2020 and The Growth of Internet Retailing in Africa

Business Features

Sibonginkosi Mlalazi

Overview

Africa is still a rather small player in terms of global standards in internet retailing; however better access to technology i.e. infrastructure and innovative solutions have resulted in a boost in internet retail sales.

As South Africa is the most developed country in Sub-Saharan Africa, it naturally leads the pack in terms of online sales. We are however seeing other countries use innovative solutions to keep up with the global trend that is online shopping. They are tailoring their offerings to provide Africanised solutions for the region’s unique stumbling blocks and obstacles.

Currently, in Africa, most of the retailing activity is informal and takes place in the street, mainly through markets and street vending. For example, according to Euromonitor International, 90% of retailing in Nigeria is informal, and mainly happens at the street markets.

Innovators are staying ahead of the curve

The Covid-19 pandemic has had quite an impact on retailing trends in Africa, and this has resulted in an increase in the number of people who have been shopping online because of various lockdown restrictions imposed by the different governments during the past 6 months. Retailers that have been able to adapt immediately to the change are most likely to survive after post-Covid-19.

According to Investec, small retailers with no online presence are being driven out of business as a result of the pandemic and the various lockdown restrictions. The pandemic has accelerated the need for online shopping largely driven by a young, digitally savvy and price sensitive consumer.

In Kenya, young adults use social media to interact with their favourite brands and see product reviews before they make purchase decisions. The informal retail sector has since found a way to take advantage of this new normal, via social media.

Small businesses have taken to platforms like Facebook Marketplace. These small businesses operating via social media have experienced growth as they have managed to tap into a new consumer base.

The availability of affordable courier services such as Aramex and PAXI in South Africa, has helped these informal businesses to become serious online contenders, as they are able to process orders in quick turn-around times. Such innovations have helped small businesses to stay relevant during these uncertain times.

Mobile internet retailing is a trend in Africa, largely driven by the introduction of affordable and locally manufactured low-cost smartphones.

Retailers that target the bottom of the pyramid have thus focused their efforts on mobile internet retailing. Major players like PEP and Mr Price have adapted their websites to enable their customers to shop on their mobile phones, with the option of shoppers collecting their purchases in-store at their nearest branch. Bottom of the pyramid shoppers have access to online retailing via their mobile phones, as such creating mobi-sites for the ease of shopping is a step in the right direction for any retailer targeting this market segment.

For the more sophisticated shopper, premium and luxury brands are using virtual reality to enable their customers to make informed decisions before making purchases. Real Estate companies like Jawitz Properties in South Africa provide VR tours of properties listed for sale on their website, so as to avoid having people go for viewings given the strict restrictions of social distancing during the pandemic.

Mercedes Benz also uses VR to showcase their cars so that there are no people crowding at their dealerships wanting to see cars before making a purchase decision. VR therefore helps the customers to make their purchases with the utmost confidence in the capabilities of the brand.

Looking ahead

Moving forward, internet retailing is set to continue to grow in Africa. Giants like Takealot and Jumia are expected to continue growing and still dominate the e-commerce space in Africa.

As access to internet and the middle class grows, more and more people will gravitate towards the ease and convenience that comes with buying online.

In Nigeria, an expected increase in the number of young adults in paid employment over the next few years will support the further growth of mobile internet retailing.

Sibonginkosi Mlalazi is Zimbabwean born Communications Expert based in South Africa. She is the Founder of Ingenious HD, a communications company based in Cape Town.