Egypt’s competition watchdog in talks with Glovo to avoid abrupt exit
Egypt’s competition watchdog started talks with Spanish startup Glovo officials to determine why the company decided to exit the market, government sources with knowledge of the matter told Amwal Al Ghad.
Glovo announced on Tuesday evening it is exiting Egypt, Turkey, Uruguay and Puerto Rico, as part of a goal of pushing for profitability by 2021.
The app will continue to function in the four markets “for a few weeks” following the announcement, the company added in a statement.
The Egyptian Competition Authority (ECA) is stepping in to pause Glovo’s plan to leave the country and determine the reasons for its decision while considering opening a probe on potential monopolistic practices that may have led to the exit, the sources said.
In 2018, Glovo entered Egypt, where activities were limited to the capital Cairo and Alexandria, the second-largest city.
Glovo’s exit from Egypt signals the end of a second act in the market. It first announced it was pulling the plug on Egypt in April 2019 — but returned last summer, at the behest of its investor Delivery Hero, a rival food delivery startup which has a stake in Glovo.
“This has been a very tough decision to take but our strategy has always been to focus on markets where we can grow and establish ourselves among the top two delivery players while providing a first-class user experience …” CEO Oscar Pierre, said in a statement.
“Leaving these four markets will help us to further strengthen our leadership position in South West and Eastern Europe, Latin America, and other African markets, and reach our profitability targets by early 2021,”
The exits mean Glovo’s app footprint will shrink to 22 markets, with a focus on South America, South West Europe, and Eastern Europe, and Africa. Glovo will be withdrawing from eight out of a total 306 cities.
Glovo said the eight cities collectively generated 1.7 percent of its gross sales in 2019, emphasizing that the move does not amount to a major revenue hit.
Spain and Southern Europe are the best markets for Glovo, co-founder Sacha Michaud told reporters following the announcement, confirming it generates operating profit there. “Latin America will become operation profitable next year,” he predicted.