Goodbye Mizado, Hello Jumia: Inside Rocket Internet's Newest Gamble in Egypt
Jumia, the new online mall, launched with little fanfare in Egypt just over two months ago, the progeny of the German behemoth Rocket Internet. Rocket is a venture builder with a thrust unseen in this region previously. Anyone with an interest in the Egyptian or MENA entrepreneurial ecosystem, not to mention the site's regional competitors, is bound to be watching this Amazon clone closely, especially after the recent sudden closure of similar clone Mizado. So when Jumia’s director of marketing Pierre Herve invited me to visit their HQ in Maadi for a chat, I jumped at the chance to peek into the belly of the beast.
The first thing that struck me walking into the open plan workplace was the bareness- no reception, two glass corner offices, just desk after desk of employees talking on the phone, tapping at their laptops, or in group discussions. Everyone was young; the average age was 25 at most. It was noisy, energetic, and to be honest, reminded me a little of a battery hen farm. To say the layout was minimalist would be an understatement. One thing was obvious above all else though: these guys meant business.
After a warm greeting from Pierre, we found a space at a desk, and got straight to it. Pierre had joined Rocket after completing his MBA in entrepreneurship from France’s prestigious HEC business school. His first project was in Vietnam, helping launch home appliance and electronics e-tailer Lazada. They went from 5 to 150 employees in six months, a fact he’s, justifiably, very proud of. Then came Jumia and Egypt. Jumia started three months ago with six people, three of which were the directors, Pierre, director of buying Rawiah Abdallah, and director of operations Olivier Xu. Olivier held the same role at Lazada, and also has an MBA from HEC. Rawiah was working at BCG Dubai before accepting the Rocket temptation, and has an MBA from Harvard. Have you noticed a pattern?
Pierre confirmed that Jumia was wholly owned by the investors, so there are no founders, in the way we normally define founders. n fact, no employees have shares, although this might change in the future. Current Egyptian legislation of course compels companies to have at least one Egyptian director. Yet there’s no tech director at Jumia as the website was developed by another Rocket team in Portugal, and Rocket prefers not to re-invent its own wheels.
The question looms: what happened to the Mizado Egypt team? Mizado was headquartered in Dubai and delivered products to Egypt, so when Mizado Dubai shut, Mizado Egypt also disappeared by default. Why was the company shuttered? “Rocket is above all pragmatic”, Pierre smiled. “If a business is not performing as well as planned, it closes.”
So why choose Egypt for a new base? “Egypt has huge potential, it’s one of the biggest countries in Africa, has good net penetration, and we noticed that internet activity boomed post-revolution,” Pierre explained. And what involvement would Jumia Nigeria or Jumia Morocco have? “Most Rocket ventures are independent enterprises, but we do share resources, ideas, and best practice. The Nigerian experience helped us in choosing our launch products, team make-up, and marketing campaign.”
The first step was aggressive recruitment, through university and business school visits, events, LinkedIn posts and personal referrals. Networking is how Rocket recruits generally. It’s cost effective and evidently fast. Pierre explained, “we look for young, motivated, and talented people, normally MBAs or fresh graduates. The mindset is most important; they must be hands-on, be entrepreneurs and be excited to build a company from scratch.” Some would argue that an employee that doesn’t risk any money can’t be called an entrepreneur, however, so "intrapreneur" might be a better description.
I recognized one of the employees, Nesma El-Far, who was part of the AUC‘s Entrepreneurs’ Society, which hosted the competition “The Hit” a few months back. Why did she join Jumia? "I got excited to join Jumia after I knew that they were starting a new venture that specializes in fashion online selling. I think it's an untapped market in Egypt that would change Egyptian consumer attitudes towards e-commerce," she said. Pierre confirmed that fashion is indeed a new line they’re launching mid September, everything from shoes to shirts to veils. So that’s why there’s no Namshi in Egypt.
The website went live just over a month ago when they had around 23 employees. Now there’s nearly 60 and they’re still growing and the next phase is building brand awareness and a move to a new bigger office nearby.
But what of the service? Well it just so happens that I
bought from Jumia a few weeks ago. The site is a well
presented, standard e-commerce site; I found what I wanted easily
and bought it. The next day, customer service called, full of
apologies, to inform me that the item was out of stock. They gave
me a EGP 100 e-voucher for my troubles; I was happy and bought
something else. It then took two weeks to arrive, so I was
less happy. But to be fair, the service is as good as the
main competition, Souq and
Nefsak. Speaking of
which, Pierre said he prefers a market that has well established
competitors, as the consumer is savvier, as the competition have
done all the heavy lifting in creating the market.
Jumia’s prices are also consistently less than the competition. Pierre confirmed that competitive pricing is vital to their business model, and that so far all products have been sourced locally, something that was likely difficult in Dubai. Whether these lower prices are down to Jumia’s superior negotiating skills, or a lower fresh graduate-based wage bill, you decide.
Rocket doesn’t do beta launches, but it's easy not to iterate too much when you simply copy and paste. Their ventures hit the ground running, and if an average speed isn’t maintained, they abandon the race. This aggressive and ruthless, sorry pragmatic, approach is sure to be disruptive. Not least to the investment community here, which has taken a more leisurely and risk-averse approach, which is slightly ironic as the local investment community is heavily U.S. influenced, and the U.S. is normally known for having the more ruthless, sorry, competitive capitalist mindset. Rocket has, in effect, shown more belief in Egyptians than many Egyptians have.
Will Jumia reach its aggressive target of being the top online mall in Egypt within a year? I don’t know. I do know that for now their employees and I, the consumer, are happy they’ve arrived.