Spanish on-demand delivery platform Glovo announced today the expansion of its operations in Africa and plans to double its investment on the continent.
The Barcelona-based company has invested up to 25 million euros ($ 30 million) in bringing its food delivery service to six African countries: Morocco, Uganda, Kenya, Ghana, Ivory Coast and Nigeria.
Glovo is available in more than 40 cities with more than 300,000 users, 8,000 restaurants and 12,000 couriers in these countries. Earlier this year, it launched operations in Lagos, Nigeria and Accra, Ghana before expanding to Tema, another city in Ghana last month.
Over the next 12 months, Glovo says it will invest an additional 50 million euros ($ 60 million) to drive expansion to more cities on the continent and enter new markets such as Tunisia, where it plans to launch in Tunisia next month.
According to a statement issued by the company, the expansion will make Glovo’s services available to 6.5 million people. Co-founder Sacha Michaud believes that these markets are currently underserved, and Glovo has found the right opportunity to work with local restaurants, putting them online to reach new customers in an attempt to “make everything, within all towns and cities, is available to everyone. “
The focus in Africa follows a series of regional moves Glovo has made this year. After his huge gross of $ 528 million in Series F, he acquired several Delivery Hero businesses in Central and Eastern Europe for $ 208 million.
Now present in 23 countries, Africa represents 30% of the company’s geographic footprint. And the Spanish company plans to be present in 30 countries before the end of next year, a decision in part due to an IPO target in three years.
Glovo says it is the market leader in 80% of the countries where it has operations. The company’s grocery services arm has grown faster and revenue has risen significantly after a steady increase in orders. To meet growing customer needs, Glovo has had to invest heavily in dark stores and in July it also launched virtual restaurant brands.
It is unclear if Glovo will extend these complementary services to Africa, where it has its largest market in terms of population size: Nigeria. However, the West African nation is not without problems such as poor logistics infrastructure and an unpredictable regulatory environment.
Despite that, a couple of food delivery platforms like Gokada and Jumia Food, a subsidiary of e-commerce giant Jumia, have tried to scale, finding varying degrees of success in doing so.
While Glovo will have to compete for market share with these players, the company says it is bullish due to its multi-category strategy. According to the company, grocery sales account for half of its business in some African markets.
That said, Glovo’s performance in emerging markets is questionable. Last year, the company withdrew from all Latin American countries: Argentina, Ecuador, Peru, Panama, Costa Rica, Honduras, Guatemala and the Dominican Republic. It sold operations in these markets to Delivery Hero for $ 272 million.
The company also left the Middle East and North Africa (Egypt and Turkey) and Uruguay and Puerto Rico in January 2020.
For the past two years, Glovo has said that it wanted to achieve profitability in a short period of time. Delivery space is a low margin business and is tighter in emerging markets. This played a role in why Glovo left the Middle East and Latin America. The market is no different in Africa, and time will tell if the Spanish delivery will stick, go out or close the store.
Whatever the case, Glovo says it is “committed to continuing its policy of hiring the best local talent” on the continent and plans to double its staff and add an additional 200 employees before the end of next year.
“Our expansion into Nigeria, Ghana and our upcoming launch in Tunisia is something we’ve been looking at for some time now, so it’s great to be able to make it official. There has been an unprecedented increase in the on-demand delivery business in Africa and the expansion of our services to new countries and cities is both a reflection of that trend and a testament to our commitment to the continent. We look forward to making food, grocery, pharmaceuticals and retail products available to our new users at the touch of a button, ”said William Benthall, Glovo’s general manager of Sub-Saharan Africa, in a statement.
