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China’s Vivo is eyeing smartphone users in Africa and the Middle East
Africa’s mobile phone industry has in recent times been dominated by Transsion, a Shenzhen-based company that is little known outside the African continent and is gearing up for an initial public offering in China. Now, its Chinese peer Vivo is following its shadow to this burgeoning part of the world with low-cost offerings.
Vivo, the world’s fifth-largest smartphone maker, announced this week that it’s bringing its budget-friendly Y series smartphones into Nigeria, Kenya and Egypt; the line of products is already available in Morocco.
It’s obvious that Vivo wants in on an expanding market as its home country China experiences softening smartphone sales. Despite a global slowdown, Africa posted annual growth in smartphone shipments last year for the first time since 2015 thanks in part to the abundance of entry-level products, according to market research firm IDC.
Affordability is the key driver for any smartphone brands that want to grab a slice of the African market. That’s what vaulted Transsion into a top dog on the continent where it sells feature phones for less than $20. Vivo’s Y series smartphones, which are priced as little as $170, are vying for a place with Transsion, Samsung and Huawei that have respective unit shares of 34.3%, 22.6% and 9.9% in Africa last year.
The Middle East is also part of Vivo’s latest expansion plan despite the region’s recent slump in smartphone volumes. The Y series, which comes in several models sporting features like the 89% screen-to-body ratio or the artificial intelligence-powered triple camera, is currently for sale in the United Arab Emirates and will launch in Saudi Arabia and Bahrain in the coming months.
Vivo’s new international push came months after its sister company, Oppo, also owned by BBK, made a similar move into the Middle East and Africa by opening a new regional hub in Dubai.
“Since our first entry into international markets in 2014, we have been dedicated to understanding the needs of consumers through in-depth research in an effort to bring innovative products and services to meet changing lifestyle needs,” said Vivo’s senior vice president Spark Ni in a statement.
“The Middle East and Africa markets are important to us, and we will tailor our approach with consumers’ needs in mind. The launch of Y series is just the beginning. We look forward to bringing our other widely popular products beyond Y series to consumers in the Middle East and Africa very soon,” the executive added.
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African e-commerce startup Jumia files for IPO on NYSE
Pan-African e-commerce company Jumia filed for an IPO on the New York Stock Exchange today, per SEC documents and confirmation from CEO Sacha Poignonnec to TechCrunch.
The valuation, share price and timeline for public stock sales will be determined over the coming weeks for the Nigeria-headquartered company.
With a smooth filing process, Jumia will become the first African tech startup to list on a major global exchange.
Poignonnec would not pinpoint a date for the actual IPO, but noted the minimum SEC timeline for beginning sales activities (such as road shows) is 15 days after submitting first documents. Lead adviser on the listing is Morgan Stanley .
There have been numerous press reports on an anticipated Jumia IPO, but none of them confirmed by Jumia execs or an actual SEC, S-1 filing until today.
Jumia’s move to go public comes as several notable consumer digital sales startups have faltered in Nigeria — Africa’s most populous nation, largest economy and unofficial bellwether for e-commerce startup development on the continent. Konga.com, an early Jumia competitor in the race to wire African online retail, was sold in a distressed acquisition in 2018.
With the imminent IPO capital, Jumia will double down on its current strategy and regional focus.
“You’ll see in the prospectus that last year Jumia had 4 million consumers in countries that cover the vast majority of Africa. We’re really focused on growing our existing business, leadership position, number of sellers and consumer adoption in those markets,” Poignonnec said.
The pending IPO creates another milestone for Jumia. The venture became the first African startup unicorn in 2016, achieving a $1 billion valuation after a $326 funding round that included Goldman Sachs, AXA and MTN.
Founded in Lagos in 2012 with Rocket Internet backing, Jumia now operates multiple online verticals in 14 African countries, spanning Ghana, Kenya, Ivory Coast, Morocco and Egypt. Goods and services lines include Jumia Food (an online takeout service), Jumia Flights (for travel bookings) and Jumia Deals (for classifieds). Jumia processed more than 13 million packages in 2018, according to company data.
Starting in Nigeria, the company created many of the components for its digital sales operations. This includes its JumiaPay payment platform and a delivery service of trucks and motorbikes that have become ubiquitous with the Lagos landscape.
Jumia has also opened itself up to traders and SMEs by allowing local merchants to harness Jumia to sell online. “There are over 81,000 active sellers on our platform. There’s a dedicated sellers page where they can sign-up and have access to our payment and delivery network, data, and analytic services,” Jumia Nigeria CEO Juliet Anammah told TechCrunch.
The most popular goods on Jumia’s shopping mall site include smartphones (priced in the $80 to $100 range), washing machines, fashion items, women’s hair care products and 32-inch TVs, according to Anammah.
E-commerce ventures, particularly in Nigeria, have captured the attention of VC investors looking to tap into Africa’s growing consumer markets. McKinsey & Company projects consumer spending on the continent to reach $2.1 trillion by 2025, with African e-commerce accounting for up to 10 percent of retail sales.
Jumia has not yet turned a profit, but a snapshot of the company’s performance from shareholder Rocket Internet’s latest annual report shows an improving revenue profile. The company generated €93.8 million in revenues in 2017, up 11 percent from 2016, though its losses widened (with a negative EBITDA of €120 million). Rocket Internet is set to release full 2018 results (with updated Jumia figures) April 4, 2019.
Jumia’s move to list on the NYSE comes during an up and down period for B2C digital commerce in Nigeria. The distressed acquisition of Konga.com, backed by roughly $100 million in VC, created losses for investors, such as South African media, internet and investment company Naspers .
In late 2018, Nigerian online sales platform DealDey shut down. And TechCrunch reported this week that consumer-focused venture Gloo.ng has dropped B2C e-commerce altogether to pivot to e-procurement. The CEO cited better unit economics from B2B sales.
As demonstrated in other global startup markets, consumer-focused online retail can be a game of capital attrition to outpace competitors and reach critical mass before turning a profit. With its unicorn status and pending windfall from an NYSE listing, Jumia could be better positioned than any venture to win on e-commerce at scale in Africa.
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Nigeria’s Gloo.ng drops consumer e-commerce, pivots to e-procurement
Nigerian startup Gloo.ng is dropping consumer online retail and pivoting to B2B e-procurement with Gloopro as its new name.
The Lagos-based venture has called it quits on e-commerce grocery services, shifting to a product that supplies large and medium corporates with everything from desks to toilet paper.
Gloopro’s new platform will generate revenues on a monthly fee structure and a percentage on goods delivered, according to Gloopro CEO D.O. Olusanya.
Gloopro, which raised around $1 million in seed capital as Gloo.ng, is also in the process of raising its Series A round. The startup looks to expand outside of Nigeria on that raise, “before the end of next year,” Olusanya told TechCrunch.
Gloopro’s move away from B2C comes as several notable consumer digital sales startups have failed to launch in Nigeria — Africa’s most populous nation with the continent’s highest number of online shoppers, per a recent UNCTAD report.
The country is home to the continent’s first e-commerce startup unicorn, Jumia, and serves as an unofficial bellwether for e-commerce startup activity in Africa.
Gloo.ng’s shift to B2B electronic commerce was prompted by Nigeria’s 2016 economic slump and a customer request, according Olusanya.
“When the recession hit it affected all consumer e-commerce negatively. We saw it was going to take a longer time to get to sustainability and profitability,” he told TechCrunch.
Then an existing client, Unilever, requested an e-procurement solution in 2017. “We observed that the unit economics of that business was far better than consumer e-commerce,” said Olusanya.
Gloopro dubs itself as a “secure cloud based enterprise e-procurement and commerce platform…[for]…corporate purchasing,” per a company description.
“The old brand Gloo.ng, is going to be rested and shut down completely. The corporate name will be PayMente Limited with the brand name Gloopro,” Olusanya said.
From the Gloopro interface customers can order, pay for and coordinate delivery of office supplies across multiple locations. The product also produces procurement analytics and allows companies to designate users and permissions.
Olusanya touts the product’s benefits at improving transparency and efficiency in the purchasing process.
“It makes procurement transparent and secure. A lot of companies in Nigeria still use paper invoices and there are some shenanigans,” he said.
Gloopro began offering the service in beta and building a customer base prior to winding down its Gloo.ng grocery service.
In addition to Unilever, Gloopro clients include Uber Nigeria, Cars45 and industrial equipment company LaFarge. Cars45 CEO Etop Ikpe and a spokesperson for Uber Nigeria confirmed their client status to TechCrunch.
Olusanya believes the company can compete with other global e-procurement providers, such as SAP Ariba and GT-Nexus, by “leveraging our sourcing and last-mile delivery experience in Nigeria” and expertise working around local requirements in Africa.
Gloopro expects to hit $4 million in revenue by the end of the year and the company could reach $100 million over the course of its international expansion into countries like South Africa, Kenya, Morocco, Egypt and the Ivory Coast, according to Olusanya. A seed investor briefed on Gloo.ng’s estimates confirmed the company’s revenue expectations with TechCrunch.
Gloo.ng’s pivot to Gloopro and e-procurement comes during an up and down period for B2C online retail in Nigeria, home of Africa’s largest economy.
Last year, e-commerce startup Konga.com, backed by roughly $100 million in VC, was sold in a distressed acquisition, at a loss to investors, including Naspers. In late 2018, Nigerian online sales platform DealDey shut down.
On the possible upside, several outlets reported this year that Jumia — Africa’s largest e-commerce site and first unicorn headquartered in Nigeria — is pursuing an IPO. But that information is unconfirmed based on a February 8, Bloomberg story without named sources. Jumia has declined to comment.
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