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Startup Lounge: COVID-19 impacted positively on growth of digital services – Hesham Safwat

Startup Lounge: COVID-19 impacted positively on growth of digital services – Hesham Safwat
Hesham Safwat - CEO of Jumia Egypt

By: Ingy ElSafy

Mubasher: The economy of any country mainly depends on small and medium enterprises (SMEs) as they acquire a key share in creating job opportunities and economic development. Online retail or e-commerce has empowered businesses in Egypt over the recent years, and one of the leading e-shopping platforms in the Egyptian market is Jumia.

For a month like November, described as the Black Friday season, consumers in Egypt spend a sum of money to benefit from discounts and offers, whether on local or international products.

In an interview with Mubasher, Hesham Safwat, the CEO of Jumia Egypt, is our guest in the Startup Lounge to talk about the pandemic impact on Jumia’s business and consumer behaviour, as well as the company’s initiatives, investments, and role in endorsing SMEs.

Safwat also mentioned how the Black Friday season boosts Jumia’s sales, and how he sees the future of offline retailing business in Egypt, and finally, the four factors he believes they contribute to a successful e-commerce business in the Egyptian market.

How is Jumia helping local SMEs nationwide to grow their business?

Jumia believes that the economy of any country depends mainly on SMEs since they are important contributors to job creation and countries’ economic development. Therefore, Jumia was one of the first companies that launched an online initiative to encourage local products under the slogan “Made in Egypt” and was promoted, as Jumia offers its partners of small and medium businesses and handicraft owners a great opportunity to show their products on our platform and sell all over Egypt, whether in Black Friday season or via discounts that take place throughout the year. There are some buyers who prefer homemade products that come in line with the president's initiative to encourage local products.

We have witnessed an increase in the share of locally manufactured products compared to past years and this is due to the increase in the presence of vendors and distributors of locally manufactured products.

Jumia also launched “Support them and buy their products” initiative, which comes as a continuation of the efforts made by Jumia over the past few years to support SMEs and encourage customers to purchase their products. Through this initiative, Jumia seeks to encourage SMEs to reach a large number of customers and grow their business, which in turn will help boost local productions and improve the Egyptian economy. Around 1,500 vendors participated in this campaign to show their goods from many product categories.

We have also partnered with Alexbank and Sawiris Foundation to launch the online store of “Ebda3 Men Masr” to support and encourage handicrafts and shed light on their crafts, which helped increase the demand for their products including 4,000 items. The store aims to promote and market Egyptian handicrafts, browse the catalog of different products, and purchase creative handmade products from all over Egypt, in addition to onboarding the creative economy sector to be part of the e-commerce system in Egypt.

Which segments get most of the orders? And how have consumer choices changed nowadays versus the pre-pandemic time?

Pandemic period imposed exceptional conditions on everyone and helped motivate and encourage customers and shoppers to buy through online and digital platforms, and during the past year and a half, Jumia set its priorities to support its consumers by providing essential goods and products such as groceries via partnerships with market leaders. In addition, we launched “Contactless Delivery” to reduce physical interaction between individuals and accordingly the spread of COVID-19, this lead to helping our customers to save money and time as well as staying safe and since that time groceries and essential goods have become on the top selling categories.

Did the COVID-19 pandemic help Jumia grow more? If yes, how did that happen?

COVID-19 impacted positively on the growth of digital services, either e-commerce or online payments and services worldwide, as the spread of COVID-19 has reflected on the tendency of many customers to buy essential goods and products or the use of online payment services to pay their bills and other services through trusted digital platforms.

It has also contributed in raising the awareness of many online platforms and services. We have seen this in the different buying behaviors of customers as the percentages of electronic payments have increased and the number of orders per person has increased in comparison with previous years, in addition to the increased percentages of certain age groups, especially among the elderly whose participation rate was less regarding the use of electronic payments in the past.

Also on JumiaPay application for digital services, we witnessed growth of customers and size of transactions.

Which industries attract the majority of your consumers, based on the current purchase behavior and the number of sellers/suppliers?

Fashion and essential goods come at the forefront of the goods and products that Egyptians purchase, in addition to groceries and basic products that customers need on a daily basis.

The presence of many vendors and distributors of locally manufactured Egyptian goods contributed to the provision of many on demand products and also contributed to an increase in the percentage of locally made products over the previous years.

Would you describe November as the most income-generating month of the year for Jumia, given the Black Friday season?

November is one of the special months in Jumia in general and for customers and shoppers in particular. Over the past eight years, Jumia has succeeded in placing Black Friday season on the annual shopping map for the Egyptian consumer in all governorates, and customers are waiting for this month to benefit from discounts and offers, whether on local or international goods and products. During Black Friday season, we succeeded in achieving great sales through our partners, and year after year sales rates are increasing magnificently.

Jumia was the first to introduce Black Friday to the Egyptian market, and we believe that the main pillar of the success of Black Friday in Egypt is through strategic partnerships that reflect positively on customers by offering to them the best prices and assortment of products which helped in increasing customer awareness about this season.

Every year we introduce new services to be included in our Jumia Black Friday campaign and what’s unique about this year is that our offers got extended to our various platforms, whether Jumia, JumiaPay, and Jumia Food.

For the eighth year in a row, Jumia offers its campaign in partnership with thousands of sellers and brands such as American Eagle, Dove, LC Waikiki, Banque Misr, Viu, and KFC to provide a wide range of products at the best prices with exclusive offers and big discounts for existing and new Jumia customers at competitive prices with high quality local and international products.

How did you find consumers’ feedback on the mentioned-above “Support them and buy their products” initiative compared to the branded items?

There is no doubt that handmade and local products are controlling the markets, and the difference between them and foreign or well-known brands is the quality of the product, then its competitive price.

What are the initiatives you’re working on for 2022?

We have an ambitious strategic plan that we are trying to implement in line with the vision and strategy of both Jumia and the Egyptian state. In general, Jumia is doing annual initiatives to be implemented in the Egyptian market and aim primarily to increase the share of e-commerce and digital services in the Egyptian market as well as support digital transformation and the moving towards cashless society within Egypt's strategy for 2030. 

Would you brief us on Jumia’s expected short- and long-term investments and partnerships?

Every day we work on having new partnerships with market leaders across different sectors and industries, our investments are nonstop; both direct and indirect which results in increasing job opportunities. Jumia is no longer just an e-commerce platform, but has turned into a large entity as a technology company. We offer new and unprecedented services, such as Jumia Food, JumiaPay, and we also have the newest Tech Center, which is considered one of Jumia Group's highest focus as it provides its services to the Egyptian and African markets as well.

How do you plan to increase the number of Jumia Egypt’s active consumers?

Jumia has transformed from being focused on specific shopping seasons to an “Everyday APP for daily needs”. In addition, we have offers and discounts at different times throughout the year offered by a lot of local and international brands.

In addition, we have launched several platforms in Egypt such as JumiaPay and Jumia Food. 

We believe that technology has the potential to transform everyday life in Africa for the better. We built Jumia to help consumers access millions of goods and services conveniently and at the best prices while opening up a new way for sellers to reach consumers and grow their businesses.

Would you share with our readers how female contribution and women empowerment play a role in expanding Jumai’s business?

Jumia believes in empowering women and so they play a key role in building Jumia Group in Africa as a whole, they hold several leading positions in the company across all countries including Egypt. Additionally, they take on roles which traditionally used to belong to only men such as; operations and logistics.

You were in the offline retailing business until 2012 before you go online, how do you see the future of offline retailers in Egypt?

Retail industry has drastically transformed over the past century to reach the stage of the organized retail it is currently in, especially with the opening of shopping malls in Egypt back in 2003 and 2004. Now with the current growth of the online sector, we regard it as complementing offline retail and not competing with it. Yet this will affect the growth of offline retail as many retailers currently would prefer to expand their businesses online rather than opening new physical stores.

As a CEO of a leading e-commerce platform, what would be your prescription for succeeding in the e-commerce market in Egypt?

There are four factors; the first is the customers as they are considered the most important key to succeed, and the Egyptian customer is considered a smart one by nature as he is able to benefit from technology, get along with it according to his needs and requirements also can determine the appropriate time to take a purchase decision, compare between different platforms to find the best offer and choose the right time with a wise evaluation to the provided services. 

Second, the support of the Egyptian state and government for the digital transformation contributes significantly to the growth and success of the e-commerce market.

The third factor is the different sectors that give special attention to e-commerce, such as the banking and logistics sector, which contribute to the growth of the industry.

Lastly is the increase in calibers and talents in the tech sector which reflected positively on the growth of e-commerce business.