The company has invested over $3 million into the Ghanaian market over the past two years to expand its operations.

However, citing profitability challenges specific to the Ghanaian market, Glovo has opted for a strategic pivot, redirecting resources to other African markets such as Morocco, Uganda, Kenya, and Nigeria.

The closure of Glovo in Ghana highlights the broader challenges faced by online businesses in the country. Jumia, another significant player, ceased its food delivery operations in the nation last year.

Despite substantial investments, Jumia could not overcome the operational difficulties in the Ghanaian market.

The closure of Google Trader about 14 years ago further emphasizes the challenges faced by tech ventures in the country.

Following the announcement, delivery riders and customers have expressed concerns about the potential impact on employment and inconvenience caused by the loss of these services.

Some restaurants also shared their concerns about how this decision might affect their operations.

A rider indicated, “Some of the riders have only the Glovo app and that’s what they’re based on so while some have Bolt, Glovo and Yango so what it means is that as Glovo is folding in Ghana, it will cause a lot of unemployment in Ghana because the youth depend on it to survive and feed their families.”

A Customer also added, “If they leave Ghana, it will affect the rate of employment and at the same time inconvenience customers who purchase such services. If the government can find a way to at least make it 50/50, I’m sure they are leaving because of the taxation, the VAT they are getting and they are not getting much income from this country. For me, it’ll affect goods and services.”

Meanwhile, a technology analyst, Maximus Ametorgoh, suggested that the shutdown may not solely be due to the economic situation but could also be attributed to the business model not favouring the company in the Ghanaian market.

According to him, the high cost of operations and competition in the country might have contributed to Glovo’s decision to exit the market.

Net profitability and difficult market and that one it’s not just the economy, it may be a cultural structure that doesn’t favour their model. The cost of operations may be higher because of competition.

“Because if you have a lot of competitors in the state and you have people that are signing up for your service and they are not delivering on time, customers will tell others and rather turn to other services. So for me, profitability doesn’t mean, as in the economic situation but the business modelling that didn’t favour them.”

The company recorded a decline in operating losses and adjusted EBITDA in the first quarter of 2021, but they increased in the second quarter.

Per the report, operating losses were US$51.6 million in Q2 2021, up 24.7%, while adjusted EBITDA came in at -$41.6 million, worsening by 15.1% compared to Q2 2020.

The sharp losses were driven in part by how Jumia spent heavily on sales and advertising, which rose by 115% to $17.1 million in the second quarter alone. In Q2 2020, the sales and advertising bill was only $7.9 million, which is less than half what it is same period this year.

The huge jump in sales and advertising spending may indicate that the company is back to its old method of executing aggressive advertising, which initially slowed during the pandemic.

Experts say the company’s rising costs and declining profitability are not encouraging regarding its chances for near-term profitability.

However, the company stressed long-term investments in its business in its earnings report that it expects to leverage in the coming quarters and years.

Given that Jumia’s shares rose following its earnings report, it appears that investors are at least amenable to the argument. Still, the company’s metrics paint a mixed picture of its efforts.

For instance, Jumia’s active customers only grew by 3.3%, to 7 million, in the second quarter, while orders grew by a stronger 12.8%, to 7.6 million. In contrast, gross merchandise volume (GMV) fell 11%, to US$223.5 million, in the second quarter.

Jumia’s falling GMV impacted the total payment volume (TPV) of its payment arm, JumiaPay, in the quarter. That figure fell 4%, to $56.6 million, compared to the year-ago quarter.

That said, on other fronts, JumiaPay’s recent results are impressive. The payment service’s “on-platform penetration” as a portion of GMV grew to 23.5% in the second quarter. And transactions made on the platform grew 12.1%, to 2.7 million — the fastest transaction growth rate Jumia has witnessed in the past four quarters, mostly supported by the company’s food delivery category.

In the space of five months, from October 2020 to February 2021, Jumia’s share price spiked over 700%, to $65, mostly due to the pandemic increasing appetite for e-commerce stocks globally. But the company’s share price has dropped by more than 60% from those highs, to a close at $21.27 last Friday.

Revenue

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Meanwhile, Jumia closed its most recent quarter with $637.7 million in cash, which means that it has a good amount of runway ahead of itself to sort out growth and profitability.

In the wake of its earnings reports, Jumia’s shares climbed 3.38% to $21.99 per share with a market cap of $2.168 billion.

In the second quarter of 2021, Jumia reported revenues of $40.2 million, up 4.6% on a year-over-year basis.

Wall Street was optimistic that Jumia would report revenue of $43.34 million, up from the $38.5 million recorded in Q2 2020. Although the company did not meet revenue expectations, it did surpass investor expectations of a loss worth $0.43 a share by reporting a more modest $0.41 per-share loss in the second quarter. For reference, Jumia lost $0.61 per share in the year-ago period.

While the African e-commerce company has shifted from first-party sales to a marketplace for third parties, its first-party revenue increased 7% year-over-year in the second quarter. Jumia’s marketplace revenue, on the other hand, grew a smaller 0.6% to $26.2 million.

The revenue mix-shift helped Jumia’s gross profit grow 4%, to $26.8 million in the most recent quarter, compared to its year-ago comparable. Gross profit after fulfillment expense also expanded 16.3%, to $7.7 million.

Standard Chartered Bank Ghana has rewarded its clients who have subscribed and used the bank’s digital banking platform – SC Mobile App, with free 3 months premium subscription on Boomplay Music and shopping vouchers on Jumia.

The winners were part of a promotion where customers were encouraged to open accounts on SC Mobile and enjoy the power of seamless, convenient and secure banking.

The partnership between Standard Chartered Bank Ghana, Boomplay Music and Jumia was as a response to the recent surge in the consumption of social and digital media by many Ghanaians who are staying more at home to protect themselves from the COVID pandemic.

Read also: Standard Chartered Bank Ghana Limited records highest percentage growth in 5-years

Star actress and Standard Chartered SC Mobile ambassador Joselyn Dumas shared how simple and easy their lives have become with the usage of the app as they presented the awards to the winners.

Commenting on the initiative, Head Products & Segments, Retail Banking, Standard Chartered Bank, Bossman Kwapong, said: “We recognize that digital lifestyles and e-commerce are the new normal. These rewards represent just a fraction of the goodness that comes with using SC Mobile. We continue to encourage all Ghanaians to sign up to experience real digital banking.”

SC Mobile was launched in 2019 to fulfill the bank’s determination to provide the best digital lifestyle for clients. It has been designed with continuous feedback from clients, incorporating innovative technology to allow clients to execute all banking activities from a mobile device.

A year after its launch, SC Mobile has recorded remarkable growth nationwide, due to its many functionalities that allow users to bank on the go, transact cardless cash transfers, perform local and international fund transfers, pay bills and send money while gaining access to a functional service request centre.

Source: Standard Chartered