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Ecommerce Growth In Africa – Includes Examples Of African Ecommerce Sites
Despite the challenges that Africa (the second most heavily populated and second largest continent) has faced over the years, its growth in ecommerce is overly breathtaking. According to the CEO of payment Gateway PayU, Mark Chirnside each and every year the growth rate of ecommerce in Africa is at 30% and according to several other studies it is likely to even rise all the way to 40% in the next ten years. The number one factor leading to this outstanding growth in ecommerce is the rapid increase in use of cell phones, it is amazing how only 63% of Africa’s population can easily reach piped water but an alarming percentage of 93 own cell phones. These figures clearly explain why ecommerce is growing at such a fast rate on the continent of Africa. Democratic republic of Congo, Cote d’Ivoire, South Africa, Nigeria and Kenya are some of the countries with the most developing ecommerce economies. There are several investors in the ecommerce in Africa and some of these include Africa internet group which is the largest, Naspers, One Media Africa, Ringier and Casino which mostly common in Cameroon and Cote D’Ivoire among many others. In this post we are going to highlight lots of issues about ecommerce growth in Africa including some of the biggest African ecommerce sites, challenges still facing this development and so much more…….
REASONS FOR THE RAPID ECOMMERCE GROWTH IN AFRICA
The rapid increase in ecommerce growth in Africa can be attributed to so many different factors, but remember the sector is still growing therefore if ecommerce companies want to develop even more than they already are, these are some of these factors that they must pay attention to.
- Urbanization; urbanization is defined as the raise in population in towns and cities as compared to rural areas. Every other year urban growth increases by about 3.4% in Africa and according to different individuals during the understanding risk and finance conference it was speculated that the percentage of urbanization will have increased to as far as 60% (1.2 billion people) by 2050. Compared to all other continents, Africa stands out as the fastest urbanizing continent and the increase in urbanization also brings about raise in expenditure by individuals due to the improved and high standards of living in town areas. An increase in the population in cities and towns definitely means an increase in the number of people that can purchase goods and services through the internet. This increase in demand in turn causes an increase in the number of people operating online business companies so as to meet the high raise in demand.
- Large population; Africa has the second biggest population and any skilled business personnel can clearly see that it would a good place to invest. There is also no hope of this population reducing because all studies and research have discovered that Africa’s population is going to continue increasing over the years, it is predicted to reach around 2.5billion people in the years to come. Therefore with the expected population combined with the rise in urbanization, there will be a great increase in demand of products and services especially those purchased through the internet. This gives retailers and large investors guarantee that Africa will continue to be a great place for investment.
- High access to mobile devices; the rate at which Africans have adapted to using mobile devices such as mobile phones and tabs is absolutely amazing, this has caught the entire world by surprise. It is now called a mobile-web and mobile only continent because the percentage at which people use mobile phones is even much higher than the percentage of people that can access piped water, that is how alarming it is. From this increase in people who use mobile phones, mobile networks are also on the increase thus improving data and communication all through the continent. Better data connection has attracted people with smart phones to using the internet much more frequently and also increasing their interest in buying products and services online and hence the ecommerce growth in Africa.
- Deficiency of retail outlets; the explosion in urban populations means there are more people accessing the African market unfortunately in the towns and cities not many people deal in retail businesses and this has drawn buyers to looking for products on the internet where they can access lots and lots of retail sellers. The few available retail shops are quite distant it takes extra costs of transport, going through the poor infrastructure and wastage of time to get to them which is a whole long and expensive yet on the internet one would only take a few minutes to order for any product that they want. Predictions done by the McKinsey and company reported that there would be an increase of 40% ecommerce growth annually, $75billion raise from ecommerce revenue and 10% from retail sales by the year 2025.
- Increase in young age online shoppers; when it comes purchasing through the internet, studies show that the biggest number of people who shop online are the younger generation which provides long term guarantee of ecommerce growth. With so many young people participating in online shopping this is clear evidence that ecommerce is continuously growing and will continue to grow even with years to come. It was predicted that in 2035 the people working at the age of 15years will have increased to 100 million people.
- Shift to global brands; as people spend more they are more attracted to classier products and branded products rather than those products that are not branded. Lately people are attracted more by premium brands which are easier to find on the internet since they are considered more durable and elegant. On the other hand the population of people buying the unbranded products like household items and food staffs among others has really reduced giving way for ecommerce to prosper in the African continent.
AFRICAN ECOMMERCE SITES
After understanding the reasons as to why ecommerce has been able to gain such great success in Africa it is only logical to look at some examples of ecommerce sites that have been able to penetrate through to the market and which products they deal in;
This site belongs to UK2ME logistics a retailer based in Nigeria and it delivers products that are competitively priced to consumers. They deal in a wide range of products that they get from the UK and US including home décor, fashion products such as clothes and shoes and electronics and so on and so forth. For consumers in Lagos, the site delivers the purchased product just the next day and between 2-4 working days to deliver to the cities and towns away from Lagos. The most interesting thing about this site is that when goods are damaged or lost during the transfer process it offers full money back guarantee. It leaves a section on the site for frequently asked question for consumers to know more about a product before paying for it for them to be more satisfied.
Bidorbuy.co.za is the biggest African ecommerce site and it was started way back in 1999 and it has stood the taste of time for up to 18years now. The main reason as to why it has been able to stand the competition for such a long period of time is because it offers a very wide variety of products to meet needs of all kinds of customers especially those that live stylish lifestyles. This site provides images of products and even some details about the products it offers together with links for the newest products plus special offers. This site gains revenue getting commission of between 1 and 5% from each successful sale that the seller of that particular product makes. In a month this site makes over one million product sales from over 1.4million visitors.
The name associates a lot with African languages and this has helped get some attention by customers however its main trademark are the products that it offers consumers including home ware, appliances and luggage among others. This is a south African based site but it is not yet as competitive as the first two sites we looked at therefore south Africa still has a big job to do to attract more consumers to online buying and selling of goods.
And for anyone who is searching to have the perfect cooking session, yuppiechef.co.za is the perfect site to look from as it offers the best cooking equipment. This site deals in kitchen ware, tools and appliances that are used in the kitchen. It is based in Cape Town, South Africa and was launched in 2012. This site has caught consumer’s attention due to the fact that it delivers products at no cost for people in South Africa. While buying from this site, consumers are given four categories to choose from and these include, brand, price, most popular product and newest products which makes shopping easier.
This is another Nigerian based site dealing in selling so many different products through the internet and its major emphasis is to offer consumers a shopping experience that is completely stress free and very quick. It also offers very many different shopping categories so it mainly stands out because of its versatility. It is able to satisfy all customers needs yet at the same ensures very easy and secure payments through online banking or cash on delivery. This site allows buyers access to products 24hours a day and takes about 1-5 days to deliver the products depending on the customer’s location. Most of the buyers who buy through jumia.com.ng come from Kenya, morocco and Egypt.
This one is common for its dedication to selling handcrafted products but it doesn’t stop at that it also offers other products like books, music, san crafts and basketry. They display product images in order to make customers get the real feel of what they are buying and make straightforward purchases. It takes about two weeks to deliver the products. It was started in 1983 though it was privately owned and is meant to indirectly sell products for rural craft makes all through Botswana.
The Kenya based site is managed and owned by Kenya interactive online shopping kiosk limited. It focuses on lifestyle mainly and it was established in 2005.
I cannot exhaust all the African ecommerce sites because they are lots and lots of them but the few that I have included here are some of the biggest and most successful sites that prove the growth of ecommerce in Africa.
CHALLENGES OF ECOMMERCE GROWTH IN AFRICA
Ecommerce growth in Africa has come along with some challenges and below are some of them:
- Poor service delivery; delivery of products and services by online companies is still one of the challenges facing ecommerce growth and this is due to the poor infrastructure in most African countries. Online retailers need to improve on their delivery services in order to please consumers.
- Lacking return policies; consumers are overly complaining about the return policies of these online companies for example when there is damage of a product before it is delivered sometimes it is not accepted on return. African online sellers still need to create strict return policies and comply with them.
- High illiteracy rates; Africa is still facing high cases of illiteracy and this is making the growth o ecommerce lag behind because buying products online requires a consumer with some literacy or else they will not know what to do. There is high need to educate people and reduce on the number of people who are ignorant about online shopping.
- High distrust among consumers; some consumers are still not convinced with the way online purchasing works and there are so many hackers on the internet that can easily access consumer’s information and use it wrongly. Some companies are using cash on delivery to solve this problem however this has turned out into another problem because some consumers are thieves and refuse to pay after receiving the product.