Africa offers significant growth potential for players looking to procure a piece of the e-commerce pie, with growth percentages expected to reach into the hundreds and even thousands. However, the magnitude of growth is not matched by the value it represents, warn industry experts.
With consistent year-on-year growth in the region, and no sign of a slump, industry watchers have for some years been predicting solid e-commerce expansion in Africa.
Sumesh Rahavendra, head of marketing for DHL Express sub-Saharan Africa, says the company's recently released Shop the World report reveals emerging markets offer the highest growth potential for the e-commerce industry.
"Although global e-retailer Amazon celebrated its 20th anniversary in July, e-commerce companies in Africa are only now beginning to mark their presence in the marketplace. An example is Nigerian online retailer, Jumia, which, despite being founded only two years ago, is quickly gaining market share within the country."
DHL cites a recent report by McKinsey & Company, which revealed e-commerce could account for 10% of retail sales in Africa's largest economies by 2025. "In comparison, online retail in the US already accounts for around 9% of total retail sales."
Unspectacular value
World Wide Worx MD Arthur Goldstuck notes SA is the undisputed leader in e-commerce in sub-Saharan Africa, with a sustained growth rate since 2006 of between 30% and 40%.
He says the lower tier emerging markets, where e-commerce growth is coming from a base of next to 0%, is where the "spectacular percentage growths" will be seen. He notes, however, the value of the growth at this early stage is "rather unspectacular".
Kevin Tucker, founder and CEO of PriceCheck in 2006 and - more recently - e-commerce platform ShoppingFeeder, says, while the future is bright for e-commerce in SA and Africa at large, we do need to accept that the market is very small.
"We've been waiting for a major growth spurt for many years and that hasn't materialised, though growth is consistent. The number of people buying online is still proportionally very small and is comparable to population sizes of some boroughs of major cities abroad."
Tucker says the proposed merger of Takealot and Kalahari.com should also spur growth and interest in local e-commerce, "though we have yet to see how the lack of competition between the two will affect their current discounting strategies".
Tech role
Rahavendra notes the connectivity issues Africa faces are slowly but surely dissipating. "We are noticing a rising trend in retailers growing due to advances in this area. According to figures by the International Telecommunication Union, 16% of the African population have Internet access - up from 10% in 2010."
The 2014 Mobile Media Consumption report released in February by InMobi found 83% of consumers planned to conduct mobile commerce in this year - up 15% from 2013 figures. The study includes data from 14 000 users across 14 countries, including SA, Nigeria and Kenya.
"As technology continues to evolve in the respective African countries, so will the levels of online shopping. 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 the online shopping space due to the rise in mobile and Internet services within Africa," says Rahavendra.
Tucker adds technological innovations like single-page checkout and responsive sites have been at the heart of strategies around the growth in mobile and connectivity. "However, I've found that payments on mobile are still clunky and difficult, especially if one doesn't have a credit card. When this problem is solved, mobile retailers will have the Holy Grail."
Share