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Africa sees rise in e-commerce, digital marketplace

June 9, 2024

Online shopping is booming across Africa, with the digital marketplace estimated to grow to $75 billion by 2025. Big players like Amazon want to capitalize, but how can the continent unlock its e-commerce potential?

An employee works at a multi-purpose warehouse of e-commerce company Jumia in Lagos
Online shopping in Africa is still relatively in its early stages compared with more mature marketsImage: Guox Jun/Xinhua/IMAGO

Africans are gradually embracing the convenience of online shopping. However, this trend is still in its early stages in Africa, compared with more established markets such as Asia, Europe and the United States.

Projections by the McKinsey Global Institute suggest that by 2025, e-commerce could account for 10% of all retail sales in Africa's largest economies: Nigeria, South Africa and Egypt

But according to experts, though the e-commerce sector holds significant potential in Africa, it faces challenges related to cultural and logistical factors. These considerations are crucial when customizing products and services to align with local preferences.

A delivery man drives a transporter with an advertisement for Nigeria's e-commerce site Jumia
Jumia brings in sales from Nigeria, Egypt, Morocco, Kenya, South Africa and other countriesImage: Issouf Sanogo/AFP/Getty Images

Who are Africa's key e-commerce players?

Africa's largest online marketplace is Jumia, an e-commerce company that attracts 23 million monthly visits. It is followed by the online shopping platform Takealot.com, which has 10 million monthly visits, 96% of which are from South Africa, the country in which its based. 

Souq.com, a Middle Eastern business that Amazon acquired in 2017, has around 10 million monthly visits, most of which are from Egypt. Meanwhile, in South Africa, the fashion and lifestyle retailer Shein is the most popular shopping app.

Jumia's East Africa regional CEO, Vinod Goel, told DW that Africa's online market is still in its infancy.

"We can also see what has happened in the markets where e-commerce has become very mature, for example, [in] China," said Goel. 

"Southeast Asia, India, Europe and the US — in these markets, e-commerce has already taken a higher percentage, and we can see that this is going to happen in Africa as well," he said, adding that the industry is entering an "interesting sweet phase where those barriers are fading away."

What are the implications of Amazon's South Africa launch?

Jumia, which is listed on the New York Stock Exchange, attracts sales from Nigeria, Egypt, Morocco, Kenya and South Africa, among other countries.

Attracting fresh shoppers on social media

Internet penetration has grown in Africa, with around 570 million internet users in 2022 — a number that more than doubled compared to 2015, according to statista.

Nigeria, Africa's most populous country, has the largest number of users which has aided in the rise of online shopping. 

Olisa Chukwumah, a DW correspondent based in Nigeria's capital, Lagos, said social media has become a decentralized tool to find and reach customers directly through platforms such as Instagram.

"You can reach them with the pictures, you can reach them with the quality of what you're offering, you can reach them with a pricing so they can actually reach you directly," he said, adding that internet penetration has been the major driver, particularly for Nigeria when it comes to this online shopping industry.

Challenges to online shopping growth

But for e-commerce to thrive on the continent, some barriers need to be addressed.

Some Nigerians who DW spoke with pointed out that credibility and efficient delivery services are crucial to customer satisfaction.

"Sometimes they advertise one thing, you place an order, but when you get what you've ordered, it's not what you wanted to pay for," one Nigerian said.

Another pointed out that customer service is a widespread issue in Nigeria.

"So we have vendors that as long as they've gotten their money and you've paid to them, managing the customer's emotion is still a challenge. You find that sometimes they might not pick up your calls," she told DW.

DW correspondent Chukwumah agreed with those challenges, adding that getting scammed is still an issue when buying online.

"Nigeria is one kind of a country where they will flood your timeline, they will flood your comments with accusations, they will draw the authorities to you. So they will get you," he said.

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Amazon sets foot in South Africa

In May, Amazon started operations in South Africa. The e-commerce giant is entering a space dominated largely by local e-commerce companies, such as Takealot, and many online retailers in their infancy that are hoping to thrive.

Online retailer Paula Maseko said Amazon's arrival in South Africa could disadvantage small businesses like hers because Amazon "has more resources than we do, and they will most probably have lower prices than we do."

Maseko was optimistic and said her business, like many others, would have to change and adapt in order to survive.

Contributions by Isaac Kaledzi, Eddy Micah Jr, and Olisa Chukwumah.

Edited by: Keith Walker

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