The listing of online marketplace JUMIA on the New York Stock Exchange (NYSE) stirred a debate mainly hinged on its level of "Africaness" for it to qualify for the grand reception that it has received and it perceived benefit to the larger African technology ecosystem. A debate with opinions as varied as the pundits who engage, I would rather dissect it differently and look at the era in which we are now entering where pure software plays are no longer sufficient to disrupt or add value to industries.
Back in 2011, well known American entrepreneur, investor, and software engineer, Marc Andreessen wrote an essay titled "Why software is eating up the world". The article was apt for its time and in the examples shared about the transformational nature of connectivity and having billions of people getting online.
In the case of JUMIA, Konga and other marketplace platforms, I have read conversations where the uninformed question the need to raise what is considered, at a cursory glance, obscene amounts of capital for mere websites that can be supposedly be spun off by a single developer in their bedroom.
What I feel is not highlighted enough in these discussions is that frontend simplicity of any digitally service is often driven by a complex backend and for truly transformative ones, coupled with offline brick and mortar interventions that help control more factors of production to deliver magical user experiences.
If you were to start an online accounting service for small and medium sized companies, you could pull that off with a small team, make use of digital advertising tools to acquire customers and grow the business to a good steady monthly recurring revenue state. Same for online classifieds, online job boards and a host of other software led, software only opportunities.
On the other hand if you are pursuing any opportunity that has the movement of people or things as part of the fulfilment cycle, the dynamics change drastically if you look under the hood.
E-commerce is more complicated than you think
The consumers understanding of Amazon for example, from their experience online is far removed from the controlled chaos of its back office. Alibaba investing (2017) in loss making logistics outfit Cainiao and committing to pump in close to $15 billion to improve the network, speaks into the fact that technology as end consumers interact with, is but a sliver of a large complicated, often misunderstood and walled ecosystem.
Sometimes, deep pockets are needed to power through long-term opportunities; providing runway and capital for physical infrastructure and "plumbing" before technology can stitch it all together.
Cover image credit: JUMIA Share this article via: