Over the past five years there has been an impeccable growth in international attention on Africa’s economic potential. From a notable increase in investment by global brands to the creation new payment platforms, that are enabling a connected continent.
Trade, has also become easier and its constant evolution through integration has presented Africa with major opportunities to access international markets, mostly for small and medium enterprises. Whereas there’s continuous growth, there remains a challenge to how e-commerce platforms can tap into this access – with a continent that is still grappling with connectivity. According to the International Trade Centre (ITC), only 10 countries were responsible for 94% of all online businesses in Africa as of 2019. In Africa, most e-commerce businesses mainly engage in the business-to-business (B2B) and business-to-consumer (B2C) models. But this too requires infrastructure development. There’s an opportunity, and a boom that has been triggered by the coronavirus pandemic.
Despite the recent development on mobile technology penetration, smartphone usage intake, and mobile money revolution, it’s impact on stimulating the growth of e-commerce in Africa is still very limited, says Salum Awadh, CEO, SSC Capital.
A World Economic Forum, online marketplaces could drive inclusive growth across Africa, with e-commerce likely to create 3 million jobs by 2025. A 2021 report by global fintech business, PayU, revealed the massive potential for digital businesses across the continent, with South Africa, Nigeria and Kenya experiencing a major increase in internet and e-commerce penetration.Nigeria and South Africa experienced 37 percent while Kenya experienced a 25 percent increase. While the growth potential for these countries is overwhelming, they are not the only ones experiencing this new digital dawn.
E-commerce in Rwanda was projected to reach $79 million in 2021, with an annual growth of around 12.5 percent year on year until 2025. DUBUY.com an e-commerce platform connecting B2B in Rwanda and UAE has received over 500,000 website visits from sellers and buyers and has built a community of more than 4,000 active merchants on the platform in just six months of operating in Rwanda.
The B2B is a multibillion dollar business in itself especially now that e-commerce is greatly influencing it however the growth in technology and logistics have to sync for it to yield more profits, says Henri Nyakarundi, Chief Executive Officer and Founder ARED
Continued investment in both physical and digital infrastructure will enable markets to grow at a faster rate. Physical infrastructure in matters logistics is needed for the increased movement of goods. Supply chain optimization is very crucial, as poorly timed deliveries can lead to loss of customers and in turn cause a major monetary loss for the companies.
An interplay of factors that include trust, logistics, user education and awareness, and convenience is needed for e-commerce to grow. Major household names such as Jumia, have yet to show that e-commerce has taken off in Africa, even after being listed on NYSE, the company still booked losses of more than $240m in 2021, adds Salum Awadh.
I am an e-commerce customer and I quickly leave a site that has complicated shipping processes so it is somewhat very important for e-commerce platforms to optimize shipping processes to not only be cost-effective but to give better customer experience to enhance loyalty. Improving delivery routes whether in the digital or physical landscape whilst identifying the stumbling blocks in the supply chain is very important.
In spite of Africa having a fragmented market, patient investment in both the digital, product and the logistics will go a long way in ensuring African businesses reap the most in this digital revolution age, Nyakarundi adds.
While having a wide and satisfied consumer base is crucial for any business, a satisfied B2B(Business to Business) is equally important. According to analysts at Statista.com the global B2B e-commerce market was valued at $14.9 trillion in 2020 which is over 5 times that of the B2C market. Globally, B2B brands are looking for new ways to increase their sales, mainly through growing their online presence and notably embracing omnichannel strategies to carry users across touch points through moving between brick-and-mortar shops to websites, social media, online newsletters, chatbots and beyond. This strategy of unifying data and putting customers first has been the B2C focus for years, but it’s likely the future of B2B as well.
E-commerce is solving a big problem in the B2B by connecting supply with small shops through unifying logistics and as we look into the future it will be better with the electric vehicles expected to help when gas prices fluctuate which will in turn enhance competition, Nyakarundi reiterates.
The use of diverse payment options that are easy to use across numerous markets through partnering with payment gateway service providers e-commerce platforms are allowing businesses and individual entrepreneurs make secure online payments at a much wider scale. Payment security is cardinal regardless of the size of a business and the ability to secure a reputable sales base through these e-commerce platforms.
Although transaction security continues to be a major concern for African e-commerce participants according to the World Trade Organization, countries and platforms that focus on cyber security continue experiencing a boom in the sector.