African e-commerce trends

March 16, 2017

A research describing how widely e-Commerce is used in Africa, the primary sectors that sell through e-commerce, and how much product and service in each sector is sold through e-commerce versus brick and mortar retail is painting a very bright future.According to it, the amount spent online in Africa is only going one way and thats up. I will try to dissect whether African business  are best placed to take advantage of the e-commerce revolution as well as examine trends shaping African e-commerce.Although the African e-commerce industry has been thriving, there is plenty of room for further growth, as it still only accounts for less than 3% of the total African retail sales.In order to capitalise on this opportunity, issues with inadequate infrastructure, poor payment systems, and logistics have to be addressed. For instance, although the number of credit card users jumped 39% in the past three years, 95% of e-commerce payments are completed with bank transfers and only 5% with credit cards.And also, delivery is too slow and expensive due to challenging geography paired with poor infrastructure, and absence of high-tech logistics companies. This represents valuable opportunities for e-commerce technology, applications, and other supporting products and services. The retail industry has undergone huge change since the advent of e-commerce. The latest preliminary data in my possession show income derived from internet sales in 2016 was above $9.7 billion in sub saharan Africa.More people are choosing to go online to buy anything ranging from perfume to personal training sessions, and many African bricks-and-mortar retailers now have an online presence to capture a piece of the rapidly growing e-commerce industry.One of the trend is that e-commerce has winners and losers.I personally believes the most successful African online retailers are either selling huge numbers of commoditised goods, or selling niche products that are rare and valuable but not necessarily scalable.

The most successful e-commerce industries in Africa are products like homewares and appliances, fashion, department and variety stores, and media comprising of CDs, books and DVDs. There has been an increase in online grocery sales in Africa, but it has been slow to take off. In my view, is that there is a need of knowing where your food comes from and knowing how far it’s travelled to get to buyer. I don’t think people are necessarily interested in buying foods online and I think the trend is more people preferring locally in a polythene paper bag rather than from miles away in a can or carton box. In South Africa, Zimbabwe, Nigeria, Ghana and Egypt, the issue of brand trust outweighs price.Consumers in this countries are attracted to e-commerce due to its convenience and variety. While price is an important factor, research shows that trust in a brand by far outweigh the attraction of lower prices.It is the same trend in countries like Uganda and Kenya, two countries that share almost every cultural aspect than any other two African countries where it’s more about what is the online business’s brand worth.E-commerce service providers in this countries need to ask whether their brand is strong enough to engender trust and enable a customer to go through with a purchase, or whether they are simply used as a price comparison point. It’s a challenge for businesses in Uganda and Kenya and I think businesses are looking for ways to augment trust. Just a few years ago, it was once enough for businesses to display secure sockets layer certificate on their e-commerce sites to demonstrate to consumers they could be trusted with their card details but Africans are more enlightened than ever and go beyond seeking answers beyond security and want to know who the sellers is, their background and whether they are going to deliver it, and if something goes wrong, what they are going to do about it. Another trend that I have well documented, is the personalised shopping experiences and products. African shoppers are hooked to, just like bricks-and-mortar businesses, online retailers that adopt an innovative approach are likely to attract the attention of shoppers.

Sites that provide a personalised experience is a trend shaping the African e-commerce market. With plentiful data available about customers’ likes and behaviour,African retailers can now show a depth of care and understanding by personalising every message and curating content to suit each customer’s needs. It’s similar to providing shoppers with a personal shopping assistant every time they visit a retailer website.Also, another way of personalising the e-commerce shopping experience that has taken shape in Africa is where retailers are allowing shoppers to express their individuality and customise their own purchases.This is a trend that has been adopted by both established retailers in countries like Nigeria and South Africa, as well as emerging retailers in countries like Uganda, Ghana and Zambia. This African e-commerce business allows its customers to digitally design their own pair of undies, shirts or even ladies shoes by selecting style, shape, heel height, materials and colours. I must say pink and red are more regularly bought compared to black or white shoes.In Kenya, Tanzania and Nigeria mobile e-commerce is the sexiest e-commerce trend.Thanks to mobile technology, Africans can now shop anywhere, any time.Research shows that mobile transaction volume and value will increase by an average of 40 per cent each year between 2016 and 2020 in the three countries. It also estimates the mobile e-commerce market to be worth $40 billion, with more than 50 million users by 2020. A lot of thought is going into mobile payments in Kenya at the moment, whether that means being mobile while you make a payment or using your mobile to make a payment. In Kenya, if buyers can find something that’s genuinely useful buying through a mobile, then they might be in with a chance of real success as it has been the case with OLX where a land owner sold his coffee farm worth $120 million via the mobile advertising platform.

Contador Harrison