Glovo will double down African investments in the next 12 month, but will it remain put?
Glovo, a Spanish online delivery platform that offers on-demand delivery, announced today plans to double its African investment and expand its operations in Africa.
Barcelona-based company invested as high as 25M ($30M) to expand its food delivery service in six African countries: Kenya, Uganda, Kenya and Ghana.
Glovo is available to more than 40 cities, with over 300,000 users and 8,000 restaurants, as well as 12,000 couriers. It began operations earlier this year in Lagos, Nigeria, and Accra, Ghana. Then, last month, it expanded to Tema.
Glovo plans to invest another 50M ($60M), over the next 12 month, to expand into new cities across the continent, and to move into new markets such as Tunisia. Glovo will launch in Tunis next month.
Glovos services will now be available to 6.5million people, according to a company statement. Sacha Michaud, co-founder, believes that these markets are underserved. Glovo has found the opportunity to partner with local restaurants to bring them online in an effort to make all services, anywhere, accessible to everyone.
Glovo's series of moves in Africa this year has brought attention to Africa. It acquired several Delivery Heros businesses in Central Europe and Eastern Europe for $208 million after its massive $528 million Series F raise.
Africa now accounts for 30% of the company's geographic footprint. The Spanish company intends to be present in 30 countries by the end of next Year, a decision partly due to the IPO target within three years.
Glovo claims it is the market leader in over 80% of countries in which it operates. After a steady increase in orders, the company's grocery service division has seen its revenue rise significantly. Glovo had to make significant investments in dark stores in order to meet customers' growing needs and also launched virtual restaurants brands in July.
Glovo is not yet certain if it will offer these add-on services in Africa, where it has the largest market by population: Nigeria. The West African nation is not without its problems, including a poor logistic infrastructure and an uncertain regulatory environment.
However, some food delivery platforms such as Jumia Food and Gokada, which are subsidiaries of Jumia, have attempted to scale up, with varying degrees success.
Glovo will need to compete with these companies for market share, but it is optimistic because of its multi-category strategy. In some African markets, grocery sales make up half of Glovo's business.
However, Glovo's performance in emerging markets remains questionable. The company pulled out last year of all Latin American countries, including Peru, Ecuador, Panama, Costa Rica and Honduras. Delivery Hero purchased operations in these countries for $272 million.
In January 2020, the company also left the Middle East and North Africa (Egypt. and Turkey), and Uruguay and Puerto Rico.
Glovo has stated that it wants to be profitable in a short time over the last couple of years. Delivery space is a low-margin industry, and is even more so in emerging markets. This was a major reason Glovo left Latin America and Middle East. This market isn't different in Africa. Time will tell if the Spanish delivery will stay or exit.
Glovo insists that it will continue its policy of hiring top talent from the continent. It plans to double the number of employees and add 200 more before next year.
We have been planning for our expansion in Nigeria, Ghana and our launch in Tunisia for some time. It's great to finally make it official. The on-demand delivery market in Africa has seen an unprecedented rise. Our expansion to new cities and countries is both a reflection and a sign of our commitment to Africa. Glovos sub-Saharan Africa general manager William Benthall stated that they are looking forward to making food and groceries available to new users with the click of a button.
