Wednesday 27th of May 2020

Nairobi, Kenya

Africa E-commerce Game Changer

Posted On : May 20, 2020

Oscar Alochi

0

Moulaye Taboure, founder of Afrikrea, a e-commerce marketplace for African fashion designers. Even though the platform predominantly services clients in Europe and the US, Taboure says orders from customers on the continent tripled on the platform over the past two months.

Further, Taboure says more designers in African cities with tougher movement restrictions are now signing up to the platform.

“This is definitely a game changer in Africa,” says the founder of Afrikrea, a fashion e-commerce marketplace in Abidjan.

Much of the demand shift is due to lockdown restrictions which have left brick and mortar retail outlets closed as governments attempt to curb the spread of Covid-19. In addition, reduced vehicular traffic also means deliveries can happen much faster in cities known for notorious traffic jams a boon for customer retention.

Put together, these coronavirus induced effects are “already positively impacting” e-commerce players in Africa, says Maxime Bayen, company builder at startup investment firm, GreenTec Capital.  “The companies we are talking with in that space have seen their sales gone up clearly.”

It’s an effect that plays out even for business-to-business (B2B) enterprises.  Sokowatch, which operates in in Kenya, Tanzania, Rwanda and Uganda and supplies informal shops and kiosks in low-income communities with products, is signing up more shop partners and reporting a higher share of stock in local shops compared to traditional suppliers. “We are a technology-enabled supplier that provides same day delivery to their shop, it’s not an option that they have with traditional suppliers to the store,” says Sokowatch founder Daniel Yu.

Taking advantage

The dominant view among e-commerce players on the continent is the boon will last a while longer even after lockdown measures are eased. With physical distancing measures likely to remain in place in different forms, there’s a strong possibility of a drop in foot traffic at normally crowded shopping malls and stores. Taboure says Afrikrea is already tweaking its model to make it cheaper for designers based in Africa to sign up so as to cater for an expected growth in orders from across the continent.

And he’s not the only betting on riding the wave, Only the flexible will survive. Every business has to learn how to do things very differently.”

Pan-African payments giant Flutterwave has set up an e-commerce portal that allows merchants set up online shops that it will power payments for. Essentially, Flutterwave is positioning to facilitate and take advantage of any recourse to e-commerce by offline stores and merchants.

In Kenya, Twiga Foods, a marketplace which supplies retailers with fresh produce from farms, has partnered with Jumia to widen the scope of its reach, allowing households order and receive foodstuff without visiting supermarkets.

Similarly, FarmCrowdy, a Nigerian agri-tech platform that allows people invest in existing farms for a share of profits, has also launched a e-commerce platform for fresh produce. In addition to expanding the scope of market access for farmers within its network, the platform is also an obvious play to provide middle-class Nigerians with an alternative to crowded open-air markets that are likely viewed as high-risk for Covid-19 infections.

Established traditional businesses are also turning to e-commerce out of necessity. Eko Hotel, arguably the biggest hotel brand in Nigeria, has launched an online food delivery service, ostensibly to shore up revenue deficits given the impact of the pandemic on hospitality businesses.

“Only the flexible will survive,” says Victor Asemota, veteran tech investor. “Every business has to learn how to do things very differently. Those who have gained will want to sustain the momentum and those who have lost will die if they don’t change drastically.”

It’s not entirely a home-run for e-commerce businesses though. Supply chain disruptions could yet result in an inability to fulfill orders, especially in countries with strict lockdown measures. For instance, Jumia suspended delivery of all fashion items in South Africa last month. Poignonnec has also admitted to challenges being faced with fulfilling orders particularly for products sourced from China.

Then there are also concerns over the sustainability of the company’s reliance on groceries as an anchor for sales. “It’s not a very profitable vertical for a general merchandise e-commerce platform without specialized value chain for groceries,” says Laolu Sameul-Biyi, former financial analyst at Jumia. For his part, Poignonnec hopes that ongoing consumer adoption amid the outbreak “will accelerate the long-term shift to e-commerce” among local users.

Given the short-term boon amid a lack of options for customers, “the main question is whether or not this trend will stick in a post-COVID era,” Bayen says. For Taboure however, it’s up to e-commerce companies to ensure that answer is affirmative by solving problems around ease of use and building trust. “If it’s not easy to buy online [then] we need to find solutions,” he says.

Content courtesy of Quartz Africa and Afrikrea

 

Oscar Alochi

Comments