In this exclusive interview with SEYI JOHN SALAU, Jumia Nigeria CEO, Massimiliano Spalazzi, speaks about the eCommerce company’s trajectory in the logistics industry in the last 9 years and how its investment in Nigeria is helping to develop the sub-sector. Excerpts:
Jumia is celebrating 9th anniversary of its eCommerce journey in Africa. How would you describe the journey so far?
It has been simply an amazing journey, so if I went back to how we started and where we are, being the number one e-commerce in Africa and in Nigeria, it makes us very humble.
Especially in these days, we felt the need to have people having business in buying everyday needs in a simple way with delivery in their home. We believe that e-commerce has played an even more important role in people’s life and to celebrate the achievement and to better serve our consumers and sellers, that is why the slogan for our 9th anniversary is ‘Celebrating You’. The anniversary will be celebrating you as our consumer, employee, seller, logistics partner, celebrating you as our client and those in the ecosystem and our environment for which we make life better every day.
Jumia recently opened its logistics technology to serve third party businesses; what informed this decision?
Bridging the significant gap in Africa’s logistics and helping businesses especially SMEs reach more consumers more affordably everyday without having to worry about logistics and distribution, and leveraging more of our Jumia assets. Technology helps us better optimize our operations, allowing us to sustain high customer service performance at very competitive prices.
Also, the market is big and growing and there are more needs. After covid, there was more and more needs for deliveries, there is this willingness of people to get their orders delivered faster. For example, independent sellers selling on social media platforms need logistics services to get their products delivered to their consumers. We believe we possess the right platform, process and tools to provide the best experience to these clients.
For us, opening our logistics technology to third parties, that is, offering our logistics services to anyone in Nigeria was a natural next step for us as a company. We have been operating for 9 years and in these 9 years we developed a solid market of products and also a solid platform to deliver these products and services to consumers, and now testing the asset we have built in the last 9 years, we decided to offer this to external clients. It comes naturally because we have it and we know what it means to deliver to last mile, we want be able to deliver to all our consumers and we know what it means to offer the best prices, thanks to the handlers of the logistics provider we work with every day, and we believe we can offer very affordable rates to any sort of business or individual within Nigeria that needs logistics. So, it is really a natural step for us. It is about opening the heart or the backbone of Jumia to our consumers and sellers that already know Jumia.
At what cost is this to Jumia?
Jumia is committed to supporting the growth of businesses and SMEs in Africa. As such the decision to open the Jumia last mile service has been received well by the businesses in Africa. In Nigeria, businesses are increasingly using more of our services daily to serve their consumers and customer orders daily across the country and we are aggressively expanding to cater to these needs.
What is your assessment of the logistics and delivery landscape in Nigeria, and do you consider competitors in the sector as threat to your business?
Nigeria’s logistics landscape is on a growth trajectory, shown by the growth of GDP contribution from Transportation hitting a peak in 2020 pre-Covid. We believe Nigeria is on the tipping point of Ecommerce and online retail expansion. As such the logistics industry is catered to further grow multiple times. If we look at markets in Asia and Africa the industry has multiplied 60 – 70 times in the last 3-4 years. Nigeria will be higher in all probability owing to macro factors. Healthy competition amongst players in a growing industry is good news for customers and consumers, and we welcome it. The business is very big and there is always a cost of need for small entrepreneurs, big entrepreneurs and large incorporations to satisfy all sorts of logistics needs. So far we’ve seen great attraction and also thanks to the network of sellers we have, but we believe we are just at the start and we can serve many more.
2020 was a special year for most businesses, especially small businesses but logistics somehow enjoyed a boom because people had to move essentials when there was a lockdown. What was the impact first on your business and on the general logistic industry?
eCommerce spending in Nigeria has accelerated since 2020 mostly driven by COVID impact. We see habits and purchase behaviors evolve to embrace more the convenience, diversity of choices and other benefits of e-commerce. Accordingly, the sector is projected to experience further growth within the next five (5) years.
It’s not easy to sustain being number one/market leader. What have you put in place to sustain your position as Industry leader?
A couple of things. First, I think competition is always good. It always makes you do better. Not to forget Jumia consists of three things: the marketplace of goods, the marketplace of logistics and the marketplace of payment which is seen across the whole business or which we have built a stable client on logistics and Jumia advertising. Different players come in at different times of the year. Competition is always good because it pushes yourself and the competitor to do better and eventually to serve consumers better. I am not thinking about the number compared to others, rather I am thinking how do I keep on being the number one choice to consumers, sellers and small businesses. Now it’s really about best offers, best prices and better services. On the best prices, you can see the volume of packages that we move every month and are able to adapt best prices to the needs of the businesses. Then, it’s about the speed and activeness which is something we are working on, starting from Lagos and reaching the other 36 states of the country.
Are there specific requirements businesses must meet to be able to enlist your third party logistics services? If yes, what are those requirements?
Companies, business owners, merchants, and others can connect with us on [email protected] and we can take it from there.
Logistics is a major nightmare for a lot of businesses in Nigeria. How is your logistics technology built to help businesses solve this nightmare? Is your technology bridging the gap caused by the infrastructure deficit in the country?
With Jumia’s logistics one can practically ship anything anywhere. We take care of pick up, delivery, cash collection, reverse logistics, secured delivery, identity based deliveries etc. Today, we see various FMCG, Bank, Fashion businesses using us a lot. There are several businesses selling on Instagram, WhatsApp etc – we are really empowering them with our logistics and payment solutions. Address systems remain a key challenge – we manage with our geo localized delivery app and presence of local 3PL partners in our network who are managed with our tech and SOPs. Very integrated linehaul management, technology enabled SLA and customer communication.
Can you tell us about the investment you have made so far in Nigeria?
We’ve been constantly investing in the country since day one. We’ve invested in three main pillars with the goal of satisfying the needs of sellers and consumers in the best ways possible. We ensured from the beginning that the logistics leg was well set up. From the beginning till now, we’ve invested heavily in infrastructure, and people for logistics. We have invested in a marketplace for products. We also ensured that in doing business, consumers and sellers could pay themselves in the best and most secure way, which is why we have JumiaPay. We have also been heavy on human capital development. There are loads of people who worked with Jumia and have moved on to establish their businesses. If you think about Jumia, the biggest investment is actually people. We started eCommerce in the country and built knowledge and professionals that were not available here. We groomed and trained many employees. We can say we have been one of the enablers of the tech scene in Nigeria.
Payment service is huge in Nigeria; how is JumiaPay doing in this market?
JumiaPay has a very solid usage. If you look at it from usage of consumers and sellers, we are recording solid users and returning users. Clearly, our ambition is more than this and which is why you see on the app that beyond the platform transactions, we provide payment services such as utility bills payment, mobile recharges and the likes. We have an ambition to make it bigger because it’s one of the pillars of the company.
In the next five years, where do you see e-commerce in Nigeria and Africa generally?
First of all, eCommerce penetration needs to increase. The big difference between where we are today and other market is that eCommerce penetration is still low and I believe that despite the fact that we are here for nine years, we are still at the start. Secondly, eCommerce is very needed and here I think we can serve even more. We can make eCommerce more affordable. Today we target the masses and we need to work everyday to improve our pricing, offer and reach. For example, in the last month, we opened about 20 more pickup stations across the country and we plan to open even more. We are partnering to give access to areas with lower reach by setting up pickup stations which we believe will be relevant in the future. We want to be more accessible as the shift to everyday needs on eCommerce becomes stronger. E-commerce is a habit that is getting traction and will grow more in Africa by offering assortment in different categories and constantly working on the price of the products. On logistics, we need to become faster with quicker delivery time than today, that is quick commerce. On payment, we need to be more accessible. We need to increase the scale of services and cover more internet users in the country. I think the pillars are what we want to build first, but we are still at the start. We want to keep on going and make it a platform for everyone.
You said penetration is still low. If you consider your investment and that of other players in the industry; why is penetration low?
The word low penetration was used in comparison with other markets: 20% penetration in China, 12% in the US, but less than 1% in Africa. What we saw is really a hockey stick curve. The adoption rate is a hockey stick and usually adoption rates follow certain trends and patterns. I think we are at a turning point where more people are using the platform more until we have exponential growth. I think we are right on time because if you look at other markets, even the US, it took them more years to reach a certain level of penetration. I think it’s a matter of trial; the more you find your everyday needs on the eCommerce platform, the more people will embrace it.
