[Column] Kayleigh Alexandra: Why Africa's ecommerce industry is poised for boom
13-06-2019 11:04:00 | by: Andrea Ayemoba | hits: 3145 | Tags:

Africa is the second largest continent on the planet, the most populated area on the globe, and home to one of the fastest-growing consumer bases in the world. Already, there are some huge global ecommerce brands in Africa, and the continent’s middle class is becoming larger and better connected to the internet. With it becoming easier for people to buy products and set up businesses in Africa by the year, we expect ecommerce to explode in the near future.

Nowhere in the world has faster growth in internet penetration than Africa. As the continent becomes more connected and wealthy, online business in the region is booming.
But with Africans now finding it easier than ever to gain access to global markets, this is only the beginning of the continent’s ecommerce explosion – as I explain below.

Internet access is improving

By definition, ecommerce is dependent upon internet access – if you can’t connect to the web, you can’t buy products online. Though Africa’s internet penetration lags behind other regions, it has increased rapidly since the beginning of the 2000s.

Just 2% of Africans had internet access in 2005, but by 2018 that number was up to 51%. These figures are projected to continue growing, with 52% of people Sub-Saharan Africa (home to some of the poorest nations) expected to have access to the internet by 2025 – currently, 44% of people in Sub-Saharan Africa have internet access.

As more and more people get access to the internet, the region’s ecommerce market will grow alongside it.

Better internet access will mean the increased digitisation of local services, the creation of new jobs, and the fostering of native African digital talent — all which will positively contribute to a burgeoning ecommerce economy. The hope is that digitisation will lead to grassroots and community-led businesses being able to find a wider (even global) audience, without (necessarily) having to rely on marketplace selling. (Though marketplaces are a great ecommerce entry point).

Africa is an increasingly mobile region

Much has been written on the mobile commerce boom Africa is experiencing, with particular attention given to the growth seen in South Africa: for example — Zando sold 80 items per minute during Black Friday in 2017.

An increase in mobile commerce is fuelling the continued rise of ecommerce on the continent and it’s happening because smartphones are becoming easier and cheaper for people to buy.

Smartphone penetration in Africa was 15% in 2014. By 2018 this figure had increased 33% and by 2025 it’s predicted to have doubled, meaning two-thirds of the continent will have access to a smartphone.

People are now able to buy smartphones more cheaply and simply, with most people purchasing them in one of three ways:

• Direct payment
• Asset financing
• 3rd party payment.

Africa has a growing & globally-minded middle class

People on the continent are becoming richer, with the expansion of the region’s middle class increasing the number of people who have the money to buy products online.

Deloitte’s Consumer Review of Africa explains that there were 375 million middle class Africans in 2013. Deloitte goes on to claim that by 2030, Africa’s middle class will number over 500 million.

More and more people are aspiring to a lifestyle that includes shopping for Western brands and indulging in ‘retail therapy’, but there is also a deep-rooted desire to support local trade and artisans through digital mediums — supporting local artists, designers, and creatives.

There are 65.4 million ecommerce uses in Africa and the Middle East and a further 20 million expected by 2021, due, in part, to their being the demand among the middle class.

Africa has many successful ecommerce brands of its own, with Jumia, Bidorbuy, and the earlier mentioned Zando all shining examples,

The interest in ecommerce from Africa’s middle class isn’t only inward looking. Mall For Africa is a company that gives access to over 200 US and UK online stores.

Ecommerce is not just booming in Africa because of local businesses, it’s also growing because the global market is being opened up to its people – but this isn’t limited to buying products from other regions.

Africa is breaking into global ecommerce markets

The success of ecommerce platforms and brands is allowing people to get access to online businesses — people are increasingly able to start their own companies and take them into global ecommerce markets.

Apparel brands like Anbessa Shoes (Ethiopia) are exported across the globe, while the products of drinks companies such as Amarula (South Africa) are sold in some of the world’s biggest retailers. These businesses are part of the reason that African brands are among fastest-growing globally, as ecommerce stretches across the continent and beyond.

While global commerce is one of the reasons ecommerce in Africa is going to get bigger, it’s not without its issues for brands and startups. Some of the most important things to consider include shipping, taxes, and inventory management – all of these come with costs and complications, making it essential that the right structural and technical mechanisms are in place.

Structural & technical mechanisms enable global ecommerce

Global commerce opens the world up for African ecommerce. Fortunately for businesses and startups in Africa, it’s never been simpler for everyday people to use cross-border ecommerce to build a business and take it into global markets.

There is a range of renowned third-party platforms available that allow people to take their business into the US, UK, Canada, Australia, Asia, Europe, and beyond. Africans can use internationally renowned platforms like Shopify Plus to trade freely because they come with crucial cross-border commerce features like local currency converters, in-built fraud prevention, and tax calculators.

Going global is the most important step in African ecommerce achieving its full potential. It allows big businesses, startups, and one-person passion projects to sell goods to anyone – opening up new revenue streams, tapping into richer markets, and building broader and deeper brand awareness.

People being able to trade without borders that’s the biggest reason the region’s ecommerce boom is only just starting – the fundamental good of ecommerce is that it’s open to everyone to become both a customer and a business owner, as market entry barriers fall the impact of ecommerce in Africa rise.

Kayleigh Alexandra is Content Manager at Microstartups.