Amazon offering to Buy Flipkart must make Jumia wet


#1

Amazon sometime back acquired Souq in middle east, the main ecommerce player, then they now made an offer to buy 60% of Flipkart in India.

Naturally this means that if the sales and logistics are growing in Africa for Jumia they could hope for something in the near future.

I’d assume the Rocket Internet WhatsApp/Telegram group or Slack is on fire today.


#2

This could be the reason why Jumia is running losses just to keep customers through deals.


#3

I do not see what Jumia has to offer Amazon (in Kenya, at least)

  • No free shipping.
  • No next day shipping on most items.
  • Delivery times are still long.
  • Erratic shipping charges.
  • Home delivery is super expensive, especially if you live outside Nairobi.
  • You still pay to pick up your items. (Last time I checked, picking up items from their Westlands office is 100 bob)
  • Extremely high markups by vendors.
  • Short return window. ( 7 days)

These are the ones I could come up with at the moment.

Jumia has still not figured e-commerce in Kenya. I do not think anyone has. I do not think they would mount any sort of resistance if Amazon set up shop in Kenya.

Amazon would be king in less than a year after inception if the Kenyan service is on par with their other markets.

TL:DR:- Amazon does not need Jumia to succeed in Kenya.


Amazon is trying to acquire Flipkart because Walmart is interested in them. Amazon is already leading in India.

They would probably not need to buy Flipkart if Walmart was not involved.


#4

Jumia is in at least six African markets, not to take from what you just said.


#5

Although at a valuation of around $1 billion dollars for the whole of Jumia (I think), Amazon might not mind paying that.

It is chump change to them.

Either way, they (Amazon) have a good track record when it comes to e-commerce. Plus their scale allows them to take a hit for a few years to gain market share.

Very few companies in the world can afford to do that.


#6

I strongly believe that FlipKart will go with Wal-Mart since Wal-Mart have made a promise of allowing FlipKart to operate independently, a promise that Amazon is not willing to make. In fact, Amazon had to match Wal-Mart’s offering and in most mergers and acquisitions job security of employees is usually of essence. Wal-Mart has promised not to change anything including the company’s leadership, well Amazon is silent on change of company structure and that speaks volume.

On the other hand, I bought something from Souq.com and it came in Amazon’s packaging :neutral_face::neutral_face::neutral_face:


#7

Souq is a subsidiary of Amazon. They acquired them last year for around $600m - $800m.


#8

I noticed that after receiving the package. Had to do some research.


#9

this is true.

:triumph::triumph: yeah. I dont think they are making losses as @aydensaruni said but they might be in operating loss. I dont know finance that well but I think Net Operating Loss (NOL) is not the same as actual loss overall… it just affects taxable income… I think. someone clarify.


#10

jumia havent figured out the online shopping market locally,honestly i still think they have a long way to go to get to that point…


#11

Agreed. No one has figured out eCommerce in Kenya so there isn’t any ‘real’ competition at best. You just pick the provider that has the least pains.

Amazon’s best bet would be to come and start afresh. $1B Africa wide market valuation is pennies to Amazon. Nothing Jumia has is worth the negative PR Amazon would inherit if it bought them. Better to start a fresh.

We lack an address system so deliveries are tricky. There is a way this could be solved:

Amazon could partner with schools and utilize the schoolbus network to understand home deliveries before launching their own.

This would work because:

  1. School buses are trusted in neighborhoods so access isn’t an issue.
  2. They know the best routes so deliveries would be speedier
  3. Different schools help them understand different family economics so helps build market profiles
  4. No worries about your purchase being delivered as it would come with your child after school
  5. In case of a return it can be done via the same network simplifying everything - no return fees or haggling
  6. More deliveries can be done while students are in class or over the holiday period
  7. Added revenue for the drivers moonlighting as shippers

Amazon could even foot the bill for the transport costs of all schools in the first year while laying the groundwork for this network and it wouldn’t even be a blip on their budget. If people are willing to trust school vans with their kids, they can trust amazon to deliver their products via the same network

Amazon’s bigger issue here would be vendor management. Too many dodgy vendors with suspect items. They might need to do a speculative analysis based on what Kenyans buy the most and import in bulk. One cargo ship would be enough to set up the experiment while they vet vendors.

How many of these markets have a payment infrastructure that matches (rivals) Kenya? They could be in all countries for what it’s worth but less revenue collection is rendered hassle free for the customer none of that really matters

And credit cards aren’t much of a solution, unless they want the money going straight to their offshore bank accounts and are willing to give major incentives to customers for using them ala uber

Conclusion:


#12

The solutions are already there (sort of) - https://what3words.com/en/partners/industry/deliveries-logistics

Addresses in Swahili are already included.

The system is in use in 7 countries for postal deliveries. Nigeria is one of them.

You can grab their app to check what your what3word address is. The entire thing is so simple to use.

Android - https://play.google.com/store/apps/details?id=com.what3words.android

iOS - https://itunes.apple.com/us/app/what3words/id657878530?mt=8


Google also has a similar service.

Plus codes - https://plus.codes/

If you have Google Maps on your phone, you can check what your plus code is.

This one is open source, unlike what3words. Jumia would not need to pay a single cent to use this.