E-commerce in Africa is getting a much needed boost from Coronavirus pandemic lockdown
Running e-commerce businesses in Africa’s overwhelmed cities can be a thankless task due to the basic infrastructure gaps and a reluctant customer base.
Take Nigeria Africa’s largest internet market, where e-commerce ventures face inefficient logistics and informal home addressing systems as well as uncertainty about the actual size of the addressable market. These problems are also often seen in other African markets and sometimes makes business untenable: Jumia, the largest e-commerce operator across Africa, shuttered its business in Rwanda, Tanzania and Cameroon over the past year.
But it turns out the ongoing Covid-19 pandemic may yet ease one of the lingering challenges faced by e-commerce businesses in African markets. While many of these ventures have attempted to engineer a shift in local social behavior in customers, the pandemic’s restrictions mean the choice of shopping online is finally getting a PR or marketing boost out of necessity and safety.
Even though Africa has had a billion-dollar IPO for an e-commerce company and smartphone penetration is growing, the reality is that shopping online is still a fanciful prospect for most ordinary Africans. Even Jumia which was backed by the likes of Goldman Sachs and MasterCard, and once valued at over $4 billion by enthusiastic investors soon after its IPO, has been brought down to earth by the realities of promising but tough, underdeveloped markets across the continent.
While there are some interested customers, e-commerce players require much higher levels of mainstream consumer adoption and retention to build viable businesses in a space where most still remain comfortable with shopping offline or are not yet fully convinced by the benefits of online shopping including wait times for delivery or the trust factor needed for online payments. But lockdowns across the continent during the ongoing Covid-19 pandemic are helping to accelerate a change in attitudes with consumers in many pockets exploring e-commerce out of necessity.
Jumia has reported a spike in both customer and seller interest as demand for groceries and essentials grew four-fold in the first quarter compared to last year, chief executive Sacha Poignonnec said during the company’s earnings call last week. In Morocco and Tunisia, sales have also doubled at different times over the last month.
Photo courtesy of Afrika Tech
Content courtesy of Quartz Africa