It was probably not going to be long before Business to Customer (B2C) E-commerce would take off in Africa. If one looks at the economic landscape on the Continent and its unique attributes it makes sense that e-commerce is going to be one of the next big drivers for companies eager to grow their competitiveness and revenue streams and respond to customers who increasingly want choice, quality, value for money and ultimately whose shopping habits are changing. Internet platforms are uniquely placed to provide customers with the flexibility and ease of shopping and doing business wherever and however they are connected.
There are a number of factors that account for the growth in E-Commerce as is highlighted in the Africa B2C E-Commerce Report 2013. These include: the proliferation in internet usage; the increased market for mobile technology; and advances in “payment and delivery infrastructure”. Advances in technology are rapidly changing consumers’ behaviour and businesses are eager to take advantage. One of the other key factors in the equation is the rise in the middle class and it is to them that this change is largely owed.
At this point, South Africa and Nigeria lead the way. Nigeria is led by two of its main online wholesalers “Jumia” and “Konga”, while South Africa’s online fashion retailer “Zando” leads the charge.
According to the report, B2C E-commerce sales did not reach the EUR 1 billion mark in 2012, but on a very positive note, it is projected that this market will see growth in the order of 40 percent in the next decade.
Some of the barriers that have been highlighted for the sector in the report are structural, including “poor logistics”, particularly in rural areas, the absence of a strong banking sector and the general lack of knowledge on the part of consumers about this mode of transacting.
According to a new report on the African telecommunications sector by TA Telecom titled: Serving Communities on the Cusp of Change, mobile penetration in Africa has hit the 80 percent mark for the first quarter of 2012 and is still expected to grow at 4.2 percent annually. According to the report, Africa is just behind Asia as the world’s second largest market for telecoms. “Today, more than eight in 10 Africans have a mobile phone”.
The TA Telecom report asserts that the focus is currently on extending infrastructure for the telecoms sector. It notes that data services and connection speeds are improving. Further, data revenue for telecoms has grown 67 percent in the key African countries of South Africa, Kenya, and Nigeria in the past few years. Currently, the penetration of smartphones is at 20 percent; however this figure is expected to grow by almost 600 percent in Nigeria by 2017.
There is therefore an inextricable link between the penetration and access to mobile phones and e-commerce. It goes without saying that the mobile market is hands down the leader in terms of the way people connect outstripping the market for computers. The Africa B2C E-Commerce Report 2013 notes the rise of what is termed M-Commerce and the use of mobile technology for making payments in a market where banking is yet to fully mature and large segments of the population do not yet have bank accounts.
It is significant to note that “over 10% of active Internet users in Africa shopped on mobile in 2013”. Nigeria, Egypt and Morocco lead the way in mobile shopping, while South Africa is the current regional leader in online shopping.
According to the report, e-commerce has caught on fast in South Africa where “over a half of Internet users in South Africa who go online at least weekly make purchases over the Internet”. South Africa also is home to some of the largest merchants on the continent. “B2C E-Commerce sales in South Africa are expected to grow by a quarter in 2013, to reach less than half a billion EUR”.
In the first three quarters of 2013, B2C sales in Morocco surpassed the totals for 2012 with the number of online shoppers exceeding 300,000 in 2012. “B2C E-Commerce transactions with bank cards grew by a more than a half year-on-year in 2012, reaching over EUR 50 million”.
Nigeria is the strongman in the category with its burgeoning market driven by a large population and “fast growing Internet penetration”. There is no doubt that Nigeria is set to be the leader in B2C E-Commerce in Africa. Again it is the unique circumstances of African economies that ironically may drive this demand. As the report states, “the lack of supply in brick-and-mortar retail also drives demand for online outlets”. B2C E-Commerce has seen tremendous growth in Nigeria expanding into the double-digits in 2012 and achieving just “under EUR 20 million”. In an interesting statistic, approximately “a quarter of urban Internet users shopped online in 2012”.
Kenya has seen a surge in mobile Internet penetration driving B2C E-Commerce. Added to this, is the apparent “popularity of mobile payments”. In June 2013, the number of Internet users “reached almost 20 million” accounting for half of the population. Online shopping is gaining in popularity with just under 20 percent of Kenyans making use of such approaches to make purchases.
Interestingly, Tunisia has some of the largest Internet penetration rates in Africa at roughly 40 percent. In Tunisia, there were “over 500 active E-Commerce platforms in September 2013, which generated sales of under EUR 20 million in the first eight months of 2013”.
Through studying the types of purchases consumers are making online one will be able to track the companies that are set to grow in the B2C E-Commerce market. The majority of purchases are for clothing, shoes and accessories, consumer electronics, travel, music and video. It is also evident that African consumers are, in the main, making purchases from domestic companies, although an appetite for foreign corporates exists, albeit small.
These reports highlight the continuing positive trend in the African economic landscape and the type of growth that is expected in the telecoms market and the spin-offs this holds for B2C E-Commerce. Mobile technology penetration has burgeoned and has laid the platform for expansion in the B2C E-Commerce market. Africa will likely emerge as the key market for smartphones in the near future and this will drive a range of new mobile applications further making shopping and payments via mobile more accessible and efficient. There is no doubt that the growth in mobile technology is contributing to new dynamism in Africa’s economies and at this point the sky is the limit in terms of what is possible.