There has been a sharp increase in internet users worldwide over the past few years, with recent statistics showing that one-third of the world’s population is now online. This advancement has aided the development and utilisation of e-commerce in Africa and globally.
Before the COVID-19 pandemic, e-commerce was often considered a luxury, providing simplicity and convenience to customers who could afford it. However, the pandemic has shown where that belief fell apart. COVID-19 made it abundantly evident that consumers can acquire better prices, a wider range of products, and time savings through e-commerce.
In a statistics recently published on statista.com, e-commerce will account for 23% retail sales by 2022 and sales will hit $7.3trn by 2025 as more Africans have access to the internet
Entrepreneurs and digital creators are now integrating and utilising the internet to access more clients, scaling at unexpected rates, and reaching new markets. In other words, technology is transforming how customers and businesses interact, recasting online commerce from mere convenience into a utility, bolstered by an interconnected world with increasingly interdependent supply chains. And so, the needle keeps moving.
Besides introducing new ways of transacting, e-commerce offers economic growth for many already developed and developing countries. In a statistics recently published on statista.com, e-commerce will account for 23% retail sales by 2022 and sales will hit $7.3trn by 2025 as more Africans have access to the internet.
The benefits of this growth cannot be understated. Research also suggests that by 2025, as many as three million new jobs could emerge from digital services and the online marketplace. Going by this insight, it is safe to say e-commerce has the potential to facilitate trade and other income-generating activities, thereby contributing to Gross National Product (GDP) through export growth and employment creation.
Global e-commerce sales are expected to reach $5.5trn this year, according to theafricareport.com.
The increasing access to the internet is seeing a rapid emergence of e-commerce sites eager to tap into the continent’s growing online consumerism. The likes of Nigeria, Kenya, South Africa, and Ghana are at the forefront of this evolution.
E-commerce companies such as Selar.co are supporting thousands of African entrepreneurs and digital creatives with useful technology tools, resources, and community support to reach their customers and monetize their skills as digital products. Jumia, a Lagos-based online retailer, is also dipping its finger in almost all major markets on the continent, cutting themselves an enviable piece of every pie. Jumia is also among Africa’s best-funded e-commerce sites, having raised US $150 million in funding in 2014.
In Ghana, Pan-African marketplace for manufacturers and suppliers of commercial products, Plendify, launched a B2B e-commerce platform to facilitate customers’ access to wholesalers, manufacturers, exporters and importers. The B2B marketplace was built to reduce the inaccessibility and difficulty local and international buyers face in reaching African suppliers for goods in bulk.
The 2017 Accenture Digital Consumer Survey finds that in countries such as South Africa, smartphone acquisition increased from 52% in 2016 and 63% in 2017
According to Douglas Kendyson, Founder of Selar, the diffusion of e-commerce in businesses has continued to contribute to developing the growing economy by stimulating entrepreneurship, which creates avenues for entrepreneurs and creators, especially in Africa, to access exposure to broader markets over the internet.
“The expansion of e-commerce industries has created a demand for skilled human resources, providing employment opportunities to ease trade and other revenue-generating activities, boosting the Gross National Product (GDP) of the countries in the continent,” he said.
“Last year, Selar marked a milestone of paying over $2.4M to African creators on our platform. Most of these creators are digital product sellers, selling ebooks, courses, training, e.t.c. One of the major highlights for us was seeing that most of the creators that use our platform are employers of labour, and that’s how impactful creators of today are. They end up hiring for digital skills. It’s also interesting when you study historical records of creators across the board. We’ve been operating for six years, and the earning potential of a creator grows as they grow over the years, and that’s why creators today are powerhouses for multimillion-dollar businesses of tomorrow. The results are evident in job creation, and revenue growth as more African creators create more exportable content”. He added.
As more people take to the internet to sell and buy, the demand for devices such as smartphones also increases. The 2017 Accenture Digital Consumer Survey finds that in countries such as South Africa, smartphone acquisition increased from 52% in 2016 and 63% in 2017. Some of the more technologically advanced nations like Kenya and Nigeria boast a smartphone uptake of more than 44% and 30% respectively. Across the continent, the number of smartphone users saw a nearly twofold increase, reaching more than 226 million. This spike in smartphone penetration is steering a digital revolution on the continent, exposing users to the endless opportunities the internet provides.
As mobile internet penetration grows, so has the desire for convenience. Global e-commerce sales are expected to reach $5.5trn this year, according to theafricareport.com. How then does Africa commerce tend to leverage on this trend?
Local businesses are gaining cost-saving benefits from electronic transacting and further get exposed to wider markets over the internet. According to Douglas, “one of the fundamental contributions of e-commerce is that it increases the speed and accuracy of business exchanges, thereby reducing trade transaction costs. The use of websites and electronic communications to conduct business has greatly reduced transaction costs associated with working with paper”.
“In addition, the sale of digital products online has offered a cost reduction opportunity to both buyers in terms of cost of production and sellers who are now able to avoid shipping costs while at the same time ensuring that buyers can enjoy their purchase as soon as the transaction is completed”.He added.
E-commerce is impacting the growth of businesses in Africa. However, substantial barriers to e-commerce development on the continent remain. These barriers are often due to the digital divide, and lingering doubts about the reliability of payment systems, transaction security, and the quality of goods and services offered have hindered the adoption of online marketplaces.
Addressing this, Douglas said,” there is a real digital divide between Africa and other developed continents. This can be improved by putting into consideration improvement in internet connectivity. On the other hand, educating people about digital payments’ safety and transparency would help boost consumer trust. To support this, data privacy and consumer protection legislation should also be implemented”.
“At the heart of every transaction online, payment needs to be made and while this is better today than it was years ago, more work needs to be done to ensure payments are efficient across the continent” He added.
