Everything delivery startup Glovo has been ordered to reopen its operations in Egypt, a month after it announced an abrupt exit from the market in what is reported to have been a friendly non-compete deal with Delivery Hero, a firm that owns 16% of Glovo.
The firm has announced it’s setting up shop in Nigeria and Ghana in a few months after setting up successfully in Nairobi, Kenya. Like Glovo Kenya, food delivery will be Glovo Nigeria’s key product for its first few months of operation.
Nigeria is an interestingly important market for anyone who wants to conquer the continent. With a population of over 200m and counting, Nigeria is like a small India or China, or a mix of both. India and Nigeria have massive populations which are good for its labour force and customer base. Glovo needs Nigeria to succeed in Africa. Even though it’s now the most downloaded food delivery app in Kenya, downloads do not equal to revenues. The firm’s major competition Sendy, reportedly sees food delivery as a very small fraction of its core B2B business.
Egypt is another interesting market, which was its first point of entry into Africa but the firm had exited it abruptly after a deal with its shareholder company Delivery Hero. Luckily, the exit has been annulled.
The announcement about Glovo’s Egypt reopening is good news to many unlike its exit which came as a sudden shock to its customers and the many riders who relied on it for employment forcing Egypt’s competition watchdog, the Egyptian Competition Authority to look into the matter.
According to the Egyptian Competition Authority, “ Research and investigation revealed that there were horizontal agreements between Delivery Hero and Glovo, which would reduce competition. These agreements were the main reason for the company’s exit from the Egyptian market. Delivery Hero and Glovo have proved to be in contravention of Article 6 of the Competition Protection Act. The two companies agreed to divide the markets in such a way as to ensure that the company, which is owned by Delivery Hero in the Arab Republic of Egypt, does not compete.”
The authority says the merge or the acquisition of Glovo and its eventual shutdown was against competition was a violation of the competition protection law, and the use of such shares to influence Glovo’s exit from the marker violated article 6 of the Competition Protection Act .
“The division of markets on a geographical basis among competitors is one of the most monopolistic forms of competition. It is beyond normal product competition, which allows consumers to have access to their products in a free choice that ensures competitive prices and better quality,” said the watchdog adding that the exit of the Glovo from the Egyptian market, could contribute to the loss of a large number of jobs as Glovo had achieved remarkable success in the Egyptian market in a short period and acquired a large market share that would allow it to expand in the Egyptian market.
The body also added that the exit would also have a negative influence on technological development and innovation and limit opportunities available to Egyptians.
The Board of Directors of the Authority decided in its session held on May 21, 2019, that Delivery Hero and Glovo were guilty of violating article 6 (b) and (d) of the Competition Protection Law and were asked to immediately cease the agreements between them and to restore Glovo’s operations in Egypt within 30 days from the date of notification.
Glovo which recently launched in Nairobi is eyeing expansion across Africa with Morocco, Ivory Coast still up and running and Nigeria, Ghana and Tanzania as its next big launch markets.
Speaking during the announcement of its funding round last month, Priscilla Muhiu, the firm’s Head of Marketing for Sub-Saharan Africa said, “Glovo is committed to taking its tech capabilities and systems to the next level. We will use this opportunity to grow our team of tech experts to create a smarter and more efficient experience for customers and reduce waiting time for Glovers. We also intend to expand our footprint across Sub-Saharan Africa, with new operations in Ghana, Nigeria and Tanzania.”
Though Glovo has heavily marketed its food ordering and delivery vertical, it aims to invest heavily in growing delivery categories beyond food such as groceries, gifts and courier, laundry, alcohol, pharmacy products and auto spares among others.
“When you look at delivery apps in this market, food is the mostly ordered online. It’s easy to market the platform to users ordering food then add everything else,” Muhiu told TechMoran.
The everything app for cities is planning to invest heavily in its groceries vertical, plans to build its dark supermarkets and quicken deliveries to less than 20 minutes in the city.