Booming e-commerce in Africa
Africa’s booming e-commerce sector can not only jump-start small companies however likewise assist big business enter a market loaded with energized customers.
Africa has one of the most digitally linked populations in the world, with 400 million web users. Sacha Poignonnec, cofounder and co-CEO of Jumia, Africa’s largest internet group, goes over why the e-commerce opportunity in Africa is so great for companies large and small in this interview with McKinsey’s Georges Desvaux. A modified records of his remarks follows.
Africa’s huge hunger for e-commerce
From the outdoors, you take a look at Africa, you read the news, and you believe it’s going to be very tough– everything is going to be very tough. We started business in Lagos, and on the very first day we had customers purchasing smart phones. I was so shocked. On the very first day we opened the site, no one knew us, and yet 10 consumers bought mobile phones.
We were very surprised by the appetite of customers for items that are in some cases costly. We were really stunned that we could find a way to make the deliveries happen. A lot more favorable than negative things were occurring. I’m extremely bullish about e-commerce in Africa since what is unique in this continent is you have this huge population– over one billion people– and they are extremely linked.
There are more than 400 million internet users in Africa, which is the second-largest internet-user population on earth, simply after China. And yet circulation for items and services is challenging. And it’s well-known that in Africa, for customers, it’s harder to find items and it’s harder to store. Since of mobile and due to the fact that of the internet, customers now have a method to gain access to goods and services in a more efficient method.
Understanding Africa’s consumers
Customers in Africa desire the exact same thing as consumers all over else: they desire excellent products at a great cost, good quality. It’s the very same thing. I speak to a great deal of service partners who are considering Africa and how various it is. There are some things which are the same everywhere. And for us, consumers desire to conserve time and conserve money.
In regards to customer sectors, what is unexpected is we have a great deal of customers who are not always in the big urban locations. From an outsider, one could believe, “OK, e-commerce is for the inhabitants of Lagos and Cairo and Nairobi.” We have a great deal of consumers who live in the small towns and in the little cities. Why? Because they see a great deal of choice on Jumia, and they do not really have that option in the areas where they live. For them, it’s really difficult to have access to the items.
Conquering barriers to business
Among the barriers, obviously, of e-commerce is the logistics because we need to move the items from the merchants who are offering the items to the consumer who is ordering the product. And logistics is certainly a big challenge for whoever understands Africa.
In Africa, there’s no address system in the majority of the cities. For someone to find a consumer, you need to have a regional partner who understands where the consumer is, based upon extremely subjective information. And, for instance, if you state in a city in Africa, “I live in the third street by the church with the blue door,” that’s the address.