Glovo's African Expansion: Doubling Down on Investment

Glovo Announces Significant Investment in African Expansion

The Spanish on-demand delivery platform, Glovo, has revealed plans to substantially increase its investment within the African market and broaden its operational reach across the continent.

Initial Investment and Current Presence

Up to €25 million ($30 million) has already been invested by the Barcelona-based company, facilitating the introduction of its food delivery services to six African nations: Morocco, Uganda, Kenya, Ghana, Côte d’Ivoire, and Nigeria.

Currently, Glovo operates in over 40 cities throughout these countries, serving more than 300,000 users. It collaborates with 8,000 restaurants and employs 12,000 couriers.

Future Expansion Plans

Over the next year, Glovo intends to allocate an additional €50 million ($60 million) to fuel expansion into further cities and enter new markets.

Tunisia is a key target, with a planned launch in Tunis scheduled for next month.

Reaching a Wider Audience

This expansion is projected to extend Glovo’s services to an estimated 6.5 million individuals.

Co-founder Sacha Michaud highlights that these markets are presently underserved, presenting a valuable opportunity to integrate local restaurants online and connect them with a broader customer base.

Strategic Acquisitions and Regional Growth

Glovo’s focus on Africa follows a series of strategic regional moves earlier this year. Following a substantial $528 million Series F funding round, the company acquired businesses from Delivery Hero in Central and Eastern Europe for $208 million.

Navigating Regulatory Landscapes

Glovo’s expansion activities coincide with regulatory challenges in its home country, Spain. A recent agreement in Spain reclassifies delivery riders as salaried employees rather than independent contractors.

While this model may spread across Europe, the regulatory environment in Africa presents fewer concerns regarding rider working conditions, which is advantageous for global players like Glovo.

Africa's Growing Importance

Africa currently accounts for 30% of Glovo’s global geographical footprint, operating in 23 countries. The company aims to be active in 30 countries by the end of next year, partially driven by an anticipated IPO within three years.

Glovo asserts market leadership in 80% of the countries where it operates.

Growth of Grocery Services

The company’s grocery delivery service has experienced the most rapid growth, with revenue steadily increasing alongside rising order volumes.

To accommodate growing customer demand, Glovo has invested in dark stores and launched virtual restaurant brands in July.

Challenges and Competition in Nigeria

While Glovo may extend these additional services to Africa, particularly its largest market, Nigeria, the West African nation presents logistical and regulatory hurdles.

Existing food delivery platforms, such as Gokada and Jumia Food, have experienced varying levels of success in navigating these challenges.

Multi-Category Strategy and Market Share

Glovo is optimistic about its prospects, leveraging a multi-category strategy where grocery sales contribute to half of its business in certain African markets.

Past Exits and Profitability Concerns

However, Glovo’s performance in emerging markets has been inconsistent. Last year, the company withdrew from all Latin American countries, selling its operations to Delivery Hero for $272 million.

Exits from the Middle East and North Africa (Egypt and Turkey) and Uruguay and Puerto Rico occurred in January 2020.

Glovo has emphasized the need for profitability, particularly in the thin-margin delivery sector, which is even more challenging in emerging markets. This contributed to its departures from the Middle East and Latin America.

Commitment to Local Talent

Despite these past experiences, Glovo remains “committed to continuing its policy to hire top local talent” in Africa and plans to double its workforce, adding 200 employees by the end of next year.

Statement from Glovo’s General Manager

William Benthall, Glovo’s general manager of sub-Saharan Africa, stated: “Our expansion in Nigeria, Ghana, and our upcoming launch in Tunisia is something we’ve been looking at for some time now, so it’s great to be able to make it official.”

He continued, “There’s been an unprecedented spike in the on-demand delivery business in Africa and the expansion of our services to new countries and cities is both a reflection of that trend and a testament to our commitment to the continent. We’re looking forward to making food, groceries, pharmaceuticals, and retail products available to our new users at the touch of a button.”