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. 

Read also:MTN Plans to Sell its Afghanistan Business

“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.

Read also:Cracked Down In China, Ride-hailing Startup DiDi Begins African Exploration With Egypt And South Africa

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.

Glovo delivery Africa Glovo delivery Africa

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

Glovo appears to have found a comfortable home in Africa. Barely five months after launching in Uganda and two years after launching in Kenya, the startup has further expanded to Ghana making it the second market in West Africa for the company, and the fifth African country where it has established operations, after Morocco and Cote d’Ivoire.

“We are excited about launching in Ghana. We are bringing a brand new service to Accra, which will make convenience a few clicks away,” said Pearlyn Budu, General Manager for Glovo Ghana. 

“At this time, when it is essential for us to stay at home where necessary, our service will be a great way to get all the things you need, without leaving your home or office. We are confident that Ghanaians will love Glovo. This service will be a huge asset to business owners. In a city like Accra where traffic is a huge challenge, we have brought convenience and affordability to all residents. There is also a large segment of the population using apps to move around or order goods for delivery. Glovo provides a new opportunity to introduce a fresh new service with low prices and amazing user experience”

Here Are Quick Facts About Glovo:

• Barcelona-based Glovo is the on-demand delivery app that allows customers to order anything — restaurant meals, groceries, flowers — from more than 1,000 participating businesses and have it delivered in less than one hour.

• Simply put, the startup is known as the “anything” delivery app.

• Glovo makes profit by charging a service fee, plus a commission on their partners, depending on the cost of the product or item.

• The most interesting fact about Glovo may be that despite being founded only about 6 years ago in 2015, the company already has a presence in more than 150 cities across more than 20 countries.

• The startup’s vision is to be a lifestyle app with all urban services available easily through its smartphone application.

• Food delivery service remains its most popular service. Other services available on the app include Groceries, Pharmacy, Desserts, Courier, and Quiero (anything).

• While most companies are very focused on food only, Glovo can, however, deliver everything.

• The food business allows users to find and place orders with their favorite restaurants which is picked up when ready and delivered to the user’s doorstep. Today, more than 85% of Glovo’s orders in Europe are for food.

• Unlike the other couriers — namely the UK-based Deliveroo and US-based UberEats — Glovo couriers don’t just pick up food for customers of the app. They’ll also buy them a particular dress in a size 12 from Zara, or grab some painkillers from a pharmacy if the customers so request.

• In fact, the startup has become so successful that the company now claims a valuation of more than $1 billion, a rare milestone for a privately held Spanish startup.

• The firm’s revenue jumped from €18 million ($20 million) in 2017 to €81 million ($91 million) in 2018

Why Is Glovo Succeeding In The Face Of Stiff Competition?

‘‘We…Found Our Gap’’

Glovo is not the first delivery app out there. Oscar knew this. In fact, at the time of starting up Glovo, there was already the US firm Postmates (which inspired him) that delivers anything a city-dweller might need or want, as well as Uber and Amazon’s Deliveroo that do similar things. This means the startup is already in direct competition with those companies. Thus, it is rather surprising that Glovo would make such quick success.

Read also:Spanish Delivery Startup Glovo Enters Uganda, Its Fourth Market In Africa

‘‘It makes the market more difficult,’’ Oscar told Spanish online magazine Viaempressa. ‘‘We have found our gap; we are the only platform in Europe that supplies the user with anything in the city, and I think that this is the key; the offer is broad. It doesn’t scare us that the competitors are large, being small is a competitive advantage because it means we can react quickly to these monsters. They are very powerful, but they move slowly. A clear example is our partnership with McDonald’s, for which we competed against Uber Eats and Deliveroo. We got it because we were the quickest to come up with a model that McDonald’s needed, it is specific for them on a technological and logistical level. When you are a startup, you bargain more easily.’’

Pierre also said there are many differences between Glovo and other national or international startups.

‘‘Our freelancers will buy for you whatever you want,’’ he said . ‘‘Another major difference is that our service is based on immediacy. We have a totally different model compared to other apps dedicated exclusively to transport people or deliver food. In addition, we are not a logistics company, nor do we want to be. These companies are only dedicated to collect and deliver while we put a whole city open to anyone.’’

Getting The Timing Right is Crucial

Getting into a crowded market could be easy but staying successful would remain the toughest game startups will face. Oscar Pierre, however, said getting the timing right is more crucial. 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), he said.

Read also:What Startup Glovo Can Teach African Logistics Startups In A Time Of Pandemic

‘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, a new FT-backed website that launched early 2019.

Again, the startup 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.

See Also: How Kristo Käärmann’s Frustration Led Him To Build Europe’s Most Valuable Startup

‘‘Become obsessed about being profitable’’

Oscar said the most important factor that has guaranteed the startup’s continuous growth is its quest to remain profitable.

‘‘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.

But All That Did Not Come Without A Fight, Including Initially Pitching 118 Funds, Who All Said ‘No!’

Oscar said building the startup did not come without a fight. He said the startup pitched to 118 funds before its current progress.

“For our series B round, we pitched to 118 funds, and all of them said ‘no.’ We were very close to going bankrupt, maybe a month away. All our competitors were huge. Two years ago, there was no way to convince investors that we’d really be competing face-to-face with Uber Eats or Deliveroo. There was very little conviction about food delivery back then.

Being from Barcelona was always very tough because when you only operate in Spain, you don’t have access to the VCs in London or in France. The Spanish ecosystem of VCs is very small and very risk-averse,” he said.

In 2017, Glovo raised $30 million in a series B funding round led by the Japanese tech giant Rakuten. Rakuten ended up being a company with a famous connection to Barcelona that came to Glovo’s aid.

‘‘One day, Rakuten came out of the blue and decided to invest in us,” Pierre said.

Since then, two other funding rounds have followed, the latest of which, totaling 150 million euros, or $170 million, was led by the early Spotify investor, Lakestar, in April, 2019 taking the startup’s total funding to $340 million. In December, 2019, it, again, raised €150 million ($167 million) in a series E round of funding led by UAE-based investment firm Mubadala, with participation from Lakestar, Drake Enterprises, and Idinvest.

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

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