Jumia has expanded its offer in Egypt with the launch of its online food delivery service, Jumia Food. The move follows the exit from Egypt in 2020 of two of its largest competitors: Glovo and Uber Eats and the explosion of interest in online ordering in the wake of the COVID-19 pandemic.
Sacha Poignonnec, joint CEO of Jumia, has said that food makes up 20% of overall transactions on the platform and food delivery “is increasingly important to us.” In the wake of the COVID-19 pandemic, online retail has exploded in popularity in Egypt, including online food delivery.
For many operators with online stores, such as Majid Al Futtaim’s Carrefour, gains made in 2020/21 will be permanent. I.e. indicative of a wider shift by consumers towards online retail.
Jumia already operates in Egypt with its other services, including an online store. It will need to fight hard to establish a market presence in what is a competitive and regulated market. Glovo launched in Cairo in May 2018. It announced its exit one year later. Kuwaiti-based while Carriage lasted only five months in Egypt before it shut down its business in August 2019. Uber Eats, the market leader in Saudi Arabia, exited Egypt in May 2020 after just two years.
Part of the issue was that in 2018, Delivery Hero acquired a 16 % stake in Glovo, raising concerns with the Egyptian Competition Authority (ECA) because Delivery Hero also had a stake in Carriage and is the owner of market leader Talabat (formerly Otlob), which it acquired in 2017. This is why Carriage exited Egypt. The ECA has alleged that Glovo and Delivery Hero had a form of exclusivity or allocation agreement that led to Glovo’s exit.
A second problem for Jumia is the strength of the competition. In particular market leader Talabat (formerly Otlob) and Elmenus, as well as the challenger Akelni. In September 2020, Talabat said that it planned to create 50,000 new freelance rider jobs in Egypt by the end of 2020 and was preparing to expand into eight new cities Egypt. It also said that it planned to add a further 2,000 restaurant partners to its platform by the end of 2020.
Elmenus was founded in 2011 and secured a $1.5m round of funding from Algebra Ventures in mid 2017. In total it has raised $9.5m in funding. It secured an $8m Series B round in February 2020, fortuitously timed to help accelerate it during the pandemic. In February 2021 it secured further funding from former Just Eat CEO David Buttress. It covers more than 6,000 restaurants in Cairo and witnessed a 3x growth in 2020. In March 2020, Elmenus revealed that its data showed that only 5% of its orders were online – the remaining 95% were made by phone.
The third competitor is Akelni, which was founded in 2017 and has raised at least $1.5m in investment funding. It covers 11 cities and has more than 2,000 restaurant partners. The fourth competitor is Saudi-based Mrsool. Founded in 2015, it raised a multi-million dollar Series A round led by MENA’s largest VC fund Saudi Technology Ventures (STV) and Raed Ventures. It has a smaller profile in Egypt and is the weakest of the four main players.
Trendtype believes that Jumia will look to pick off Mrsool and Akelni. Even if it runs at a loss for 12 months, its scale and penetration has the capacity to make the smaller operators unviable without significant additional funding. Elmenus is also vulnerable, although it has a stronger positioning among consumers and is well embedded in Cairo, Alexandria and across the Delta region.
