African retailers are intent on making their presence known, online. But, can they achieve success despite the low numbers of internet penetration documented throughout Africa? The answer is yes. In 2012, Internet World Stats released figures of Africa’s online penetration. Nigeria was among the higher percentages, with 28.9% of the population actively using the internet.
Business Day reported that online retail in Nigeria generated N62.4 billion in 2011, N12.5 billion more than revenues measured in 2010. These figures are promising – as is investor confidence. It is estimated that Nigeria spent N100 billion on developing their internet technology over the last three years, says Business Day. They added that, “Konga, an online retailer, led by its astute CEO, Sim Shagaya, has reportedly raised about $40 million from Kinnevik and Naspers in its quest to develop a world-class integrated retail system for Nigerians.” Another successful online retailer, Jumia, claims to be “The biggest online shopping mall of Africa.”
At the 2014 Retail Leaders Conferences, held in Lagos, the agenda of customer guarantee was at the forefront of discussion. That is, the seller guarantee’s to take responsibility for their products, even once it has been ‘checked out’ of the virtual shopping cart. As with any retail, customer satisfaction is the key for online retailer’s success. Nigeria seems to have embraced this, and online retailers are reaping the rewards.
What about the rest of Africa?
As a whole, Africa has an internet penetration average of around 15%, some countries ranking as low as 0.3%. But, these numbers shouldn’t discourage potential online entrepreneurs. Africa stands as a strong example of technological leapfrogging, where the foundations of 20th century technology were skipped, and the continent was launched straight into the technological realms of the 21st Century. Africa has achieved this with high usage figures of mobile phones.
OAfrica argues that most internet statistics, have excluded mobile phone usage. So, while Internet World Stats says that South Africa has a 17.4% (2012) online penetration, more than 20% of the population own, and use smart-phones, according to Nielsen consumer research. In addition, online techies predict that most Africans will be in possession of a Smart-phone by 2018.
What does this mean for online retail in Africa?
Considering this, if online companies are looking to reach a larger shopping demographic, the potential market gap for online retail in Africa seemingly lies in mobile phone technology. Marketing strategies aimed at mobile users are a must for any online business. Mobile coupons, virtual versions of the outdated paper cut-out discount coupons, is an example of innovative marketing that targets mobile users. These virtual discounts make online shopping, using mobile phones an intriguing and financially lucrative option for consumers. Groupon is an online company that offers vouchers and discount for online shoppers buying anything from food, electronics and fashion, to medicines and pet supplies. While you can sign up for Groupon using email, an app for android and IPhone is available on the site.
African consumers are more informed, brand conscious, and with increasing numbers of the urban middle class, retail expansion is a given. Internet access will always be growing as the African countries strive to improve their economic sectors, and keep up with evolving market trends. This in mind, online retail for mobile phone, is a market opportunity not yet entirely realized. It is also the opportunity that could launch many online businesses that are struggling to bridge the gap between, consumers without in-home or at-work internet access.