African e-commerce is on track to double in size every 5 years, if …
E-commerce generated revenue of $ 16.5 billion in 2017 on the African continent, according to a report by research firm Statista. She says that within five years, the business should reach a turnover of $ 29 billion. And even 75 billion dollars by 2025, according to McKinsey … However, for these beautiful growth forecasts to be realized, some obstacles must be removed.
From your mobile, tablet or PC in the bus, at the office or at home, buying goods and services with a simple click gradually enters the habits of consumers in Africa. With the improvement of Internet connectivity, many e-commerce platforms have sprung up across the continent. Today, the market is disputed by various companies including Jumia, Konga, Zando or Mall for Africa.
In its 2017 report, “Afri-Shopping: Exploring the African E-commerce Start-up Ecosystem,” the research firm Disrupt Africa counted 264 companies engaged in e-commerce activities in 23 African markets, in various sub-sectors such as as food, capital goods, clothing, taxi services and travel. The report presented Kenya, Nigeria and South Africa as the main poles of activity on the continent.
According to a report by research firm Statista, e-commerce in Africa generated revenues of US $ 16.5 billion in 2017. By 2022, revenue generated by the sector is expected to reach US $ 29 billion. For McKinsey, in its study entitled “Lions Go Digital: The Internet’s Transformative Potential in Africa”, e-commerce, which holds great promise, could capture 10% of retail sales in Africa’s largest economies by 2025 In financial terms, this translates into nearly $ 75 billion in annual online sales.
E-commerce is very promising and could capture 10% of retail sales in Africa’s largest economies by 2025. In financial terms, this translates into nearly $ 75 billion in annual online sales.
It is these thriving prospects, signs of great business opportunities, that justify the great interest that Alibaba Group has been showing in Africa for several months. The Chinese company specializing in e-commerce prospects across the continent for the installation of its African branch.
On the eve of the opening of the Beijing summit on Sino-African cooperation, held from 03 to 04 September 2018, Song Juntao, Alibaba’s Electronic World Trade Platform (eWTP) project manager, justified the development of the group’s activities on the continent by the search for mutual benefits. He emphasized that the group sees its development through the formation of innovative talents in the digital economy, support for African companies in promoting their products in the international market and sharing of inclusive technologies with small businesses and youth.
However, all these good growth prospects in e-commerce in Africa may not materialize if some obstacles are not removed. According to Disrupt Africa, less than 30% of e-commerce companies are now profitable in Africa.
According to Disrupt Africa, less than 30% of e-commerce companies are now profitable in Africa.
If the research firm points out the lack of funding, it must be said that those who have still been able to get into the market still face various problems, beyond the access to the Internet. improves over the years.
The low rate of banking
In Africa, the majority of e-commerce platforms still require the use of bank cards or electronic solutions such as Paypal to make a payment. On a continent where the rate of banking is still below 10% and financial inclusion, excluding mobile, is very low, this situation restricts the volume of consumers who can buy online. Conscious of this reality, which has negatively influenced the activities of the pioneers, the new promoters of online sales platforms have decided to take the problem from another angle by integrating Mobile Money into their means of settlement.
This idea, Marc Wabi, managing partner of the office Deloitte Côte d’Ivoire considered it more adapted. In 2015, at the 11th edition of the Africa Telecom People International ICT Fair, held in Abidjan, one of the most important topics was e-commerce in Africa, he argued that “there are adaptations to to do with sociological, technical and technological questions. The main problem is the method of payment (…) The reflections must be moving towards mobile payment. With a phone, you can find a person. Without mobile payment, I do not see how African e-commerce will develop. ” In Africa, mobile payment is much more developed than the bank.
“The reflections must be moving towards mobile payment. With a phone, you can find a person. Without mobile payment, I do not see how African e-commerce will develop. ”
The service, which reaches even the smallest stock exchanges, accounted for 338.4 million accounts for 1.2 billion financial transactions in 2017, according to the World Association of Telephone Operators (GSMA). The value of these transactions was US $ 19.9 billion. By 2022, these figures should double or even triple with the improvement of the mobile market, very dynamic on the continent.
To the payment dematerialized, some e-commerce sites, faced with the lack of confidence of the consumers, also opted for cash payment on delivery (Cash Delivery). But beyond the payment method for an online purchase, the e-commerce platforms in Africa suffer mainly from the low level of physical addressing of many African cities.
The absence of physical addressing
In Africa, public street addressing in many cities becomes more approximate as one moves away from the city center. In these conditions, e-commerce companies are struggling to efficiently deliver orders from customers who give a benchmark that delivery drivers do not always know. Delivery costs are also inflated by long trips to find the exact place of delivery, and the cost of telephone to contact the customer once arrived at their destination.
Faced with the difficulty encountered in the deliveries – because of a lack of address of domicile – some Posts decided to take advantage of the business opportunity which the e-commerce raises in the routing of parcels bought on line have adopted a solution as practical as the GPS. This is the case of the Nigerian Post Office (NIPOST) which innovated with the global addressing system what3words. This addressing technology divides the world into 57,000 billion 3m x 3m squares and gives everyone a unique 3 word address. In 2017, Nigeria was already the seventh country in the world (Mongolia, Saint Martin, Ivory Coast, Djibouti, Tonga and Solomon Islands) and the third in Africa to adopt this solution.
This addressing technology divides the world into 57,000 billion 3m x 3m squares and gives everyone a unique 3 word address.
Happy with this advancement made possible by technology, Bisi Adegbuyi, Nipost’s Managing Director, explained that “better addressing is essential in NIPOST’s strategy of transforming, innovating and delivering more services at the same time. many across the country. ”
Secure the market
Electronic commerce also involves personal data. You must provide your bank details when you pay by card. The merchant is also aware of the identity of the customers during transactions by Mobile Money. In addition, in case of delivery, consumers reveal information about their place of residence. In Africa, where the protection of personal data still leaves much to be desired, e-commerce is struggling to win the trust of consumers who fear the fate that will be reserved for their personal data. Several countries have adopted e-commerce laws, but their strict application is not always effective. In addition to the fear of the management of private data, there is the fear of being cheated on the goods and of having no recourse option to assert his rights.
At the African Union’s e-commerce conference, held in Nairobi, Kenya, from 23 to 25 July 2018, UNCTAD called on African states to develop regulations that will stimulate growth in this market segment . According to Secretary-General Mukhisa Kituyi, “Africa needs to develop laws that enhance the integrity of e-commerce purchases so that consumers can trust e-commerce platforms.” He stressed that the continent’s authorities must have adequate regulation to protect consumers who order goods electronically. For him, Africa must have rules that would ensure the obligation for e-commerce companies to deliver the goods paid for by consumers, as they promised. He added that states should also put in place an online dispute resolution mechanism so that contracts can be honored by all parties involved, including cross-border cases.
Despite the number of obstacles still facing the e-commerce segment in Africa, it must be stressed that it also has economic opportunities for countries and their youth.
E-commerce, its primary function is to make life easier for consumers when they do their shopping or window shopping. Thanks to ICTs, no need to move. A boon for consumers. But also for African small and medium-sized enterprises, artisans and other professionals. E-commerce gives them an opportunity to make their products known to a greater number of people locally and even internationally. This is an opportunity to promote and export its know-how, to expand its market.
In 2013, Arancha González, Executive Director of the International Trade Center (ITC), in a working session on e-commerce development for trade development in the African, Caribbean and Pacific States. had stated that “e-commerce is a huge tool for the accelerated development of SMEs. Beyond local markets, national markets and even regional markets, it places an SME in the global market “. With e-commerce, Africa would no longer be limited in international trade to its raw materials and cash crops. Several sectors with high potential, such as clothing, catering, furniture or cultural production, could take advantage of this window to the world to seduce and generate millions of jobs for African youth.