Uganda e-commerce market

Posted on August 10, 2017 12:03 am

Ecommerce trends in Uganda are showing huge opportunities for small businesses as the focus moves towards smaller, niche driven sites instead of large department stores that sell everything. A study designed to help retailers devise successful online retail strategies and identify market investment opportunities in Uganda while understanding the tradeoffs and barriers to success shows that the East African country has a great potential. The study highlights the attractive markets for e-commerce, the towns that are always going to be e-commerce behemoths because of their size, and the smaller yet still-promising towns where potential matters more than size.Ugandan consumers are increasingly taking advantage of ecommerce. This is because of lower prices are generally available as businesses don’t need to spend as much on renting a physical store front or office space. This massively reduces costs for ongoing expenses such as rent and electricity.Also, the enormous convenience for customers of being able to search, pay for and have all products and services delivered to the same address has seen companies like Halo Food, Jumia take the market by storm. For affluent and middle class population in Kampala, there is no need to deal with crowds or travelling to a shopping mall like Lugogo or Garden City.Uganda remains in the top E-commerce sales in Sub Saharan Africa which grew by 8% last year, with strong performance in department and variety stores, homewares and appliances, and groceries and liquor, according to estimates seen by your blogger. Ugandans aged 30-40 are the biggest spenders, accounting for a quarter of money spent online. Some retailers in Kampala and other major towns like Gulu, Mbarara and Masaka increasingly see the online channel as an extension of their brick-and-mortar presence. Online sales were up by 12% for the consumer electronics retailer. So far, Uganda has punched above its weight in retail e-commerce, thanks to its sound financial and telecom infrastructure but much need to be done with logistical infrastructure.

For incumbents like department stores with good example being Quality Supermarket, strengthening their e-commerce is more of a defensive than an offensive move. They face declining sales in their stores like the one in Luobowa and are adapting to the shift in shopping behavior.The Ugandan e-commerce market continues to grow soon it will be the second largest in East African region in terms of online sales but many Tanzania seems to have stagnated in the latest data available. Kenya the regional leader, has seen its e-commerce market continue to expand, but growth declined due to slightly weaker e-commerce growth and questions about its longer-term macroeconomic conditions, particularly regarding infrastructure investment and consumer spending.Fundamental infrastructure challenges logistics and transportation in Uganda and government regulations may hinder e-commerce growth in the future.The boom in Uganda’s e-commerce has brought challenges both brick-and-mortar leaders and major pure-play online retailers are learning that the future of the industry is not merely online, but rather in creative omnichannel offerings that link online and physical shoppingThe research in your blogger’s possession identifies couple of findings that relate to business strategy, customers, and channels including the continuously connected consumer in Uganda and the need for omnichannel strategies.The data reflects trends that Ugandan retailers and brand-builders cannot overlook. Local retailers and foreign brands have seen their brands, systems, scale, or intimacy in Uganda allow them and compel them to push their boundaries further, but it is never easy. Determining where to put the chess pieces is the only way to tap into today’s sales and earnings growth possibilities in Kampala and beyond.The research covered variables including select macroeconomic factors as well as those that examine consumer adoption of technology, shopping behaviors, infrastructure, and retail-specific activities. It balances current online retail market indicators with those that predict the potential for future growth.

Contador Harrison