Africa Offers Great Potential For E-Commerce Growth

Niyi Aderibigbe Retail & Manufacturing

VENTURES AFRICA – Africa offers enormous potential for e-commerce growth given that online shopping is in its infancy in the region, notes Sumesh Rahavendra, head of marketing for DHL Express Sub Saharan Africa (SSA).
“Although global e-retailer Amazon celebrated its 20th anniversary in July, eCommerce companies in Africa are only now beginning to mark and / or accelerate their presence in the marketplace. An example is Nigeria online retailer, Jumia, which despite being founded only two years ago, is quickly gaining market share within the country which reiterates the region’s potential,” said Rahavendra.
A recent report by McKinsey & Company also revealed that,
eCommerce could account for 10 percent of retail sales in the African continent’s largest economies by 2025.
“Globally, it took over 2 000 years for a formal monetary system to evolve and over 600 years for a formal banking system to be implemented. It’s taken over 50 years for credit and debit cards to be introduced and still not every person has a bank account. With all these milestones that have taken place in the evolution of commerce, it goes to show that how we shop (e-commerce), is still in its infancy,” says Rahavendra.

Credit: Phillips Consulting

To further support his point that e-commerce in Africa was still in its infancy, Rahavendra cited a survey conducted in Nigeria, the continent’s largest economy, which revealed that close to a quarter of respondents (23.55 percent) cited the lack of security as the largest obstacle for buying products online. 38.81 percent of respondents also picked cash, compared to 29.52 percent who chose credit cards, as the payment mechanism they would prefer to use when purchasing goods and services online. “This highlights that consumers on the continent are still familiarizing themselves with the online payment methods,” he adds.
The DHL Express head of marketing however said advancement of technology will foster e-commerce growth in Africa.
With mobile penetration in Africa standing at 80 percent, there have been more consumers than ever before, who are interested in e-commerce via their mobile phones. The 2014 Mobile Media Consumption report by InMobi, which includes data from 14,000 users across 14 countries, including Nigeria, Kenya and South Africa, predicted that 83 percent of consumers plan to conduct mobile commerce in the next 12 months, up 15 percent from the current figure.
In Kenya, which has been Africa’s leader in internet usage growth, the Communication Commission of Kenya reports that internet users grew from 200,000 in 2000 to over 19.6 million at the end of last year, a staggering 9,700 percent growth, according to a UN report. Figures like this are indicative of what the future holds for e-commerce in Africa.
“As technology continues to evolve in the respective African countries, as will the levels of online shopping,” Rahavendra enthused.
“It is of our opinion that many African businesses will start to skip the traditional ‘bricks and mortar’ formal retail environment, and instead move straight into online shopping space due to the rise in mobile and internet services within Africa,” he concludes.