Amazon Prime Air image prime air 2

I first came across Jumia when I was in Nigeria this summer following conversations with a fellow HBS student who was interning at Jumia. He was there to review their Nigeria operations and then go help the company launch in Kenya.  Jumia wants to be the Amazon of Africa, and it is no surprise that majority of the founders are former Amazonians, who started the company in Nigeria in 2012 with funding from Rocket Internet.  Today Jumia has warehouses in 10 African countries.

The Jumia founders have seen the potential of e-commerce in Africa. With a population of just over 1 billion opportunities in this space are endless.  According to a report by Frost & Sullivan, e-commerce is expected to be worth US$50 billion by 2018 compared to US$8 billion in 2013 in Africa. However, like its inspiration Amazon, Jumia operates at substantial losses and due to substantial infrastructure challenges in Africa, lack of cashless payment systems, low levels of internet penetration and the endemic lack of an actual addressing system in many areas where majority of the population live. Jumia’s staff complement far exceeds that of Amazon in order to make up for the various inefficiencies in the African market.  The Managing Director of Jumia in Cote d’Ivoire, Francis Dufay, purports that only improvements in Africa’s infrastructures like roads will enable Jumia and others be able to meet the ever growing demand of e-commerce sector on the continent.  I actually disagree and I believe that African entrepreneurs need to think creatively about addressing their perceived infrastructure challenges.

For example, how many years did Africans lament the inability of their governments to provide reliable telephone lines and service?  We saw all those complaints nullified with the penetration of the mobile phone, and this revolutionized communication and even facilitated transactions with mobile money in Africa.  I believe the octocopters or drones, which will be launched in the next couple of years will revolutionize e-commerce and delivery systems in Africa.  Amazon is taking the lead in fine-tuning these new drones and once all technical and regulatory barriers are overcome these drones will revolutionize delivery services in the US by making delivery of small packages faster.  A Washington Post report, estimates the sales of drones will be worth US$11 billion in the next decade, but this also includes personal drones. These drones can cost as little at $499 and as much as $6,000. But in Africa, this means that the need for good roads and addressing systems will be circumvented and we will no longer need to wait for government to come mark where I live and tar our roads to make it easier to get my delivery.  If I have a cellphone everything will be done using it.

I imagine a world where I can order a product on my phone and then an e-commerce company can take my order, I pay using my mobile and then when I am ready for delivery I let the company know and the drone is loaded with my package, gets my GPS and takes off and goes to the coordinates where I am located. Then once my package is dropped outside my door, the drone sends notification to my phone and then I come out and pick it up.

Some naysayers worry that is technology will never get off the ground and that it will not work. But in the world there are always naysayers, think of those who laughed at the Wright Brothers when they were adamant to invent a flying vehicle that would be able to carry us across oceans in the air? Every great technology has its fair share of critics. Some of them argue that the technology will not be approved by the FAA in the US because of high crash rates and poor maneuvering.  I have no doubt that the technology will continue to improve and be more superior and address these concerns and others.  Some also argue that the technology will be subject to high-jacking and theft.  I ask myself what makes a delivery guy immune to those? Nothing and in fact it is better a machine is high-jacked than an actual human being.  But what these cynics fail to think of is that the technology can be fitted to the drones to track their movements and even little hidden security cameras.  In fact, one final argument is that people will game the system and pretend they did not get the package.  I have heard of instances where people game the system today with our current postal services.  And so these hidden security cameras can also be installed in the drone to take a picture of who picks up the package before they fly off back to base.

I strongly believe in the future of e-commerce in Africa, but it will not happen with the current inadequate infrastructure we have.  Yes we must continue to work on improving the infrastructure but this may take years, time we do not have. Revolutionary thinking and adoption of out of the box technologies can change the way Africa develops and even leapfrog us into new businesses and industries beyond even our wildest imaginations.

By: Laone Bukamu Hulela

read more

FAA regulations haven’t adapted to the new world of drones and UAVs For example, UAVs technically violate a FAA regulation requiring aircraft to carry users manuals on board in case of an anomaly. Roger……anyone there? Oh wait, UAVs are unmanned vehicles so there’s no one on board to actually use those manuals.

Many fragmented drone companies have emerged recently: AirWare, CyPhy Works, Amazon’s Drone Delivery Service, just to name a few. The FAA allows civilians to operate drones for fun, similar to playing with a toy airplane, as long as they stay under 400 ft (so it doesn’t interfere with national airspace). However, the FAA has a less accepting view of commercial drones. In 2011, Raphael Pirker received a cease and desist notice after flying a drone over the UVA campus in 2011 while filming a video ad for the medical school.

For large companies with strong lobbyists, the FAA regulations are easily circumvented. According to Forbes, in June, Amazon filed a exemption to obtain expedited authorization authority under the FAA Modernization and Reform Act of 2012 for conducting research and development of unmanned craft in U.S. airspace. Also, in September 2014, the FAA permitted six Hollywood production companies to use drones in the filming of movies.

In contrast, in a talk at MIT’s AeroAstro Centennial Symposium, Helen Grainer of CyPhy Works admitted that none of these small drone startups have the FAA clearance to fly their drones commercially. However, she states that the only way for a startup, with limited resources, to fight for regulation change is to launch their products anyways. For example, the government usually is not likely to get involved if a farmer wants to fly a drone over his private property to manage his crops. At such small scale and with many fragmented drone companies, it’s not the most efficient use of the FAA’s limited resources to go after all these small players. In time, these startups will gather critical mass and be able to ask for exemptions collectively.

The crucial point is the FAA’s laws need to be designed to maximize technological innovations and encourage equal competition between large players and startups. Drones are still a young technology, so the more companies inventing in this space, the better. The FAA needs to be careful that the exemption approval process doesn’t favor the large incumbent companies, as small start-ups tend to develop the most cutting edge technologies.

In time, you can imagine a world where regulations come to the spotlight. For example, who is responsible if someone flies a drone to spy on his/her’s neighbor’s house? However, this is a young technology that stills needs to iterate many times before it can go mainstream. Hopefully by then, these regulations will be written to not stifle technological innovation, but rather, to protect humans from abusing a perfectly innocent technology.

read more