Forbes Feature on Gloo.ng, Nigeria's Biggest Online Supermarket

1. JUNE 2014 FORBES AFRICA | 5150 | FORBES AFRICA JUNE 2014
PHOTOBYPICHAWWW.MEMORIESBYPICHA.COM
OLUMIDE OLUSANYA
ENTREPRENEURS
O
ut of a desire to ease the burden
on his beloved wife, who had
to juggle a career as a business
technology consultant with the
demands of managing her home,
an entrepreneur decided to start his own
online retail business.
Olumide Olusanya, established Gloo.
ng - initially buycommonthings.com - to
enable his better half, Seyin, to shop from the
comfort of home and not have to spend what
ought to be quality time with her family in
grocery stores.
Olusanya, a medical doctor turned
technology solutions developer, was in the
middle of his third act as a value investor
after a successful career as an e-payment
expert where he led the team that deployed
West Africa’s first locally issued and
processed international payment card -
Ecobank MasterCard. The idea to establish
an online supermarket that would offer
same-day delivery of groceries and essential
homecare products came to him on a routine
work day.
“I was doing my investment management
from my home office; I would jog in the
mornings and spend the rest of my day
working from my study. When the idea came
to me, I wrote the plans and tested it. I took
out all the settees in my house and had a
carpenter build the shelves then set up a
small team initially, but all of them ran away
after one month because they couldn’t stand
the heat. So I was left with my co-founder, my
wife, and we continued developing the idea.
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BY CHARLES IDEM
FORBES
We had built the product and were operational, so with the
traction we saw, I decided we had to do this.”
Progress over the next few months meant the business
had to be expanded. Tapping into his personal savings,
Olusanya moved to a bigger facility and hired two more
people to join the team.
“For the first three months, of course it was just me
alone. I was doing deliveries and as the demand started
growing, we had to increase capacity. So I asked my wife to
leave her job and she also started doing deliveries as well.
Then we got the facility in Lekki (a middle class suburb in
Lagos). Once we moved to Lekki that was the moment we
burned the bridge and the only way we were coming out of
this was at the other side. We had two people join us later
and for 10 months, four of us ran the business.”
Nigeria’s retail sector has seen explosive growth
since the middle of the last decade. A recent report by
Euromonitor estimated the annual value of the market for
supermarket products in 2012 at $33 billion.
Groceries and household essentials are mostly sold in
open air markets and convenience stores, but recently, there
has been a revival in the development of large shopping
malls and superstores. South African retailer Shoprite
entered the market in 2005, while Dutch brand, Spar, also
entered the market operating in partnership with the Artee
Group, a local player. Both brands are leading the market
in terms of the number of stores with a combined total of
eight. But as they seek to expand - Shoprite and Spar aim
to have 40 outlets nationwide over the next three years -
online retailers such as group buying site DealDey, as well
as Jumia and Konga, have experienced rapid growth in the
last three years.
Gloo.ng aims to ride this wave to challenge the brick and
mortar players and capture the largest share of the market.
“Our vision it to be the biggest supermarket in Nigeria
and our mission is to change the way Nigeria shops for
living essentials or supermarket goods. There’s something
driving everything we do. Our values derive from the
Spartan culture, which is a very well knit culture where our
sense is there’s nothing we set out to achieve that we will
not.”
Eschewing the marketing-led approach to creating
awareness for the brand, Gloo.ng chose to grow organically,
allowing its customers to spread the word about its
service. This has seen the company build an army of loyal
customers, something that often eludes e-commerce firms.
Olusanya reveals that 75% of the company’s business comes
from repeat buyers, where most e-commerce firms have
return rates below 10%.
“I was the one doing deliveries, and then Seyin joined me
so she started doing deliveries as well. The early customers
knew Seyin and me, but they didn’t realize we were the co-
founders. Someone found out and that was something they
liked about the story. So the business started growing; we
hardly spent money on marketing, we grew largely on word
of mouth.”
Impressively, the firm is also surmounting challenges
that have often held back online retail companies in Nigeria.
Payment has been a significant problem in a market where
a lack of trust means customers prefer to pay for products
with cash rather than using bank cards.
Gloo.ng is bucking this trend.
“What we end up building with our customers is a
relationship. Our customers know us and once they do one
or two transactions with cash, for the next transaction, they
start using the electronic means which is obviously more
cost effective for us. The new trend we are seeing is that
customers are actually leaving money with us because using
your card in Nigeria is a pain, unlike abroad where it’s just
a click once your details are stored. So I think the whole
idea, because of the nature of the repeat business that our
customers do with us, is the trust they have built with us.”
Expectedly, the company’s early success has not gone
unnoticed. Olusanya previously received offers from savvy
investors but thought it was premature to raise major funds
to grow the business. Feeling that the time is now right,
Gloo.ng just secured Series A funding from an investment
firm in Nigeria.
“We just signed a $1million funding agreement with
IRM Limited. We’ve had investors calling us from all over,
locally and internationally, but we have a type of entity that
we’ve chosen to work with because we have to have people
who are aligned with our vision. IRM understand what we
are trying to achieve.”
Selling groceries online is notoriously tough and several
worldwide start-ups have failed, most notably that of
United States-based Webvan in 2001. Scaling Gloo.ng in
Nigeria, a country renowned for the hostile nature of its
business environment, promises to be a sizeable task but
Olusanya is confident that they will succeed.
“The experience of the team we have and the research
we have done are some of the things that put us in good
stead to deal with the risk. Anything involving groceries
online has been the Bermuda Triangle of e-commerce
worldwide, but some companies like FreshDirect, Tesco.
com, Ocado and Peapod have shown that it can be done.
But we are not chasing any of those models; there is no
single model that has been proven to work in that regard,
and that’s why Gloo.ng has a multi-faceted model. We have
various models, each with its own strategic objective that
we are executing at the same time and we’ve been growing
well quarter on quarter, so we are confident that we will
get it right.”
Their loyal customers seem to agree.