Although we are still in the early days of the eCommerce boom in Africa, some startups in this space are already showing a lot of promise. The fast pace at which eCommerce is growing across the continent makes it an unstoppable wave in the evolution of retail and how Africans generally shop.
As the internet spreads across Africa, the culture of buying goods and services online is spreading with it. Although the concept of eCommerce and online shopping is relatively new to Africa, more people on the continent are adopting it, especially because of the convenience and price advantages it provides.
According to market research firm yStats.com, an annual growth rate of about 40 percent is forecasted for the African eCommerce industry. In its Africa B2C E-Commerce Report – 2013,‘ yStats.com found a number of countries where strong online sales have already emerged, including South Africa, Nigeria, Egypt and Morocco.
Well, we love the big numbers, so here is another one: According to a 2013 report published by McKinsey37, the global consulting company, the eCommerce market in Africa will grow to a staggering $75 billion by 2025. And right now it‘s in its infancy … so jump in!
Where in Africa is the best place, you ask? That‘s a good question. A recent report by MasterCard following its 2014 Online Shopping Behavior Study, conducted between September 2013 and January 2014, revealed: Mobile shopping is gaining traction in Africa, with 56 percent of respondents in Kenya and Nigeria stating they had shopped or intended to shop online via their mobile phones. This was followed by 55 percent of Egyptian consumers, 33 percent of South African shoppers and 25 percent of Moroccans.
Many of the online marketplaces that currently operate on the continent offer a wide range of products; some of those most in demand are food items, gadgets and devices (such as mobile phones), household appliances, and so on.
Some of the successful online marketplaces in Africa include:
Konga and Jumia, two of Nigeria‘s most successful ecommerce giants. To date, these two companies have raised $63.5 million and $61 million respectively from global investors. Offering a wide range of fast-moving consumer products, these marketplaces operate out of the busy city of Lagos and deliver orders to customers across a wide region of the country.
BidorBuy. Launched in 1999, bidorbuy.co.za is marketed as Africa‘s largest online marketplace. The emphasis is on providing a variety of products in numerous categories that cover all aspects of the modern lifestyle.
There are many business concepts you can develop for an online business. The most popular in Africa so far seem to be online shopping of electronics, clothes, household goods, and baby care, followed by car auction sites. But this doesn‘t mean you have to follow that young trend; you can be a pioneer for a new trend, the scope and space is there!
Promotional vouchers and offers by restaurants, shops, and photographers – such as Groupon
Organic skin care products for babies, children, and adults
Top Countries & Policy Guidance
Although eCommerce is taking off fast it has simply not yet started in many countries. So at this point it would work best in Kenya, Nigeria, South Africa, Morocco, and Egypt. But it may not take long for other countries to follow, so if you are brave and in it for the long-haul you can pioneer eCommerce in other dynamic African growth countries where they have yet to wake up to it.
It may be a little risky starting ahead of time and you should really only undertake it if you can sense the interest and trend already, in which case you will be well ahead of the competition.
Action & Tips
Many articles have been written about the journey of the most successful eCommerce and online shopping sites in Africa; after all, there‘s not too many of them as yet! A good start would be to study these articles and learn from the lessons and approaches that the founders of these companies have shared with the media.
Think of the many really successful international eCommerce sites and browse through them. Can you translate some of what you see into an African context and build your very own version?
You need to have online or mobile payment options present in those countries – and many countries simply do not have these systems available yet. But a lot is happening in this regard and it will change soon! MasterCard is one of the leading credit cards in Africa following their Africa expansion. At the time of writing this book (summer 2014) MasterCard operates in 48 out of 54 African countries. So make sure your online business is compatible with MasterCard, among other payment systems.
Success Stories Tunde Kehinde – Jumia (Nigeria)
Kehinde, a 30-year-old Harvard MBA graduate, founded Kasuwa, a Nigerian online retailer in 2012 from scratch. Within days of its founding, Kasuwa received seed funding from a German online startup incubator and the company‟s name was changed to Jumia. It has already a multi-million dollar turnover and has become Nigeria‟s largest online retailer. A major challenge for the company was the logistics of running a growing company and transporting the goods to the customers. For reasons that are not entirely clear, Tunde Kehinde recently stepped down as CEO of Jumia Nigeria. He resigned in January 2014 to start a logistics company.
Elias Schulze – Kaymu Africa (Kenya)
One of the latest online shopping sites is Kaymu Africa at kaymu.com, which was launched in September 2014. The success of the site has yet to be determined, but the approach is new, as its founder and CEO Elias Schulze combined products of already existing online shopping platforms all over Africa. Have a look and be inspired!