Delivery Service provider, Glovo has announced its decision to close operations in Ghana. In a notice to one of its clients sighted by SKB Journal, Glovo said that beginning May 10, its official customer app will be inaccessible for orders.
Glovo explained that it took the decision because it would require an “extended period of time” for it to build a stronger position in the market and achieve profits. It has thus resorted to redirecting its resources to the other 23 countries where the company operates.” but we think there is more, and we will delve into that soon.
Glovo has assured its clients likely to be affected by the decision of outstanding payments per the company’s terms and conditions in due time.
We will recall that a Business Insider Africa report in October 2021 said the company had invested €25 million ($30 million) to bring its food delivery service to six African countries — Morocco, Uganda, Kenya, Ghana, Côte d’Ivoire and Nigeria. The company launched its operations in Ghana in March 2021. Its Co-Founder, Sacha Michaud said the company was ready to invest 3.5 million euros In October 2021.
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Reasons Analyzed by SAMUEL KWAME BOADU
Glovo, the Spanish on-demand courier service that operates in several countries, announced it would cease operations in Ghana. The decision is part of a broader strategic realignment by the company. Here might be some key reasons behind this decision:
Market Evaluation and Strategic Refocus: Glovo’s exit from Ghana can primarily be attributed to a strategic refocus on markets where the company sees a higher potential for growth and profitability. Companies often exit regions where the return on investment does not meet strategic business goals or where market conditions are less favorable for their business model.
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Competitive Pressure: The on-demand delivery market is intensely competitive, with several local and international players like Yango, Bolt Food, Hubtel, SamBoad Express vying for market share. In many markets, including Ghana, local competitors may have a better grasp of the market dynamics, consumer behavior, and more tailored business operations, making it difficult for international companies like Glovo to dominate.
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Operational Costs: Maintaining operations in diverse markets can be costly, especially in regions where logistical and operational challenges are significant. These challenges could include issues related to infrastructure, varying regulatory environments, or the cost efficiency of maintaining a delivery network.
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Economic Conditions: The broader economic environment plays a crucial role in the success of on-demand services. Economic fluctuations, purchasing power of consumers, and the general economic stability of a country can impact businesses like Glovo. In some cases, adverse economic conditions can lead to a reassessment of business commitments in a particular country.
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Regulatory Environment: Changes in regulatory frameworks or challenges in navigating local laws can also influence decisions to exit a market. Companies operating in the gig economy, such as Glovo, often face complex regulatory environments that can change rapidly and have profound effects on their operations.
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Glovo’s decision to exit Ghana is a reflection of a strategic realignment intended to optimize their operations and focus resources on markets with the highest potential for growth and profitability as they stated which obviously doesn’t include Ghana. Such decisions are part of the global business landscape, reflecting ongoing assessments of business performance across different regions.
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