As Internet usage surges, an increasing number of online retailers in West Africa are springing up, giving mobile phone users a variety of options to buy and sell new and used items.
Emerging markets like West Africa, where online shopping is still in its infancy, offer the highest growth potential for the e-commerce industry, according to Sumesh Rahavendra, head of marketing for DHL Express sub-Sahara Africa, in a report released last week.
“Although global e-retailer Amazon celebrated its 20th anniversary in July, eCommerce companies in Africa are only now beginning to mark and /or accelerate their presence in the marketplace,” Rahavendra noted. “An example is Nigeria online retailer, Jumia, which despite being founded only two years ago, is quickly gaining market share within the country which reiterates the region’s potential.”
One of the largest e-commerce sites in West Africa, Jumia offers a selection of electronics, fashion, home appliances and children’s items, and allows for a variety of payment options including cash on delivery—important in a region where many people do not have bank accounts.
Other West African online commerce sites that have raised their profiles recently include Ghana’s Kasoa.com billed as a classified ad site; Sierra Leone retail and consumer site GoShop; Nigerian classified ad site OLX; and Konga, a Nigerian competitor to Jumia.
A major factor responsible for this trend is the upsurge in the number of mobile phone and Internet users. But online services also need to address specific consumer demands, said Sabine Somé-Mensah, vice president of Digipact International, a business development services provider.
“If sites like jumia.com.ng, jumia.com.ci, kasoa.com.gh are up and running, it is because they address a market need—in this case linking sellers and buyers conveniently,” Somé-Mensah said. “Assessing market needs, adapting and responding to them is what drives business, and the experience of e-commerce in West Africa is a good example of this.”
Convenience is a big driver, noted Mark Essien, developer and founder of Nigerian hotel bookings site Hotels.ng.
“Commerce is more convenient online and the e-commerce stores are capitalizing on this shift in behavior,” Essien said.
The portion of GDP (gross domestic product) derived from online commerce in Africa could increase to at least 5 percent or 6 percent by 2025, matching that of leading economies such as Sweden, Taiwan and the U.K., according to a McKinsey & Co. report, “Lions Go Digital.” The report used the term “iGDP” for gross domestic product derived from Internet commerce.
“However, if the Internet achieves the same kind of scale and impact as the spread of mobile phones in Africa, iGDP could account for as much as 10 percent, or $300 billion, of total GDP, while producing a leap forward in economic and social development,” the report said.
Continued growth of e-commerce depends, however, on a variety of factors including government tax policies and cross-border customs regulations, availability of adequate and secure payment solutions, shipping and handling standards and Internet access costs, according to the “Online Shopping in Emerging Markets” report issued by Jana, a mobile platform technology provider.
E-commerce in West Africa is still only at about 10 percent of its potential, Hotels.ng’s Essien said. “The people who set themselves up now and position themselves well are poised to capture all the growth as it happens over the next 5 years,” he said via email.
While many e-commerce sites are riding on a wave of enthusiasm for the convenience of online shopping, over time, quality and the ability to adapt to a changing market matters, cautioned Somé-Mensah.
“For e-commerce websites to succeed in West Africa,” she said, “they will have to closely monitor the market and proactively adapt to its dynamics. This may mean offering more categories and commodities in which users can buy and sell. Also, online retailers website will have to maintain the highest standards of service delivery so they build their brand image and secure customers’ loyalty.”
There is no certainty the early entrants will last, Essien noted.
“Some will die,” says Essien. “Some will become massive. The market is growing and this puts pressure on the companies to adapt and capture part of that growth. Not all will do it successfully.”
Copyright © 2014 IDG Communications, Inc.