Spanish delivery startup, Glovo, has recently announced its decision to cease operations in Ghana, marking another strategic shift after withdrawing from Latin America and the Middle East. The move raises questions about the company’s expansion strategies and its focus on African markets.
In a letter addressed to stakeholders, Glovo stated its intention to close operations in Ghana by May 10, citing a reassessment of investment priorities. The decision, the company explained, aims to reallocate resources to focus on the 23 other countries where Glovo operates, ensuring better service for its millions of daily users.
Glovo emphasized that its application and services will remain active until the specified date, and the termination of collaborations with service providers will be handled smoothly. The company expressed gratitude to its partners and customers, acknowledging their role in its operations.
The decision to exit the Ghanaian market was candidly explained by Glovo, attributing it to the challenges of achieving profitability in the region. Despite recognizing Ghana’s market potential, Glovo admitted that establishing a stronger position and achieving profitability would require significant investment over an extended period.
Glovo’s entry into Ghana in March 2021 promised professional, convenient, and affordable delivery services, positioning itself as a multi-category delivery company catering to various needs. However, the reality of operational costs and market dynamics led to the difficult decision to withdraw from the West African country.
Speculations on social media regarding the reasons for Glovo’s exit range from taxation issues to market competition. However, the company’s official statement underscores the fundamental challenge of achieving profitability in the Ghanaian market. In Ghana, the company faced competitors such as Bolt Food and Jumia Food apps.
Amidst its exit from Ghana, Glovo recently doubled down on its expansion efforts in Africa. In 2021, the startup announced plans to invest $60 million to expand its presence in other African markets. This expansion aligns with Glovo’s strategic shift towards Africa, where it sees significant growth potential.
Glovo’s CEO, Oscar Pierre, has emphasized the importance of profitability in sustaining the company’s growth trajectory. Pierre’s focus on profitability has guided Glovo’s decision-making process, ensuring sustainable operations and growth. The startup’s financial performance reflects its commitment to profitability, with notable successes in previous years.
“We make sure we are not only growing, but that the cities are not in negative numbers for many months,” Glovo’s CEO, Oscar Pierre said. “We know there are cities that need only six months to show losses and others, 12 months, because it all depends on size; but we know that sooner or later we will get good numbers. In Spain we have seen more than 10 proposals similar to ours and many of them have failed. The margins are small and if you do not look after them well, it will not work.’’
The decision to exit Ghana underscores Glovo’s strategic approach to market expansion, prioritizing regions where it can achieve sustainable growth and profitability. Despite some African markets proving difficult, Glovo’s Public Affairs & Government Relations Director, William Benthall, highlights the continent’s cost-effectiveness. As he recently stated, “Our revenues are lower in Africa, but so are our operational expenses.” This likely influenced Glovo’s decision to prioritize Africa in its recent expansion.
Glovo operates extensively across 23 countries spanning Europe, Central Asia, and Africa, with a particular emphasis on the latter continent. Among these regions, Africa holds significant strategic importance for the company. Notably, Glovo maintains a robust presence in nations like Ivory Coast, Kenya, Morocco, Nigeria, Tunisia, and Uganda.