[Column] Patrick Foster: Why Africa is becoming an e-commerce powerhouse
The 21st century has seen a digital revolution in Africa: more people are online than ever before. Better intenet access has led to an increase in online retail, which has in turn resulted in a notable boost for the ecommerce economy across the entire African continent. I'll explain why Africa is becoming an ecommerce powerhouse, and how you can get in on the African ecommerce action.
An explosion in internet access
Ecommerce is impossible if you don’t have internet access – without it, you quite simply have no online store and no customers. In 2005, just 2% of Africans had access to the internet. Fast forward to 2016, and that number was up to 25%.
Between 2000 and 2017 Africa experienced a staggering total internet growth rate of 9,942%. More and more Africans have the right tools to set up ecommerce businesses and buy from online companies.
Africa is now a mobile continent
46% of people use their smartphones to buy products. And this number is only increasing. Like internet access, African smartphone usage has experienced a huge growth in recent years. Since 2014 the number of smartphone users has more than doubled:
Mobile phones access has had a hugely transformative effect on Africa. It’s helped many nations on the continent to scale up their economic growth, and enabled millions of Africans to go global – in Kenya alone, mobile commerce is worth over $6 billion.
African ecommerce platforms
There are a number of African ecommerce platforms available to people living on the continent. The two most important platforms are:
• Bidorbuy: An ecommerce player since 1999, Bidorbuy operates as an online auction where anyone can start selling products
• Jumia: Available in 23 African countries, this marketplace allows African ecommerce brands to connect with over 200,000,000 potential buyers
African businesses also have plenty of global CMS options to choose from when setting up their online stores – for example, some of South Africa’s top businesses use WooCommere. It’s great to see more and more technolgical investment in African ecommerce, as it all starts with creating the right ecommerce ecosystem.
Connecting global brands to Africa’s growing middle class
A huge part of the African ecommerce boom has been down to opening up the continent to brands from across the planet. As MallforAfrica's founder Chris Folayan explains: “People in Africa love US and UK brands. But there was no simple way to get them. And this is the solution.”
This has come alongside a growth in Africa’s growing middle class. As these stats from Deloitte show, more people now have the disposable income to be able to buy from ecommerce brands:
• 7 of the 10 fastest growing economies in the world are African
• There are now as many middle-class Africans as there are Indians and Chinese
• The African middle class will number 1.1 billion by 2060
Similarly, ecommerce allows wealthy Africans to create global brands (think Kenya’s Tusker beer now being sold in Tesco). Ecommerce investment is also booming in Africa, and the continent is attracting attention from top investors. Africans can even invest directly into the global market by using Exchange to buy a brand, and then freely trade on another continent. This same globalized mentality has helped a lot of African bloggers foster a global reputation.
Higher growth than the global average, but ecommerce in Africa isn’t all boom
Ecommerce in Africa is growing at 25.8%, which is 7% higher than the global average. It’s booming. However despite this, there are some challenges that need to be overcome for Africam ecommerce to truly bloom:
• Supply: Many African nations don’t have a comprehensive street address system. This makes supply for ecommerce companies in Africa tricky, as couriers often need to speak with customers via telephone throughout the delivery process.
• Infrastructure: Less than 25% of the roads in Africa are paved. This means while ecommerce companies may know where there customers live, they may be unable to get there.
• Payment: While Africa is rapidly going mobile, the primary method of payment is still cash on delivery. This is in part because there is still a mistrust of online shopping among many Africans, who fear becoming victims of fraud.
While online retail in Africa does face some structural challenges, the continent’s digital revolution has brought incredible growth in industry. With a populace that has ever-increasing internet access and African companies freely accessing the global market, Africa is well on its way to becoming an ecommerce powerhouse.
Patrick Foster is a writer and ecommerce expert from Ecommerce Tips.