U.S. package delivery giant, UPS, has inked a deal with Africa’s leading e-commerce platform, Jumia. This gives UPS access to its new partner’s delivery and pickup services on the last mile in a variety of African countries, including various payment options. As a result of the accord, UPS customers will benefit from an extended range of delivery solutions, initially covering Jumia’s drop-off and pick-up stations in Kenya, Morocco, and Nigeria. At a later stage, Ghana and Ivory Coast are to follow in a cross-continental expansion spree.
Alibaba and Amazon; these two e-tailers are familiar to almost everyone. But Jumia? That name is probably largely unknown in America, Europe, and most of Asia, mainly because the e-commerce platform focuses on the African market. There, it offers products tailored to the country-specific purchasing and consumption behavior of Egyptians, Nigerians, or South Africans, for example.
Offering African consumers easy online access to ordering items such as apparel, smartphones, electronics, homeware, consumer packaged goods, beauty, perfumes, and more, was a smart move by Jumia’s French co-founders, former McKinsey managers, Sacha Poignonne and Jeremy Hodara. According to figures, currently, a transaction takes place every two seconds on the company’s online platform, where more than 100,000 active sellers offer their products. And this may be just the beginning because the sky seems to be the limit for e-tailers in Africa.
African e-commerce market has high growth potential
According to Statista, the number of digital buyers in Africa stood at 281 million in 2020, estimated to increase to 520 million by 2025. Of this total, the number of active Jumia users, Africa’s largest e-commerce platform, currently stands at seven million. That shows the huge market gap still to be explored between Cairo and Cape Town. And given that the retail sector is still underdeveloped in many parts of Africa, this too, will spur online sales. In Africa, statistically, one store supplies 67,000 people, whereas in the U.S., the ratio is 1 to 1,000. At the same time, however, more than 550 million Africans out of a total of 1.4 billion use the Internet; most of them via their smartphones. And every second, a child is born on the continent, adding another future user and consumer to its population.
So, judging by the numbers, business prospects are bright for e-tailers like Jumia and its partner, UPS, that with the access it now gains to Jumia’s last mile logistics capabilities and infrastructure, is in an excellent position to grow its delivery services on the continent.
Small and medium-sized companies dominate the business
The main beneficiaries of this cooperation, however, are local African companies, emphasizes Gregory Goba Ble, UPS Vice President of Engineering and Operations for Indian subcontinent, Middle East, and Africa: “This partnership will help small and medium-sized businesses in Africa that make up 90% of all entrepreneurial activities on the continent and are the backbone of the economy. UPS’s asset-light approach, like the Jumia partnership, offers a pathway for businesses to quickly and reliably connect to new customers around the world through our global network, potentially accelerating their revenue growth.”
While Jumia Marketplace offers goods from a large and diverse group of sellers across a wide range of categories, Jumia Logistics facilitates the delivery of the items traded online. For this purpose, a wide-span network of leased warehouses was established, complemented by local pick-up stations for buyers, and drop-off locations for sellers. More than 700 third-party logistics service providers make up part of the network. Jumia coordinates and manages their activities via data transmission.
From taking to giving
At the signing of the contract, it was clear that the Jumia management is extremely proud that it has succeeded in gaining UPS as a future logistics partner. This was confirmed by Apoorva Kumar, Senior Vice President Logistics, Jumia, in his statement: “At the beginning of our journey, 10 years ago, logistics infrastructure was one of the most challenging aspects of our operating environment. Today, we are giving other businesses access to our logistics platform. We are delighted and humbled by the opportunity to partner up with UPS, to offer them last mile solutions in Africa. We view this as a validation of the strength of our logistics platform as well as an incentive to double down on our efforts to further enhance our services and build a world-class logistics business in Africa.”
The e-tailer and its new logistics partner UPS still have some work to do, as it is not yet represented with its own branches or infrastructure in the majority of African countries.
Heiner Siegmund
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