Alibaba has been helping to set up the framework of the initiative while promoting partnership opportunities to foster the growth of a digital economy in Africa. Alibaba will also share lessons learned from China, including case studies on building digital infrastructure and growing e-commerce in rural areas, as well as leverage its training programs to teach young entrepreneurs, SMEs, policy makers, educators and universities in Africa about e-commerce. To date, 119 entrepreneurs from 18 African countries have participated in Alibaba’s eFounder Fellowship program, which was launched by Jack Ma while serving as UNCTAD Special Adviser for Youth Entrepreneurship and Small Business. Twenty-two students from Rwanda have also started their four-year undergraduate-level course on international business and cross-border e-commerce in Hangzhou last September.
Since last September, AGP has hosted a workshop in Nairobi, in December, for fintech entrepreneurs to meet with key stakeholders and executives in the central bank of Kenya. And in Davos this week, the group met with African heads of state, business leaders and other stakeholders to advocate for infrastructure investment, such as for steady water and electricity supply, and training from academia.
For Alibaba, the launch of the Davos Friends of AGP community is another step toward building a more-inclusive business landscape that serves society as a whole, Wong said.
“We are honored to serve as a founding member of the AGP as we work to enhance global cooperation among all stakeholders and to do our part to inspire, train and support entrepreneurs in Africa in order to achieve more inclusive growth,” he said.
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.
He could be contacted at udohrapulu@gmail.com
Africa’s second electronic world trade platform (Ewtp) will be established in Addis Ababa, Ethiopia, after Ethiopian government officials and Alibaba Group signed a memorandum of understanding (MoU) to have the second eWTP Hub in Addis, after the first one was set up in Kigali, Rwanda.
Abiy Ahmed, Prime Minister of Ethiopia
The government of Ethiopia hopes that the eWTP hub in will enable the country provide smart logistics and services, conduct cross-border trades targeting small and medium-sized enterprises (SMEs) by helping them penetrate markets in China and other parts of the world, as well as serve as a center of excellence in training young entrepreneurs, among others.
At a ceremony that was well attended in Addis Ababa yesterday,the Prime Minister of Ethiopia Abiy Ahmed said that the electronic trade platform is part of Ethiopia’s technological development and a step forward to making Ethiopia among the five economic giants of Africa within the coming decade, noting that it also expands the horizon for small and medium enterprises. Other dignitaries at the event are Ethiopia’s Minister of Innovation and Technology, Dr. Getahun Mekuria, Jack Ma, Founder of Jack Ma Foundation and Partner of Alibaba Group, Eric Jing, Alibaba Group Director and Financial Services Group Chairman & CEO, as well as Takele Uma, Addis Abeba deputy mayor, among others, representatives of Alibaba Group and Dr. Getahun signed the MoU at Ethiopia’s ICT Park, located in Goro road in Addis Abeba.
Speaking on the development, Dr. Getahun Mekuria noted that this engagement will greatly contribute to trade facilitation and open markets to SMEs not only in Ethiopia but in the wider region.” It is “an important step in the development of a digital economy in Ethiopia” he added.
“It is an honor to partner with the government of Ethiopian to establish the Electronic World Trade platform Ethiopia Hub” said Eric Jing, adding “We will continue to support the creation of a more inclusive. Digitally -enabled global economy, where small businesses can participate in global trade. We look forward to working together with entrepreneurs and SMEs from Ethiopia and other African nations to seize the opportunities provided by the digital era”
The first major initiative for the Electronic World Trade platform partnership in Ethiopia will be development of a multi-function digital trade hub to serve as a gateway for Ethiopian products to china, a center for cross-border e-commerce and trade within African and training center. China Commodities City International (CCCI) will partner with Alibaba in the development of the Electronic World Trade platform Hub. The Alibaba business school will implement the capacity building and training portion of the partnership which consists of a number of programs including specialized programs for Ethiopian entrepreneurs’ business leaders and university lectures.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
Nothing lasts forever, goes the saying. For the Baby Boomers and Generation X who existed without the internet, it was a shock that the traditional, physical retail business model could fade away, to be replaced by the business at the click of a button.
Today, Amazon Effect means that traditional, physical retail shops continue to wind down and call it a quit, giving in to the stiff competition from Amazon, eBay, Alibaba, Jumia and online shops. For emerging markets and developing countries, what remains for these physical shops to be completely rendered to ruins is trust.
Chinese billionaire, Jack Ma, understood this early enough. In 2016, Jack Ma started a revolution he called the ‘New Retail’ that would itself redefine what commerce really means for all of us. Jack Ma is the 21st richest man in the world and the number one richest man in the most populous nation on Earth— China.
He is piercing the heart of commerce and extracting what has fueled commerce over the course of thousands of years ago — human beings. Through new retail trade, he is relaunching the whole idea of technology in commerce and trade itself to the people that originally own them — human beings, consumers.
“Commerce as we know it is changing in front of our eyes. E-commerce” is rapidly evolving into “New Retail.” ,” Ma wrote to Alibaba shareholders in a letter sent ahead of the New York-listed company’s annual shareholders in 2016. ”The boundary between offline and online commerce disappears as we focus on fulfilling the personalized needs of each customer. We anticipate the birth of a re-imagined retail industry driven by the integration of online, offline, logistics and data across a single value chain. This is why we are adapting, and it’s why we strive to play a major role in the advancement of this new economic environment.”
This may sound more Utopian than realistic, but in China where the concept was formed, Hema Supermarket, an arm of Alibaba that specializes in new retail, has opened 64 Hema stores in 14 cities, with over 10 million customers shopping at these supermarkets since the beginning of 2016.
On average, for a Hema Supermarket that has been open for at least 1.5 years, daily average sales are upwards of 800,000 yuan (US$116,500) — about 60 percent of which comes from online orders. Based on Alibaba’s data, offering a combination of online and offline shopping options results in an increase in average monthly spending by customers. Consumers who shopped both online and offline at Hema spent an average of 575 yuan monthly, compared to under 300 yuan for purely online, or purely offline shoppers.
Pinduoduo, the $1.5B Chinese startup is also another Chinese e-commerce company, engaged in new retail. The startup is challenging the giant Alibaba in China’s towns and villages. In January, Pinduoduo had 114 million active users, surpassing that of New York-listed Chinese discount retailer Vipshop. Currently, the startup has captured a projected 7.0% of all retail e-commerce sales in China this year, not a bad showing for a firm that launched in 2015. In three short years, Pinduoduo has emerged as one of China’s fastest growing shopping startups, with as many as 55 million users accessing the site per day.
Pinduoduo’s idea of new retail comes by way of offering group discounts.
Here Is How The Idea of New Retail Works
The idea of new retail lies in thinking beyond the boundaries of the two-party system of retail operations, that is, e-commerce and legacy brick-and-mortar retailing. New retail, instead, focuses on employing an entirely new operating system for reaching and inspiring consumers to shop.
‘‘New Retail trade is trying to solve two particular core challenges in the industry,’’ Emmanuel Elem, an advocate of Sairui, Africa’s new retail startup said. ‘‘The first challenge is the challenge of cold war between offline and online malls. Shoprite is an offline multi-billion dollar shopping mall, for example. On the other hand, Jumia is an online mall. These two different malls are doing things differently and the truth is that they are struggling for the same customers.’’
Now, there are people who have sworn [or who are so internet phobic] that they cannot buy or make payment on the internet because they cannot see the person they are buying from. There are also people that say they don’t have the time to go to Shoprite and begin to buy things [be in the queue and waste their time?] when they have Jumia that can get them what they want in their houses while they wait patiently for delivery to be made. So what new retail is trying to do is to bring a marriage between online malls and offline malls.
By new retail, it will no longer be about online shopping malls. They will also have offline shopping malls or offline distribution centers where people can go, select what they want, pay online and if they don’t want to pay online, they can go to the mall offline and make payment and collect the goods, with the coupon they present to the owner of the shop.’’
He says new retail trade represents a system that blends the best of what both offline and online worlds have to offer. Apart from that, it also offers the best of an entirely new mix of human, digital and physical experience design, giving consumers a new means of inspiration, selection, immediate gratification, physical sensation and convenience, and that ultimately renders the distinction of digital vs. physical irrelevant.
Sairui, The First African New Retail Option Is Gaining Momentum
Although launched this year, March, Sairui is on course to change the idea of internet retail trade. Modeled after Chinese Pindoudou, the startup, which has its Africa headquarters in Accra, Ghana sells everything from clothing to hardware and other commodities and offers large discounts to purchasers. The startup has a strong presence in Nigeria and is also extending to other Africa countries like Cameroon, Uganda, Zambia, Tanzania, and other places.
‘‘We are doing this simultaneously,’’ said Elem. ‘‘Sairui is all about supporting grassroots entrepreneurship. Sairui shows people the possibility of starting to build a business no matter how small they have because with as small as less than 10,000 naira, they can become a business build through Sairui. This is exactly what it’s called pure grassroots entrepreneurship. Sairui also has bigger packages for those that don’t want to start with such small amounts of money.’’
The startup says it has multiple certified safeguard mechanisms, genuine licensed goods at lower prices and more reliable quality.
The Major Changes The Startup Is Bringing To The Table Are In The Logistics And The Customer Experience Areas
The startup offers large discounts to its online shoppers, bringing on-board an entirely new way of buying and selling.
‘‘What Sairui has brought in is the possibility of online and offline shoppers becoming business owners while also shopping. This has nothing to do with network marketing,’’ Elem said. ‘‘Network marketing is a different ball game altogether. Sairui has variety of products.’’
Elem said to handle logistics, the startup has physical shops where the online shoppers can go, present their coupons and redeem their goods or simply make new purchases.
‘‘Sairui is not opening up physical shops on its own. Sairui is opening up these physical shop through partnership or mini-franchising. These shops are called service centers. The centers are there to service our customers who can come and pick up these products. It is either you pay the company online or through these service centers. You can select your products online or you go to the service centers, give them your cash and carry your products. But the simple truth is that the products are going to be very affordable.Right now, we have about three physical malls in Nigeria through what we call Service centers. We service our customers through our customers centers there. We have centers in Cameroun. We have in South Africa. Right now, we have in about seven African countries.’’
For a startup that is just three months old, this appears a great streak of success, but the startup believes its incorporation of Jack Ma’s concept of new retail trade into its business strategy doesn’t just stop at setting up physical locations to enhance internet commerce experience but also that the strategy means consumers on the platform would get a chance to develop business interests from their purchasing or consumption needs.
‘‘Sairui is not a B2B company. Sairui deals directly with end users. We are dealing directly with the end users; people that are consuming these products. We are not dealing with business owners . We are making the end users business owners and also consumers linking them up directly with the manufacturers of these products, removing the middle person involved,’’ Mr. Elem said.
But it does appear that even the B2B middlemen would still have a say after all since the aim is to turn your consumption cost into instant profitability.
‘‘If you do some shopping on a $100 product on Sairui, for instance, we are giving you a discount of 60% on each product, meaning you’re getting a chance to buy two more products. Now, Sairui will help you sell those two discounted products you bought through its wholesale store,online or offline, free of charge. Sairui will sell each of them on your behalf at $100 each, the initial retail price at which you bought them.’’
The startup boasts it would sell off the products on behalf of its customers within a 7 to 10 days period, leaving customers with some unexpected side profit, long hours after they have made their first purchases.
‘‘We are the pioneer of this kind of system,” Elem said. ‘‘It may be strange to African markets, but the simple truth is that over 20,000 e-commerce companies are already using new retail to run their businesses in China. You can trade as many times as you want with one-time principal.’’
Elem said offering discount does not represent any loss for the startup because of a direct partnership with manufacturers of the goods sold by the startup. He said Sairui mall is an open market place just like Amazon, and as such, anything is bound to happen.
‘‘It is just like asking people why they drink water from a clean cup,’’ he said. ‘‘Nobody would see what is good and wouldn’t want to go for it. The general ideology of new retail is encouraging grassroots entrepreneurship. Sairui is a unique opportunity that anyone shouldn’t miss, even though not for the sake of profit, but for the sake of buying things affordable prices and getting free products from its online or offline shops.’’
Getting Started With Sairuimall Africa
To learn more about how to be part of the Sairui value chain, contact the startup’s country director on +2348039421770
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Jack Ma, the Co-founder of Alibaba, warns countries that tighten their laws to restrict companies’ ability to innovate. According to Jack Ma, such countries may soon be headed to doom. This was his message at the Viva Tech Conference held in Paris, France.
‘‘When faced with problems, Chinese entrepreneurs start to solve the problems, then think about rules and laws,” he said.
‘‘I worry about Europe,” Jack Ma added. “I worry about the worries of Europe. Africa does not worry. Asia does not worry. What are they worried about?
Jack Ma sees a problem with the way Europe is going about regulating its tech startup ecosystem. For that, he said he is worried because Europe is worried about technology and is tightening regulations that restrict companies’ ability to innovate. The European Union for instance last year introduced stringent new data laws targeted at ensuring consumers’ right to privacy. The EU executive, meanwhile, recently published guidelines aimed at maintaining ethics in artificial intelligence (AI).
“If you think the technology revolution is a problem, I’m sorry to say a problem just started. If you think it’s an opportunity, the opportunity just started. The only thing is your mentality. If the mentality is now a worry, you’ll worry all the time,” said Jack Ma told attendees at the Viva Technology conference in Paris Thursday
“Everything they do is full with rules and laws. And everything they think about, they start to worry. When they worry, they make rules and laws.”
Jack Ma already knows that his home country China which is home to a group of three large technology firms often referred to as the BAT — Baidu, Alibaba and Tencent understands this game and is playing it better. China has seen swelling venture capital investment in the tech sector, with Ant Financial raising a record $14 billion funding round from investors in 2018 alone.
This Is Perhaps Why Europe Is Not Doing So Well
Jack Ma hinted that the reason Europe is not doing so well in tech compared to that of the U.S. and China is because of its large regulations.
Jack Ma: Don’t Worry About Regulating AI: It Could Be Used To Catch Thieves
Jack Ma also said there was no need for Europe or other continents to worry about AI.
He said that his firm uses artificial intelligence to detect and trap a lot of criminals.
For example, he referred to his company’s payments platform Alipay. It uses machine learning to discover “cheating” bad actors.
Charles Rapulu Udoh
Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
