As internet penetration deepens in Africa, online retail is correspondingly gaining ground among consumers looking to cut costs or simply avoid the hassles associated with conventional shopping.
In South Africa where domestic internet access has been hampered by income inequalities, online retail is becoming more attractive to citizens thanks to low-cost smart phones which make shopping easier. Expectedly, the leading South African online retailer, Kalahari.Net, is cashing in on the situation. The company is bent on wooing middle-to-low income consumers with affordable products ranging from books to kitchen appliances. Grocery retailer Pick 'n' Pay is also on the list, and ran head-to-head with Kalahari.Net with a 6% value share in 2013.
Today, the average South African consumer can shop at home with one click. This jells with Euromonitor International's recent research findings, which project that online retail in South Africa will register a 16% compound annual growth rate going forward.
Kenya is not excluded from the race. Its Rupu caters to consumers' eShopping interests; while Tanzania has Atsoko.com; Zambia, DotCom Zambia and Ghana, eShopAfrica.com.
In Lagos, Nigeria the story is no different. With a population of over 18 million, the city's roads are often congested. Some harried consumers have naturally plugged into online retail outlets such as Jumia, Konga and DealDey.
Jumia claims it is Africa's answer to Amazon. Established in 2012, it has branches in Morocco, Ivory Coast, Egypt and Kenya. The online retailer keeps domestic appliances such as TV sets in stock, including clothing and other basic items. Konga.com sells electrical gadgets, home appliances and personal care products; while DealDey offers discounted items in dining, travel, entertainment, healthcare and more.
Typically, online retail is conducted on a pay-before-service basis. But most African retailers allow pay on delivery since consumers are wary of web-based scams. On Jumia, prospective customers browse and select products of their choice. Next, they fill out their bio-data and choose the payment option that suits them - ATM/Debit Card, pay on delivery or the retailer's e-Wallet. They place their orders and allow 3-8 days' lead time for delivery at their doorsteps.
Meanwhile, European companies interested in Africa's online retail market should note that profit will take some time. The market is promising, thanks to the growth in internet accessibility and public interest in hassle-free shopping. But abysmal infrastructure, port delays and mistrust of web-based transactions remain problems to contend with.
"Internet business is only viable if you can break down barriers to the physical movement of goods and services including the problem of inaccessibility," notes Dr George N. Njenga, Dean, Strathmore Business School, Kenya. "Anybody can come up with a policy for paying through the internet so long as there's a need for it.
He recalls an online gift shop set up by students at Strathmore which generates $50,000 from monthly sales: "Why should I go to the supermarket for those items when my students have created the environment for it online?" he wonders.
Tunde Kehinde and Raphael Afaedor, co-founders of Jumia, recently observed that starting out, their major hurdles were public mistrust of online purchases and limitations in distribution logistics. So they opted to keep customers in direct contact with their 24-hour call centre, while maintaining a fleet of drivers and door-to-door delivery system.
"The foundation is set for the future of e-commerce .... I am very proud to know the hard work has paid off," quipped Kehinde.
Indeed, the future of Africa's online retail market is bright if the continent can leverage on its strengths and work on its weaknesses in the short or long run.
Jakpor is the Communications Officer, Lagos Business School, Nigeria