E-Business
Jumia Food Exit Shows Folly of Not Following Konga Strategy
The recent announcement of Jumia Food’s exit from Nigeria, its biggest market, has set alarm bells ringing among industry watchers. Dr. Fred Bongani, a former employee and founding staff, examines the fallouts from this latest misadventure
E-Commerce, despite its potential as a goldmine, remains one of the most challenging business sectors in Nigeria and indeed, the African continent.
The obstacles that lie in the path of businesses intent on cracking e-commerce on the continent are well-documented, among which infrastructural deficiencies, logistical hiccups, skepticism for online shopping and predilection for offline retail, slow adoption of digital payment, among others, figure prominently.
Nevertheless, Africa is widely regarded by experts as the next frontier for bullish e-commerce growth.
Compelling insights from recent research by the International Trade Administration (ITA) shows that Africa represents a smart gamble for interested investors looking to reap the benefits of the wave of growth in e-commerce on the continent. Titled – The Rise of eCommerce in Africa – the study bets on the exponential boost in mobile technology that is expected to jumpstart e-commerce from its current middling status to a multi-trillion-dollar industry in the coming years.
“The logic of growth on this area is pretty much based on technology jumps that do occur within Africa because of historically missing economic infrastructure, such as banks, telecom landlines, etc. Africa is forecast to surpass half a billion ecommerce users by 2025, which will have shown a steady 17% compound annual growth rate (CAGR) of online consumers for the market,’’ the study boldly asserts.
Specifically, the research shows that Africa currently leads the world in mobile device web traffic generation, with 69% of its total web traffic consisting of mobile internet users as of 2021. Further, the continent is forecast to be almost exclusively mobile-based market by 2040.
Continuing, the study notes that: ‘‘Compared to other regions, as of 2021 the African continent leads mobile internet usage a full 13% above the global average, and almost 5% more mobile usage than Asian region markets. This should indicate a “mobile-first” approach to any business looking to sell online to the various African markets.’’
The foregoing is backed up by a 2017 Accenture Digital Consumer Survey which discovered that in countries such as South Africa, smartphone acquisition increased from 52% in 2016 and 63% in 2017. Some of the more technologically advanced nations like Kenya and Nigeria boast a smartphone uptake of more than 44% and 30% respectively. Across the continent, the number of smartphone users saw a nearly two-fold increase, reaching more than 226 million. This spike in smartphone penetration, the survey submits, is steering a digital revolution on the continent, exposing users to the endless opportunities the internet provides, top of which is e-commerce.
Considering these lofty assumptions, it therefore came as a huge shock when Jumia, a multinational African-focused e-commerce company disclosed that it will shut down Jumia Food, its food delivery business in Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria by the end of 2023 in a new round of cost-cutting.
Jumia CEO, Francis Dufay told Reuters that the food delivery segment has challenging unit economics and big losses, while also attributing the closure of Jumia Food to increasing competition and unsustainable cost of operations.
“There is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers,’’ Dufay had stated.
The Jumia Food debacle represents another signpost in a seeming never-ending list of missteps and abrupt exits by the management of Jumia since it set up shop in Africa. This includes the offloading of Jumia Travel, its hotel and flight services vertical in 2019 to a rival brand, Travelstart – a move which came a few weeks after the shutdown of its eCommerce businesses in Tanzania and Cameroon and laying off staff in Kenya. Founded as Jovago in 2013, the hotels and flights marketplace became Jumia Travel after it rebranded in 2016. Earlier in 2017, the company had sold off Jumia House, its real estate subsidiary to ToLet.com.ng, a property startup, after it failed to scale.
To start with, Jumia is a German-headquartered e-commerce platform, with its technology and product team based in Porto, Portugal, and until recently, its senior leadership operated out of Dubai in the United Arab Emirates (UAE). Yet, it lays ambitious claims to becoming the African Amazon – a faulty dynamic worsened by a damaging identity crisis and the importation of business principles and strategies fit for the Western world and which the management expected to succeed in Africa, a developing continent with its myriad of teething challenges. Indeed, several critics regard Jumia as an exploitative Western company that conveniently co-opted an African identity to extract as much value as possible and profit off the continent.
As one of the founding employees of Jumia, I had expressed reservations at the ease with which the early-stage founders of the company had been eased out of the business. Every business has its DNA which symbolizes the very essence, cornerstone or soul of the establishment. This ideal is often reposed with the visionaries of the business and consolidated over time as the business scales. In the case of Jumia, what we had was a wannabe e-commerce behemoth with a major identity crisis. This foundational ambiguity would prove to be one of the catalysts that hurt the business in the long run.
At the height of the Jumia-Konga battle for the dominance of the Nigerian e-commerce sector when both brands launched in 2012, one thing was discernible: Jumia was often quick to arrogantly ridicule or thumb its nose at any innovation or strategy pioneered by a rival brand, even if it was a masterstroke, although the lessons of history showed that it may eventually ape the strategy when it realizes there is a market advantage therein. Those early days of e-commerce, particularly in Nigeria where I was based at the time, was one full of hype and little substance as both giants embarked on a battle of attrition for the leadership position in Africa’s biggest market. It took the coming of Yudala which was founded by a fresh-faced varsity graduate and backed by Nigeria’s biggest technology group to make both rival brands sit up and become more intentional about the substance of their hyped-up efforts (more on this later).
In early 2014, Konga pioneered the marketplace structure that is now a major staple of e-commerce on the continent. In its usual fashion, the management of Jumia derided it as a DOA (dead on arrival) strategy. However, it soon ate its words after advice from some of us in the business who saw how Konga was already stealing a march on us. Five months later, specifically in July 2014, Jumia followed suit with its own marketplace.
Then came the entry of Yudala – a landmark development that shook up the e-commerce market in Nigeria. Led by Prince Nnamdi Ekeh who was 22 at the time and just fresh out of school, Yudala pioneered the composite e-commerce model with the fusion of online and offline – a futuristic piece of innovation that has now been adopted by other global players. Yudala’s emergence was a refreshing relief to the chokehold of Jumia and Konga. The brand, though big on hype as its older rivals, matched its words with true substance.
In addition to rolling out eye-catching fuchsia-pink retail stores across major cities in Nigeria, Yudala took on big projects which expanded the scope of the industry. One of these remarkable milestones was the first ever drone delivery in the e-commerce world – a feat which was achieved in 2015 and which predated any other similar efforts.
When in 2018, the management of Zinox, the technology conglomerate backing Yudala, acquired Konga from its previous owners, Naspers and AB Kinnevik, it was obvious to all interested parties that this was a development worth keeping an eye on. In my own capacity, I had also advised the management of Jumia, especially considering the renowned capacity and decades of experience and success at the disposal of the new owners of Konga, to keep tabs on their strategy and follow suit or even explore partnerships, if that would guarantee a path to profitability.
The dust had barely settled on the monumental news of the acquisition when the management of Zinox announced an operational merger between Yudala and Konga. Although I had departed Nigeria, I followed with keen interest how the new owners subsequently rebranded the new entity that emerged from this operational merger, slowly transforming it into a dominant e-commerce force.
It is important here to state that while Jumia decided to double down on its poorly conceived pan-African expansion and an ill-advised IPO founded on shady figures and cooked books, Konga chose to continue consolidating its growing dominance in Nigeria:
- KongaPay was repositioned and recalibrated, leading to its rating by Statista in 2021 as the leading provider of digital payment services for e-commerce transactions in Nigeria.
- In 2019, the brand added Konga Travel to its list of growing subsidiaries. A technology-driven, revolutionary online travel booking agency, the new entrant gained prominence and market relevance within a short period of time.
- From Kxpress, the management of Konga relaunched its delivery arm to Konga Logistics, expanding its fleet of vehicular assets and by extension, its capacity to not only handle Konga’s last mile deliveries but also cater to external customers.
- Konga Health, a digital health care distribution subsidiary joined the fray in June 2021. Today, the brand boasts exclusive distribution agreements with global brands such as L’Oreal and Livful, among others.
- Konga embarked on an expansion of its retail outlets and the set-up of massive warehousing facilities in regions across Nigeria, including what is arguably the biggest warehousing structure in Lagos located at Lekki
Amid all these major strides by its major rival, Jumia endured an embarrassing exposure of its IPO as a worthless sham by the popular US-based short-seller Citron, with its share price, which once traded as high as $60, now going for less than $4 today. The stubborn insistence of management in not borrowing a leaf from the Konga copybook has also seen Jumia continuously lose ground in Nigeria and in other less buoyant African markets.
The current exit of Jumia Food leaves a sour taste in the mouth, particularly for those of us who number among ex-employees of this once-grand e-commerce pioneer. In addition to remaining unprofitable over the years, Jumia is still shipping huge losses, as high as $19 million in Q3 2023.
With its share price tumbling down by the day and investors now potentially hedging their bets on the brand, how much longer can Jumia keep its head floating above murky waters in Nigeria before calling it a day for its remaining core physical goods delivery segment and struggling payment service, Jumia Pay?
The jury is out on that.
Maad, Francophone Africa’s fastest-growing tech & logistics platform for informal retailers, today announced the successful completion of its $3.2 million seed funding round (debt & equity).
The round was led by Ventures Platform, with participation from Seedstars International Ventures, Reflect Ventures, OuiCapital, Launch Africa, Voltron Capital & Alumni Ventures. Proparco and local banks participated in the debt financing.
Maad is a tech & logistics platform that directly connects suppliers and small retailers of Fast Moving Consumer Goods (FMCG). Their tech-driven solution allows retailers to order products from a one-stop shop, with reliable delivery, competitive prices while benefiting from working capital loans.
Maad leverages this distribution infrastructure to offer additional high-value services to brands: data, software, and services for advertising, distribution, and market understanding.
Maad is on a mission to transform the retail landscape in Francophone Africa, where 80% to 95% of consumption still takes place in informal mom-and-pop shops. “Among startups operating in this space, Maad benefits from a clear first-mover advantage in Sub-Saharan Francophone Africa.
“We often say this is a blue ocean. As the fastest-growing player in the region, we are well-positioned to maintain our leadership and continue driving transformation in this underserved market,” said Sidy Niang, Co-founder & CEO of Maad.
The company currently operates in Senegal and has already achieved significant milestones, including partnering with more than 80 suppliers, offering a catalog of over 1,000 SKUs of household brands, and reaching a monthly GMV of $3 million, while operating near breakeven. Maad plans to use the funds to further expand across & dominate the Senegalese market, introduce financial services such as Buy Now, Pay Later through a digital wallet, and launch in a second country in Francophone Africa.
Maad’s founding team brings a wealth of experience and expertise to the table. Jessica Long, Co-founder & COO, focused on Operations Excellence & Technology, was the 15th employee at Airbnb and has been living in Senegal for over 7 years, designing digital distribution systems nationwide.
Sidy Niang, is focused on Growth, Hiring & Fundraising, has over 4 years of experience in private equity and infrastructure investments with the IFC (International Finance Corporation) and previously co-founded a food delivery company.
“Small retailers are central to neighborhood life and to Senegal’s economy. Maad builds scalable digital technology and core logistics infrastructure so that these retailers can make everyday-need products consistently available to people who make less than $5 a day,” added Jessica Long.
She continues, “Maad’s strength lies in its technology. We have built a fully in-house ERP, for order, delivery & warehouse management that fits perfectly with our operations, allowing us to operate more efficiently at every single step of the logistics chain. We also collect data points on product & retailers, which we process and use to make insights available to suppliers so that they can make better decisions”
“Maad’s innovative approach to digitizing the informal retail sector in Francophone Africa has the potential to create a significant impact on the lives of small business owners and consumers,” said Dotun Oloworopoku, Managing Partner at Ventures Platform. “We are thrilled to lead this investment round and support the Maad team as they work towards building a more efficient and inclusive retail ecosystem in the region.”
Charlie Graham-Brown, Seedstars International Ventures Partner shared, “What sets Maad apart is their ability to navigate the complexities of the informal retail sector while maintaining a sustainable business model.
“Their focus on profitability and efficient use of capital, combined with their first-mover advantage in a largely untapped market, makes them an attractive investment opportunity. We believe that Maad has the potential to drive significant economic impact and create lasting positive change in the lives of retailers and consumers across the region.”
Maad’s unique positioning, sustainable business model, and ability to secure funding during a challenging climate for B2B e-commerce startups demonstrate the company’s potential to drive significant transformation across Sub-Saharan Francophone Africa’s retail landscape.
Artificial intelligence promises to transform every aspect of business operations, yet a lot of companies lack clarity on how to get from pilot to full production and value realisation. In today’s digital landscape they struggle with islands of data spread across various systems, leading many workers to not trust the data used to train AI systems and experience difficulty to get what they want out of them.
According to Salesforce research, only 28% of applications are connected, and over 80% of business leaders struggle with data fragmentation and data silos.
While three-quarters of workers surveyed in the recent “Your Data, Your AI” survey from Salesforce believe accurate, complete, and secure data is critical to building trust in AI, more than half do not trust the data used to train AI systems today. And nearly 60% of AI users worldwide find it difficult to get what they want out of AI, the report found.
The future of enterprise AI isn’t about more data – it’s about the right data. When AI is grounded in a company’s own data, it delivers more useful results and ultimately drives greater trust and adoption.
Only by consolidating their data will companies be able to fully understand the complete customer journey. A trusted data foundation and integrating AI into workflows across the enterprise are key ingredients needed for AI success.
Deploying these together, companies can unlock enterprise deployments at scale and drive measurable outcomes from AI automation, personalisation, and performance optimisation, including higher sales productivity, faster customer service resolutions, higher-conversion marketing campaigns.
Building a trusted data foundation
For AI to live up to the hype, large language models (LLMs) must be grounded in trusted enterprise data. However, with data trapped in disconnected silos, wholesale digital transformation and value realisation remains elusive. Prospects are worse when the data being used to ground AI models is incomplete, incorrect, or irrelevant — leading to inconsistent, incorrect results.
Unlocking the power of trapped data enables better analysis, decision-making, and AI automation, grounding customer and business data and metadata — a common language that integrates all applications — in ways that deliver trusted, outcome-oriented results without expensive model training.
Take, for example, real-time data that a prospective customer has just visited a company’s website. Previously, sales reps would have had no way of knowing this without manually pulling data into a custom report. Real-time data brings actionable insights, allowing for immediate customer engagement, resulting in higher conversion rates, revenue growth, and customer satisfaction.
Trust is a key component of successful enterprise AI deployments. By unifying and cleansing their data, companies can ensure that AI models operate on the most accurate information.
At Salesforce, we have engineered trust into every Salesforce application through our Einstein Trust Layer, a core part of the Einstein 1 Platform. The Einstein Trust Layer includes data masking to ensure data privacy protection, a zero-retention architecture to ensure data is never learned by AI models or stored outside Salesforce, an LLM audit trail, and keeps humans at the helm of every AI interaction. We have also built-in a feedback loop that continuously improves model accuracy and relevance, and this feedback data is automatically logged in Data Cloud.
Integrating AI into the flow of work
The need to deliver AI in the flow of where companies’ sales, service, marketing, commerce, developer, and other employees work explains why they’re leaning into conversational assistants, for their employees to interact with any data or workflow across their enterprise.
With specific customer data, employees can generate useful responses which are automatically grounded in all of their organisation’s trusted data and metadata. From generating customer campaigns, to answering service questions, everything is personalised, based on consolidated data – all securely within the confines of their company’s data and business processes.
The powerful combination of data and CRM makes these personalised customer experiences possible. For today’s consumer, milliseconds matter. The cost of not keeping up with them could be lost sales opportunities, poor social media reviews, or a disconnect in healthcare delivery.
While generative AI is still in its early stages for most companies, the potential for true enterprise transformation is immense. Those that can put in a foundation of data and trust, and offer AI in the flow of where their employees work, will be able to shift from pilot to production and realise tremendous value, employee satisfaction, customer loyalty, and business growth.
The National Information Technology Development Agency (NITDA) yesterday, signed a Memorandum of Understanding (MoU) with Cisco International for the adoption of smart solutions to address socio-economic challenges in the country.
The director-general of NITDA, Kashifu Inuwa Abdullahi said the MoU would facilitate the adoption of digital technology/solutions for the irrigation of 500,000 farmlands in line with President Bola Tinubu’s directive to boost food security in the country.
The MoU was signed at the headquarters of NITDA in Abuja by the director general of NITDA, Kashifu Abdullahi, and the chief executive officer/country director of CISCO, Clayton Naidoo.
Speaking at the event, the NITDA boss said the MoU would accelerate the process of delivering digital services to Nigerians through smart agriculture, education, health, and other social services.
Abdullahi said President Bola Tinubu’s Renewed Hope Agenda was anchored on delivering digital services through technological solutions, especially Artificial Intelligence (AI) Internet of Things (IoT), and drones amongst others to solve Nigeria’s critical problems.
According to him, NITDA is partnering with Cisco to boost agricultural productivity and food security as directed by the President, adding that the adoption of the technologies would be extended to unserved and underserved areas of the country.
Abdullahi who took the Cisco team around some designated farms in Abuja, said Cisco would be working with a firm in Maiduguri, Borno state, to develop a learning Centre for Nigerians on the use of Artificial Intelligence, (AI) Internet of Things (IoT) and other technology solutions to improve businesses.
“The MoU we signed today is aimed at accelerating the adoption of technology solutions as well as digital services to enhance agriculture productivity and improve health care services, and security, among others.
“This is the vision of Mr President as encapsulated in the Renewed Hope Agenda. Our Minister, Dr Bosun Tijani has developed five pillars for the realisation of the vision. And here in NITDA, we have 7 pillars for our strategic plans. All this is geared towards economic transformation and accelerated development”, Abdullahi said.
The country director of CISCO, Naidoo said Nigeria would benefit from the MoU as it would improve agricultural production, create job opportunities, and empower the citizens financially.
He said Cisco has been involved with various governments in Africa and America to create innovation hubs, stressing that in Nigeria technology experience centres would be created to boost security services and business units.
Naidoo said his organisation would create inclusive modules that would empower local communities in Nigeria and make them benefit from various job opportunities in the digital services sector and other related sectors.
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