This roundup provides an overview of the developments and trends in e-Commerce sector in Africa.
South Africa and Nigeria lead in intra-African e-Commerce
Intra-African e-Commerce is on the rise and this may have positive implications for South Africa and the continent's stuttering e-Commerce sector.
This is according to a recent study conducted by research firm Ipsos, which notes cross-border shopping is a growing trend with around 80% of shoppers going international when purchasing goods online.
SWIFT, in a research on cross-border payments, has indicated that African countries carry out about 23% of their trade with one another, higher than the 15% estimated by the World Bank and African Development Bank.
The Ipsos study notes that in Nigeria an impressive 47% of the online spend is already taken internationally, while in South Africa, shopping across the continent continues to rise in popularity.
The survey found that 90% of online shoppers own a smartphone or feature phone and use it to complete their purchases. More than half do so more than once a month.
Nairobi: November, December drive 30% more e-Commerce revenue than other months
November and December accounted for 30% more e-Commerce revenue than non-holiday months, according to E-Commerce Holiday Trends, a report done by 2015 Benchmark.
Retailers need to pay careful attention to their supply chains during this period, as operations and delivery are key to client satisfaction, maximizing brand exposure and increasing revenue. Africa's e-Commerce industry continues to grow steadily each year, especially in light of consumers having increased access to the internet via mobile technology and a fast growing middle class.
A McKinsey & Company report revealed that by 2025, e-Commerce could account for 10% of retail sales in the continent’s largest economies, which translates into Sh7,650 billion ($75 billion) in annual revenue.
“This surge highlights the impact of holiday season spending habits and why retailers need to optimize their service levels should they want to capitalize on consumers’ increased spending power over this period,” says Oliver Facey, Vice President of Operations for DHL Express Sub Saharan Africa.
Retailers also need to ensure that their supply chain management is agile enough to handle the increased volume of business. In addition, in order to succeed in this competitive market, e-Commerce sites need to make sure their online infrastructure and payment processor are in top shape to handle large amounts of traffic.
Other markets to rival Kenya for mobile money dominance
Mobile money operators in Tanzania, Zambia and Zimbabwe are expected to challenge Kenyan operators for dominance in the sector in 2016, levering growth registered in 2015.
Kenya has been a frontrunner in the area of mobile money, with Vodacom's M-Pesa registering resounding success. However, regulators in Tanzania, Zambia and Zimbabwe are also opening up the industry to new areas, allowing interoperability and cross-border remittances through mobile money.
"In 2016, we can expect growth in three areas: firstly, while Kenya is often cited as the forerunner in mobile payment proliferation, this leadership is anticipated to be challenged by countries like Tanzania, Zimbabwe, and Zambia, all of which have experienced significant growth in mobile payments," said Gareth Mellon, the ICT program manager at Frost & Sullivan Africa.
Dr. Emmanuel Manasseh, an expert with the Tanzania Communication Regulatory Authority (TCRA), said this month that about 35% of households in Tanzania had at least one registered mobile money user.
WorldRemit suggests that 78% of adults have sent money with their phone, 67% have received money on their phone, and more than 5 million Zimbabweans have a mobile money account.
Rwanda: E-Commerce Sector Picks Up in Rwanda As Techies Join the Fray
e-Commerce is relatively new in Rwanda, but the sector is growing as local tech start-ups and international payers enter the marketplace, attracted by adoption of new technologies in the country.
Increasing mobile payment, Internet use, convenience, social media, lack of scaled retailers and also reduced cost – which makes it easy to start an e-Commerce company – as well as a growing middle class are factors that analysts attribute to the online commerce growth.
The e-Commerce sector's potential will be exploited fully if there is a favorable ecosystem, said Jean Jacque Mutabaruka, an expert in technology solutions in financial sector at Convergencium.com. He added that the most important things for e-Commerce to grow are connectivity and security.
How much South Africans spend online
New data shows that the average basket size in online purchases in South Africa stands at around R725 (about US$50) per order.
This is according to local payment gateway, PayFast, which forms part of the South Africa e-Commerce survey results announced at the 2015 e-Commerce Awards in September.
uAfrica.com, a technology company providing cloud based e-Commerce services to SMEs across Africa, noted that 2015 marks the 21st official year of e-Commerce globally, since NetMarket reportedly recorded the first ever online transaction by selling a Sting CD online, on 11 August 1994.
e-Commerce in South Africa, while still relatively small with a value of between R6-7 billion, is growing at a rate of between 25% and 35% year-on-year and accounts for approximately 1% of the retail sector as a whole.
An Inside Look at Kenya's $40 Million eCommerce Industry
While in many parts of the world online shopping is the norm, in places like Kenya, the practice of using the Internet instead of a physical shopping cart is taking longer to become commonplace.
Millions of Kenyans do not have access to “competitive and cost-effective products” and they are more accustomed to shopping in the traditional way – going to the mall and buying things that they can physically see, touch, and smell.
To answer this challenge, Kilimall was launched in 2014, and they now compete with Jumia and Kaymu.
According to the Communciations Authority of Kenya, ecommerce is a $42 million business that is still growing, but there are still challenges that ecommerce retailers, like Kilimall, are facing. For example, delivering goods to consumers is difficult in Kenya as many buildings do not have signs, so drivers find it problematic to actually find the recipients.
Kilimall has found a solution: Posta Kenya – Kenya’s postal service.
Posta Kenya have locations all over the country, and consumers can choose which location to have their goods delivered for pickup. This system is also beneficial for consumers who are concerned about online security and fraud.
This online shopping system is attracting more and more customers, as people are very excited about online shopping through this platform.