On demand delivery app Glovo, whose African markets are Morocco, Nigeria, Kenya, Egypt and Côte d’Ivoire, hs launched a new business unit called Q-Commerce (Q = Quick). The company plans to build a B2B delivery network that will see it sell and deliver products for third parties.
The announcement comes days after Africa’s largest online retailer, Jumia, announced its plans to open up its logistics network to third parties in 11 countries.
Glovo already works directly with FMCG companies including Nestlé, L’Oréal and Unilever, as well as Walmart and Carrefour. In some core European city markets, Glovo operates “dark” stores: centrally located warehouses set up to facilitate short turnaround deliveries, sometimes in as little as 30 minutes.
Glovo has said it wants Q-Commerce to help deliver products including groceries, restaurant food, pharmacy items as well as general merchandise such as clothing, books, toys etc. The new business unit will provide a turnkey logistics service for SMEs. The company plans to launch the service in some or all of its African markets in 2021. Globally, it is has already set up 22 “dark” stores and is looking to establish 100 dark stores over the next 12 months.
It’s a major pivot for Glovo: around 75% of its revenues come from restaurant food delivery. The business case in more developed markets makes sense. Amazon and others have blazed a trail for convenient delivery. Logistics infrastructure, addressing systems, consumer demand and incomes all support the pivot.
In African markets, the business case is perhaps less clear. But a lot of money is pouring into urban delivery solutions to support digitalised value chains.
This is where Jumia is starting to move, in a bid to leverage the coverage it has built over the past five years, at great cost. We have also seen investment pour into on demand freight solutions as well as taxi firms (including, but not limited to) Uber using their vehicle networks to provide end user delivery solutions.
The elephant in the room is perhaps the addressing systems and the mapping of addresses. For almost all African markets, addressing systems are extremely poor. This disrupts scheduling software and, more practically, means that drivers have to know the areas they serve in order to deliver to addresses. There are solutions out there, such as what3words, which is finding limited traction, mostly in South Africa. It has also been adopted as an addressing standard for La Poste, Côte d’Ivoire’s national postal system.
So there is a long way to go in terms of building out the ecommerce logistics infrastructure and while we see that happening in core target markets (mostly areas within specific large cities, like Lagos, Nairobi and Cairo, rather than countries), it is a long way from the transformation of the supply chain. Examples like Glovo’s partnership with Carrefour in Nairobi, to enable express delivery, are more lie the model we expect to see in the short to mid term.
