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Marcopolis presents the Ghana Report focused on investments, doing business, economy and other topics featuring interviews with key executives and government officials. The sectors under review are agriculture, banking, energy, industry, telecom, IT, real estate and more.
InterviewsDecember 10, 2020
Discussing Online Retail with Ebenezer Lartey from Ghanaian eCommerce Company Market Express
Ebenezer Lartey, CEO of Market Express
- Written by Sandra Francisco
- Published: December 10, 2020
Interview with Ebenezer Lartey, CEO of Market Express
What was your motivation for starting this business?
I am a banker by profession. I worked in a bank for 10 years and I love digital technology. I love ecommerce as a tool and an enabler. I started Market Express because it was a project I loved and I wanted to see it come to life. At the time, ecommerce was only focused on electronics. We needed to do something that was more important and beneficial to the wider population. We know that most people spend their money mainly on food, survival and subsistence, rather than on electronics. I believed that this would work, even though people argued with me that they were not sure that people would buy food online in Africa because people wanted to touch and feel and see the things before they bought them. It took us about a year to prove that people would use this system. In our second year, we had other companies that joined us, but a lot of them died along the way. Our crowning moment was COVID-19. COVID made it even more apparent that it was important that companies like us focused on this sector of the market. During that period, other big companies in this sector started doing food for the first time, until you see that the biggest player in our market, which is Jumia, ended up joining. In the past, they were totally focused on electronics and hardware. For me, it is a dream come true that we can do something that is relevant to many more people than normal and it is going to revolutionize how we do things. One of my biggest dreams is to see that we have no messy markets in Africa. For example, if you go to a typical market, people are all stepping over each other. There is a better way. My goal with this project is to change how Africa does its commerce, and not to deprive people of an opportunity, but to actually make it possible for even the ordinary man to move online and reach more people.
It seems that COVID-19 improved your business, then?
In the past, there were people who would definitely say they have no business shopping online and COVID-19 proved that there are other ways, and it works. But the second thing that it really did for us was it gave us a glimpse of what the future holds because it made us do 10 to 20 times, even 100 times more than we have ever done. It made us rely on other partners that we would not normally engage, like logistic partners, and it challenged the whole country. But it also made people who lived abroad, for example, who were concerned about their family, be able to participate and contribute to their welfare. There was a lockdown and people were not going anywhere. But you had this peace of mind that you have been able to send your parents food that would last them for a week or two weeks. You cannot buy that kind of peace of mind. COVID-19 was significant for us to show the world what is possible. But not just that, we were able to actually serve people. For example, during the COVID period, we never charged delivery fees, it was free for everybody. We wanted people to experience the possibility of using ecommerce as a way to attend to their needs. We wanted new customers who appreciated our work and our service. We are a credible company, people recognize us, and it is because of COVID-19. We have a wider reach as a result and we are appreciative of that, but we want to go further. We want to grow wider. We want to be a bigger company. We want to cross borders. Ghana is a relatively small country. We definitely want to go to other parts of Africa and ensure that we build the same thing there too.
How would you assess the online business in the country? What is the way forward for that?
We are still at the very beginning of the market potential for online. According to KPMG, the retail business in Ghana is about $5 billion. This report was in 2017. But online accounts for less than 0.1%. With all the big companies and all the small companies put together, we are not doing even 1% of retail. That means that there is a huge potential for online business. The second thing is that it is an inevitable situation. Ecommerce is definitely going to become the predominant vehicle for commerce. The future is bright and the future is very exciting. But currently, what we are fighting for is establishing strong companies with the right capitalization, with the right product assortment, and also with the best logistics to go farther, because you want to serve a wider market, so those things are important. We definitely need companies that have the strong backing financially, that have the logistical capability, and also have credibility. Once you put those three things together, you have a good project to work with.
What are the major challenges facing the online retail business in Ghana?
We are a credible company, people recognize us, and it is because of COVID-19. We have a wider reach as a result and we are appreciative of that, but we want to go further. We want to grow wider. We want to be a bigger company. We want to cross borders.
The major challenge in Ghana today is logistics. People would first think of address systems, but those problems are not major because we figured out a way to deliver to people, with or without addresses. One interesting way of doing that is using Google Maps which is even more effective than any kind of addressing system. But going forward, there are challenges around logistics. There are also challenges around companies building the right capitalization to keep the business going because it takes a while for businesses to turn profitable. Currently, a lot of the ecommerce companies have not turned a profit yet. It takes a lot of financial muscle to keep going. And then the last point is about the customers picking up the service as a way of life. The service attracts more middle class people and the middle class in Africa is not very big. So, we need to recruit more people who are tech savvy, middle class, have the money to spend, and are able to use the service. These points can be resolved in a very short time. In the next five years, it is possible that we will have a new middle class that is tech savvy and willing to use technology and spend online. That will happen very, very soon, and it will unleash the market potential. The last point is the AFTA, the Africa Free Trade Agreement, which will help in cross border transactions. So, for example, we want to be able to cross freely and do deliveries to our neighboring countries. But we all know that there are border issues in Africa. The new Africa Free Trade Agreement is going to help even ecommerce companies be able to cross borders and serve people in the sub region. That is an exciting opportunity and the sky is the limit.
What is the competition like from other companies that are also going into online retail, especially in the food sector?
At this time, competition does not matter. The market is so big that we are not able to cover it. Worrying about competitors is of no use. At the moment, what is important is that we need to build an ecosystem where people trust us as they trust Jumia. This is a viable market for all of us. If we are all together doing less than 1% of the market potential, then I should not be looking at my competitor too much. Our energy should be focused on the benefit we give our customers. The goal is how we can make those customers who want to have a good experience using online service actually have that good experience they want or to go beyond what they are used to, to give them a service that makes them say this is worthwhile.
What is the reason behind only 1% of sales being through online retail? Is it because of internet penetration or the issue of trust?
The issue is not internet penetration. We wish that internet penetration was 90-100%, but it is now around 38%. There are people that have access to the internet but never think of shopping online. We need to get exciting offers online. Africa is unique. There are many small shops dotted all around and when you step out, you can basically get what you really need. However, there are certain things that when you do not find them after roaming around your go to places, you check online. The second issue is that delivery fees are a deterrent for many people. There are people who price delivery fees per item and if the person can walk to a shop, they would not have to pay that delivery fee. The last thing is trust. Trust is important. Generally, people are a little apprehensive to just go online, find an ecommerce company, and use the service. We need to work on building confidence in the people who use the service. One of the things we have just done is to create an ecommerce association where we are trying to ensure that we give credibility to the people who run ecommerce companies in Ghana. Over time, people will get to know which ones are more credible and which ones are not. Ecommerce is relatively new for many people. The competition for us in online grocery is just the availability of things everywhere. Once online shopping is able to generate some kind of offers that make shopping online exciting, people will begin to switch to the online space. For example, we are talking to some big brands to say that the future is online and how can we accelerate this together. In the old system, they use a distributor and the distributor uses a key distributor and sub distributor before it gets to the consumer. That is a long chain. But the question is, can the brand associate with us and once you use our online platform, we give you a special price because it cuts out all the intermediaries, and still make sure that the customer gets what they want very quickly? This market is going to evolve to its logical conclusion, but it will take a little more time and we are prepared for it.
What is your vision for Market Express in the next three years?
In the next three years, we want Market Express to go across borders and not just be a Ghanaian ecommerce company. We have four countries that we are targeting aggressively. These four countries will set the stage for us to begin to venture across Africa. The second thing is that we want to make shopping online a no-brainer. If you order an item online and it will be delivered to you in the next 90 minutes, why would you want to drive through traffic to go get the same thing? The goal is to make it such that online is so convenient that it makes no sense for you to want to drive, look for parking, go into the shop, find the thing, and join a checkout queue. That is what will make people begin to see that ecommerce is essential. There are two types of buyers, one who does not bother, but a thing comes every time and is the same and it is accurate, and the other person who wants to touch and feel the product. After a while, you get tired of touching and feeling and you just want it to be delivered to you. We really want to change the game and make it possible that deliveries are done within a maximum of 90 minutes across every city within a 20 km radius. Currently, 24 hours is our minimum and the reason is very simple. For the kinds of things we sell, people do not have time to wait. If somebody bought a pack of razors, they ordered it because their beard is growing out and they want to deal with it now. So, the next day is enough, but beyond that, it is too much. Currently, we do a maximum direct delivery of 24 hours, but we really want to bring it down. Hopefully by the end of next year, we will bring it down to a five or six hour timeframe. From there, we want to get down to our 90 minute goal. We want to equate it to a football match. When your wife tells you to go and buy something and you say let me finish this match, we are able to deliver before the match is over. It will be an achievement for us.
What are some of your success stories?
We won the New Independent Ecommerce Company Award in 2018 from the Ghana Ecommerce Awards. It was exciting because we are not backed by large companies or institutions. It is recognition that we are doing something significant. The most exciting thing at Market Express to date is what we did during COVID-19. For example, we had churches that depended on us to deliver food to their vulnerable church members. It was exciting that within the same day, we had delivered food to these people that the churches were concerned about and it was exciting that we could deliver these family goods to people who really were desperately in need. Just the surprise that this works in Ghana was so exciting. We even had ecommerce companies calling us to say they were taking orders and could we deliver them for them. These were companies that were probably 10 times bigger than us. The exciting thing is that we believe that our model works and it took us time to develop it. We stuck with it, we did not switch to what everybody else was doing, which was electronics, but we stayed and we believed in it. When everything comes to the tipping point, you realize that it is survival things that are important, the things we need every day are important, not necessarily the big ticket items that definitely make you a better margin in sales. For me, it is not money that drives us. We are learning to be more customer centric. The highlight of all we have done is that in the most critical of times, we were an organization that people could count on. That is really what makes me happy.
What are some of your current projects?
Presently, we are working on a very, very big project. During the lockdown, we realized that there were many small shops that could not sell. They do not have the ability to run a technology business. A lot of ecommerce companies focus more on the more established shops to basically sell for them online. But in our present project, we are trying to help people in the market who usually have a small shop with a very limited SKU (Stock Keeping Unit) to begin to help them sell online, not necessarily build an online store, but we are being their online store. We are giving them another channel to sell besides selling in the market, because the market is so competitive and so crowded, that depending on where you are positioned in the market, you would either have sales or not. That contributes to the chaos in the market. People want to be seen so they are moving around, they are getting out of their stalls, they are putting their things in the walkway because they are scrambling for customers. What we are trying to do with this current project is to put 2,000 small shops online, and we are sending people to them to take their inventory, take their pricing, and connect them to the market. Basically, we pick the products, we deliver for them, and we help them generate additional revenue. Now, most of these people in the market are women and it is interesting to see the kind of responsibility they have towards their families. It is a project that definitely will help us expand our variety, but also, the ultimate benefit goes to the second channel of these people that would otherwise be left out to have the opportunity to sell online. It is more complex than we think, actually. Once we put their data together, we should be able to help them access financing from the banks and create a track record of how much they have sold through us. If not, the banks will never lend to them to grow their businesses. We really want one of these development agencies to help us to do that by helping us get small grants to be able to build a good platform to allow these people to access these things on their mobile phones. We are fully committed to it.
What is your background that has led you to this path of helping to develop the country in this way?
My first bank job was in Opportunity International. I worked as a loan officer for micro businesses. I helped a group of women look at their business, create a cash flow of some sort, a P&L (profit and loss) statement, and examine their business, lend them maybe $1,000 over six months, and we would coach them to build and grow a business. That was the first thing I did out of university. Then, I went into SME banking. In SME banking, we look at small businesses that typically the banks will not serve. I did that for three years. Then, I moved to commercial banking and then I worked in corporate banking for four years. In banking, I have worked everywhere from micro to SME to corporate banking. Up until now, a lot of the banks did not have the structures to assess small businesses, even though the small businesses have potential. So, every time I choose a sector, I ask, how do you do it such that it affects society? How do you do it such that it makes sense to people? How do you do it such that the impact is exponential? People see us as an ecommerce company. We want to make money. But we think more about how we can build an economy. If you have a business that comes and kills everybody, and you make some money, it makes no sense. For us, it is more about how we build an economy that even though things are changing, it carries people along. That is my motivation.
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