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Online Shopping Explosion in Africa

06 July, 2014

Source: ICT Africa

 
Kihara Kimachia

A few years ago, it was inconceivable that you fire up your browser, go to online shop, buy goods and have them delivered to their doorstep in an African city or village. Thanks to the proliferation of Internet enabled mobile phones and faster connectivity; this is quickly becoming the norm. At the click of a button or a few screen taps, you can order anything from a computer to a kitchen appliance all without leaving your home or office.

The International Telecommunication Union (ITU) estimates that 20% of the population in Africa will be online by the end of 2014. This is up from 10% in 2010 and only 0.5% in 2000. Despite this figure being far behind the world's average of about 40% and 78% in developed countries, more Africans are beginning to explore online shopping as an alternative to traditional shopping.

The widespread uptake of mobile phones and faster Internet as a result of the commissioning of several undersea and terrestrial cables have acted as a catalyst for the expansion of e-commerce in places like Kenya, Nigeria and South Africa. It is not coincidental that these three countries are also home to the largest e-commerce enterprises operating out of Africa.

According to a recent survey by MasterCard, 54% of South African's shop online. In Kenya, a survey by the Kenya ICT Board found that 18 to 24% of 1,700 respondents regularly shop online for eBooks, movies and music. In Nigeria, there is 28% Internet penetration. Mobile phone connections in Nigeria have grown from a mere 30,000 in 2000 to over 120 million by 2013.

Companies leading the online shopping charge in Africa include Jumia which has a presence in Egypt, Morocco, Nigeria, Côte d'Ivoire, Uganda and Kenya. Jumia is owned by Germany's Rocket Internet. Rocket Internet also operates Zando, an upcoming ecommerce clothing store operating out of South Africa. Other leading online shopping ventures in Africa include Nigeria's Konga and, South Africa's Kalahari and BidorBuy. There are also several online sites operating along Groupon's business model, these include DealDey in Nigeria and Rupu in Kenya.

Untapped Market
If the size of the untapped market is anything to go by, the future of online shopping is bright in Africa. Nigerian has over 120 million mobile phone subscribers. Many of these use Internet enabled phones or feature smartphones which allow them to browse shopping websites. Yet, fewer than 20 million are currently shopping online. The same can be said of Kenya and much of East Africa. All online shopping companies operating in these countries are reporting phenomenal growth. Africans have come to appreciate the ease, safety and convenience of online shopping. It also a fact that online shopping firms charge lower prices than traditional brick and mortar companies. This is because Internet retailers have fewer overheads; they do not need to construct or rent expensive showroom space and hire shop attendants. Goods are stored in massive warehouses and shipped to customers once ordered from the online store.

Foreign (outside Africa) e-commerce companies have recognized the opportunity and are descending on Africa in droves. Already, most of the major online shopping sites such as Jumia are owned by non-African companies. Many existing firms such as Konga in Nigeria have also sourced investment from outside the continent. Clearly, the future of online shopping in Africa is bright.


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