Ecommerce Insights From UNCTAD Information Economy Report 2015

April 16, 2015 Editor Comments Off on Ecommerce Insights From UNCTAD Information Economy Report 2015

Africa remains the region with the lowest penetration of ecommerce. As noted in the UNCTAD Information Economy Report 2015, Africa and the Middle East in 2013 accounted for about 2.2 per cent of global B2C ecommerce. There are few data at the country level, but estimates for the six countries included in table II.9 show positive growth between 2009 and 2012. The table also indicates that Egypt had by far the largest e-commerce sales among the six.

The scope for e-commerce is rapidly improving, although significant barriers remain in areas such as transport and logistics, inadequate legal frameworks and limited purchasing power. Undersea fibre optic cables have encircled Africa’s coastlines and begun the long journey inland.

Telecommunications providers are investing in 3G and subsidizing smartphone ownership. Innovative solutions are emerging that allow for the delivery of small pieces of the Internet even to basic handsets. At the same time, digital payment services are becoming more important and various online marketplaces are spreading.

Internet use in Africa is primarily conducted on mobile devices, influencing the scope for and the nature of e-commerce. Service providers in sub-Saharan Africa need to adapt their solutions to make them accessible on a small screen. Cell Bazaar (now Ekhanei) of Bangladesh pioneered the creation of a marketplace accessible to feature phone users. It enabled users in Bangladesh to buy and sell via a simple unstructured supplementary service data menu, accessible to virtually all feature phones. Today, it is relatively common in sub-Saharan Africa to see such services.

Esoko.com, which started as a pilot with FoodNet in uganda in 2006, has leveraged this approach to enable rural farmers to access marketplace information via simple short message service (SMS). Services such as Binu, opera Mini 4.5, Snaptu (which was acquired by Facebook in 2011) and Tuvitu have further improved the browsing experience of a feature phone, making them somewhat mimic the experience of a smartphone.

These applications make it easier for first time Internet users to get online. Internet.org, a consortium of companies that include Facebook, Ericsson and Samsung, is also leveraging this technology for people that are currently not connected to the Internet. In July 2014, it launched an app in Zambia, making a suite of basic websites available at no cost.

Meanwhile, smartphone adoption is also growing. In Kenya, for example, the mobile network operator Safaricom now sells more smartphones than feature phones. Box II.3 illustrates the diversity of the evolving e-commerce ecosystem in sub-Saharan Africa.

The future of e-commerce in sub-Saharan Africa is promising. Large e-commerce companies such as those below are building infrastructure and customer awareness that can be leveraged by smaller, more nimble startups. As the e-commerce ecosystem continues to mature, the barriers to entry for new companies will come down further.

The first wave of fast followers to take advantage of this trend is likely to come from African technology hubs like Accra, Cairo, Cape Town, Harare, Kampala, Lagos and Nairobi. Players that are investing today have the potential to build positions in their respective markets. New entrants will continue to launch competing services, leading to better quality, further reach and lower cost. At the same time, as the market matures, major international players are likely to increase their regional presence.

Selected Ecommerce Companies in sub-Sahara Africa

A range of e-commerce players have emerged in Africa in recent years, offering different solutions and services. While there are now thousands of ecommerce startups throughout the continent, only a handful have reached significant scale, often with foreign backing. The business models vary considerably:

• one Africa Media is backed by Seek (Australia) and Tiger Global (united States) and the holding company for Buy Rent Kenya, Brighter Monday, SafariNow/StayNow, Private Property, Jobberman and Cheki. Cheki is a “vertical classifieds” portal for car listings with a presence in 10 African countries
• MIH Group/Naspers (South Africa) is behind brands such as oLX, News24 and Property24, and has previously supported DealFish, Kalahari and Mocality. oLX has a presence in more than 100 countries, including a handful in subSaharan Africa. It offers a “horizontal classifieds” portal that enables users to upload content, send purchase inquiries and close sales without the involvement of a neutral third party
• Rocket Internet (Germany) operates in more than 100 countries and is behind ecommerce brands such as Jumia, Lamudi, Carmudi, Hello Food and Jovago in subSaharan Africa. Jumia is an ecommerce portal with a base in Nigeria and a presence in another seven African markets. Similar to Amazon.com, it maintains its own inventory and manages logistics and fulfillment end to end
• Ringier (Switzerland) has ownership stakes in African ecommerce companies, such as Rupu, Pigiame, Zoom Tanzania, Tisu, Pulse, Allsports and ExpatDakar
• Bid or Buy in Kenya and South Africa combines B2C and C2C by enabling sellers to independently list items for purchase, while also managing some inventory directly. For example, a buyer in Kenya can either purchase an item from a third party seller through a bidding process, or buy an item directly from Bid or Buy
• Various ecommerce payment gateways have emerged. These include, but are not limited to, iPay, PesaPal, JamboPay, Paga, Kopo Kopo, Yo!Payments, ozinbo, 3G Direct Pay, Interswitch, Simple Pay and Paynow. They enable sellers to accept various payment types to a single account. Paynow, for example, is an ecommerce payment gateway in Zimbabwe. Similar to PayPal, it enables an online merchant to accept various electronic payments from customers. Funds are held in escrow until the sale has been completed to the satisfaction of both parties.

Go to Source. Reprinted from ICTWorks

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