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Jumia, DHL, and Alibaba will face off in African ecommerce 2.0

The business of selling consumer goods and services online is a relatively young endeavor across Africa, but ecommerce is set to boom.

Over the last eight years, the sector has seen its first phase of big VC fundings, startup duels and attrition.

To date, scaling e-commerce in Africa has straddled the line of challenge and opportunity, perhaps more than any other market in the world. Across major African economies, many of the requisites for online retail — internet access, digital payment adoption, and 3PL delivery options — have been severely lacking.

Still, startups jumped into this market for the chance to digitize a share of Africa’s fast growing consumer spending, expected to top $2 billion by 2025.

African e-commerce 2.0 will include some old and new players, play out across more countries, place more priority on internet services, and see the entry of China.

But before highlighting several things to look out for in the future of digital-retail on the continent, a look back is beneficial.

Jumia vs. Konga

The early years for development of African online shopping largely played out in Nigeria (and to some extent South Africa). Anyone who visited Nigeria from 2012 to 2016 likely saw evidence of one of the continent’s early e-commerce showdowns. Nigeria had its own Coke vs. Pepsi-like duel — a race between ventures Konga and Jumia to out-advertise and out-discount each other in a quest to scale online shopping in Africa’s largest economy and most populous nation.

Traveling in Lagos traffic, large billboards for each startup faced off across the skyline, as their delivery motorcycles buzzed between stopped cars.

Covering each company early on, it appeared a battle of VC attrition. The challenge: who could continue to raise enough capital to absorb the losses of simultaneously capturing and creating an e-commerce market in notoriously difficult conditions.

In addition to the aforementioned challenges, Nigeria also had (and continues to have) shoddy electricity.

Both Konga — founded by Nigerian Sim Shagaya — and Jumia — originally founded by two Nigerians and two Frenchman — were forced to burn capital building fulfillment operations most e-commerce startups source to third parties.

That included their own delivery and payment services (KongaPay and JumiaPay). In addition to sales of goods from mobile-phones to diapers, both startups also began experimenting with verticals for internet based services, such as food-delivery and classifieds.

While Jumia and Konga were competing in Nigeria, there was another VC driven race for e-commerce playing out in South Africa — the continent’s second largest and most advanced economy.

E-tailers Takealot and Kalahari had been jockeying for market share since 2011 after raising capital in the hundreds of millions of dollars from investors Naspers and U.S. fund Tiger Global Management.

So how did things turn out in West and Southern Africa? In 2014, the lead investor of a flailing Kalahari — Naspers — facilitated a merger with Takealot (that was more of an acquisition). They nixed the Kalahari brand in 2016 and bought out Takelot’s largest investor, Tiger Global, in 2018. Takealot is now South Africa’s leading e-commerce site by market share, but only operates in one country.

In Nigeria, by 2016 Jumia had outpaced its rival Konga in Alexa ratings (6 vs 14), while out-raising Konga (with backing of Goldman Sachs) to become Africa’s first VC backed, startup unicorn. By early 2018, Konga was purchased in a distressed acquisition and faded away as a competitor to Jumia.

Jumia went on to expand online goods and services verticals into 14 Africa countries (though it recently exited a few) and in April 2019 raised over $200 million in an NYSE IPO — the first on a major exchange for a VC-backed startup operating in Africa.

Jumia’s had bumpy road since going public — losing significant share-value after a short-sell attack earlier in 2019 — but the continent’s leading e-commerce company still has heap of capital and generates $100 million in revenues (even with losses).

Source: TechCrunch
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China Roundup: Ant Financial’s new boss and Tencent’s army of new apps

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. This week, we are looking at what Ant Financial’s executive shakeup could give to Alibaba’s financial affiliate and why Tencent has gone on an app-launching spree.

Return of the old boss

This week, Ant Financial, the online financial services company, 33% of which is owned by Alibaba and controlled by Jack Ma, announced Hu Xiaoming as its new chief executive. Management reshuffles aren’t rare at Alibaba, which prides itself on rotating executives every few months to stay fresh and agile in a competitive environment. The latest reshuffle is providing some clues to where Ant, the world’s most valuable private fintech company, is headed in the coming years.

Hu will take the lead in growing Ant’s domestic payments and financial services units while his predecessor and current chairman Eric Jing will manage overseas expansion and development of new technologies. Having worked at several major Chinese banks, Hu joined Alibaba in 2005 to expand the firm’s budding financial services and has since been credited with helping Ant identify paths to monetization.

Around 2009, Hu made a bold move to initiate a microloan service targeted at small and medium sellers on Alibaba’s e-commerce platform. It was a boon to millions of merchants who otherwise would not be able to borrow from traditional financial institutions because they lacked banking history. Instead, Alibaba assessed their creditworthiness based on digital records, such as online sales and customer ratings. Today, small loans are just one of the many offerings from Ant’s ever-expanding financial empire, which also operates the billion-user Alipay payments app, the world’s largest money market fund and credit-rating system Sesame Credit.

In 2014, the storied executive was assigned to lead Alibaba’s cloud business and later grew it into one of the firm’s fastest-growing segments and a serious contender to Amazon Web Services. Hu was no stranger to Alibaba Cloud, which had already been working to introduce cloud computing to the fintech unit’s existing IT environments (in Chinese). In fact, most of Alibaba Cloud’s early applications happened internally at Alibaba as the company felt the urgency to develop an IT system that was more scalable and customizable than most large international vendors could provide.

Under Hu’s helm, the cloud arm struck a major deal with the government of Hangzhou, Alibaba’s hometown in Eastern China, to ease traffic congestion using data analytics and cloud computing solutions. Government contracts are an important lever for businesses developing costly state-of-the-art technologies, for as soon as an innovation is proven in practice, private demand will pick up over time.

Hu Xiaoming, new CEO of Alibaba’s financial affiliate Ant Financial (Ant Financial via Weibo)

Hu’s experience with commercializing new technologies and cooperating with state agencies makes him the ideal leader of Ant at a critical time. Last year, Ant’s highly anticipated IPO plans were pushed back reportedly because Beijing worried the private firm had amassed too much influence. To allay concerns among regulators and big banks, Ant has in recent times pivoted to focus more on selling technology solutions rather than financial services, per se.

Social networking anxiety

Tencent has launched at least seven new social networking apps since the beginning of 2019. Each comes with a slightly different focus, whether it’s targeting college students or specializing in video-based chatting. Industry observers said Tencent made these moves to defend challengers, particularly ByteDance of which TikTok (or Douyin in China) has taken the world by storm. Although short videos don’t directly compete with Tencent’s messengers WeChat, they certainly are consuming more of people’s screen time. And there are signs that ByteDance is encroaching on Tencent’s core markets after the upstart pushed into video games and messaging.

Tencent might also worry about WeChat’s slowing growth. The slowdown is in part attributed to the app’s already enormous base — more than 1 billion monthly users — so growth has inevitably cooled. WeChat gave Tencent a timely boost at the start of the mobile internet revolution when QQ, Tencent’s messenger that dominated China’s PC era, had seen its day. Now Tencent appears to be in need of a new growth engine, be it a groundbreaking feature of WeChat to rejuvenate the app or a brand new social network to replicate the success of WeChat and QQ.

It’s worth keeping in mind that Tencent, like all other large internet companies in China, is always testing new products to meet shifting landscapes in the tech industry. Tencent is famous for pitting different departments against each other in what it calls an internal “horse race,” which spawned WeChat almost 10 years ago. In most cases, these projects failed to catch on, but the cost of making new apps is negligible for a behemoth like Tencent because much of the development process has been standardized. All it needs is a skunkworks team of a dozen employees, ideally headed by a visionary such as WeChat’s Allen Zhang.

Also worth your attention

Nvidia, the chipmaker known for its GPUs, is already working with some 370 automakers, tier-1 suppliers, developers and researchers in the field of autonomous driving. This week to its family of partners it added China’s largest ride-hailing company, Didi Chuxing . Together the pair will work on developing GPUs for Didi’s Level 4 autonomous cars (which can operate under basic situations without human intervention), the companies said in a statement. Didi, which peeled its autonomous driving unit into a separate company in August, said last month (in Chinese) at an industry conference that it had plans to soon begin testing autonomous vehicles on Shanghai streets.

Source: TechCrunch
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