A Difficult Business Model

Grocery delivery services in Africa face a unique challenge: they can attract thousands of customers, process millions in transactions, and still fail. GoLemon, a Lagos-based startup founded by former Paystack executives, learned this firsthand when it shut down after 28 months despite building a recognizable brand and partnerships.

The company’s experience isn’t isolated. Jumia abandoned grocery delivery as part of its restructuring, while Glovo exited Ghana for similar reasons. MarketForce in Kenya and Copia Global also struggled to secure funding and scale their operations.

The Core Challenge

While demand for online groceries exists across the continent, the real issue is operational efficiency. Customers expect supermarket prices, a wide selection, and fast delivery—all of which increase fulfillment costs:

• Sourcing products from multiple suppliers
• Managing inventory and preventing spoilage
• Coordinating riders through congested city streets
• Handling returns and substitutions

Traditional supermarkets leverage customers to perform many of these tasks themselves. Online companies must pay employees to handle every step, adding significant overhead.

The Economics Don’t Add Up

A McKinsey study found that fulfilling a typical $100 online grocery order can add:

• $8 for manual picking and related expenses
• Another $8 for last-mile delivery

This creates narrow margins in an industry already known for them. Companies cannot simply raise prices to cover these costs because customers are price-conscious, especially on essential items like food.

The Path Forward

Despite the challenges, some companies are finding success through:

• PricePally’s bulk purchasing model in Nigeria
• Chowdeck’s expansion from restaurant to grocery delivery
• Checkers Sixty60’s strong performance in South Africa
• Breadfast securing $50 million for its Egyptian platform

The key takeaway is that online grocery businesses require operational excellence, efficient logistics, and a clear path to profitability—not just customer acquisition.