Africa economic systems were defined by the promise of e-commerce back in the year 2010. The aim was to get a large number of youths to shift how they make purchases and start with the yet to be set as the new normal way of shopping; online shopping.
A lot of questions have arisen concerning the mission of the e-commerce platforms for more than a decade. Was it failing or Africa is not yet ready for the shift? The good thing is that the entrepreneurs behind the project haven’t given up yet, but a lot of questions are still lingering around logistics and last-mile delivery problems.
E-commerce Long Journey
On average, South African shoppers spend an average of $109 on online purchases and consumable goods. Surprisingly, this is the most among African countries. Even though this number may be higher in Africa, when it comes to Global comparison, it is nearly $400 lower than the global average. Among the 44 countries analyzed in Hootsuite’s digital trends, the first six African countries feature in the bottom ten.
African spending level
African spending level is still very low compared to the global numbers. This reflects the local markets’ state with the continents’ primary players still struggling to be seen. Last year, amid an enduring streak of million-dollar losses, Jumia betted on a fintech pivot to drive up revenue in pursuit of elusive profits. Has their investment proven to be decisive during these unprecedented times? During this pandemic, Jumia has realized an increase in the number of orders compared to other periods.
There might be more significant changes that e-commerce in Africa needs to navigate to realize the full potential in this digital age. Shoppers in Africa have been reported to have less disposable income for online purchases, which is a significant factor in low spending levels. This also tells the story of how infrastructure problems have hindered the adoption of e-commerce. There are many trust issues between the online vendors and the customers as the customers are skeptical about the delivery and the condition of the delivered goods itself. To deal with skepticism, e-commerce operators have maintained a cash-on-delivery option to foster trust.
Hyper-local methods have also come in handy for e-commerce platforms. For example, in Kenya, Copia Global raised $26 million last year in November. It gained traction by serving unbanked customers in rural areas. The customers are free to walk to any nearby partnered agent who places orders on their behalf, take payment, and serve as delivery points.
Have investors’ attention and appetite across the continent shifted away from e-commerce? Let us find out in the next read.