AFRICANGLOBE – I recently spoke with Jeremy Hodara Co-CEO of Africa Internet Holding, about a particularly intriguing subject: How do you adapt online retail to the specific needs of markets that are much less developed than the U.S. or Europe?
AIH owns seven Internet businesses in Africa, ranging from food delivery, classified advertising sites, hotel bookings. But its most ambitious project is e-retailer Jumia, which is fast expanding across the continent.
Marc E. Babej: Let’s start at the beginning: wow what convinced you to launch an Africa-wide e-retailer?
Jeremy Hodara: When we looked at the African market a few years back, we realized that there are no big online players. We saw a big opportunity: the reason Africa is not more developed is not due to a lack of demand, but to a lack of supply.
Not only is the online space empty, but also the retail sector is very limited in Africa. For example, in Lagos there are two malls serving 20 million people. Is this going to change in the future? Unlikely, because in Nigeria it’s expensive to build; the city is extremely jammed so it’s hard to get to a mall. As a result, when you want to buy phones, shirts, or shoes, you often have to travel abroad.
Babej: What convinced you that you could succeed?
Hodara: Consider that even in the US, where retail is obviously very developed, online is only 15% of total retail. In Africa, organized retail will never be as strong as in the US – there won’t be a Zara or Gap on every corner. So it stands to reason that the potential share of online retail can be significantly higher in Africa. WE believe that ultimately, e-commerce is going to exceed bricks and mortar retail – similar to how mobile phones eclipsed landlines in Africa.
Babej: Do you see this potential reflected in your growth rates?
Hodara: You be the judge: We started Jumia about 2 years ago in Morocco, Egypt and Nigeria, and then expanded to Kenya and Ivory Coast. Every month, we have double-digit growth month-over-month.
Babej: You are now in five countries, and about to launch in Uganda. How do you address the different situations in these markets?
Hodara: In all of these countries, the key to success is to build trust. Consumers are often afraid of shopping online. The only way to address this is to offer the same level of quality as Amazon in the US. To build this trust, we offer same or next day delivery in larger cities such as Lagos, and delivery within seven days in all of Nigeria. We also have a liberal return policy.
Another way we overcome the trust barrier is through cash on delivery. That way, people have the assurance they can pay when the product arrives.
Babej: It sounds like Amazon-like quality requires a greater vertical integration than Amazon.
Hodara: Exactly! In these countries you can’t delegate and expect to achieve this high level of service. So as a result we decided that we had to become fully vertically integrated.
In Nigeria, we now have more than 500 motorbikes and trucks that deliver to our customers in the eight biggest cities of the country. Our delivery fleet is larger than UPS, Fedex and DHL in Nigeria. We own our call center, and we have our own IT team. We have our own online marketing team. Simply put, we believe we need to control the value chain from A-Z
Babej: How is your marketing adapted to the African market?
Hodara: The rule in eCommerce is that it’s always easier to get people to shop online if they’re already online. So we emphasize online channels for marketing. Another aspect is that of our largest investors are telecommunications operators Millicom, which owns the Tigo brand, and MTN. Together, they have more than 250 million subscribers in Africa. This gives us a point of differentiation, because we market through with them to give their customers access to our Web site.
That being said, it’s still important for customers to know that we’re real. Street marketing is particularly important in this context. For example, in Morocco we decided to position ourselves stronger in two ways: first, as a place to buy fashion; second, to make more inroads with the student population, because they are early adopters. So we created a fashion truck that goes from campus to campus. That way, students can see that we’re real. They can see us, touch the products and even buy from the truck if they choose.
By: Marc E. Babej