Keeping pace with Africa’s shifting retail market: E-tailers respond to evolving customer needs

The African continent is being viewed as a potential goldmine for retailers, with a population of 1.4 billion, including over 500 million internet users and over 330 million ecommerce consumers. Furthermore, with 19 of the top 20 fastest-growing countries in the world, the continent’s trade landscape is becoming increasingly attractive for new market entrants and pan-African retail operations.

However, many countries on the continent have inadequate infrastructure, such as a lack of national street address systems, poor logistics, and inadequate transportation networks. A large portion of the African population remains unbanked, making it difficult for them to participate in ecommerce. Additionally, many ecommerce transactions in Africa are still done in cash or in some cases on credit, which can make it difficult for retailers to manage their finances.

Many African consumers are not familiar with online shopping or do not trust ecommerce platforms, which often require upfront payments. Last-mile delivery can be expensive in Africa, due to the lack of infrastructure and the need to reach remote areas. This can make it difficult for retailers to deliver goods to customers in a timely and cost-effective manner. Although the number of internet users and smartphone users is increasing in Africa, there are still large segments of the population that are not connected to the internet or lack digital literacy, and mainly use their phones for social media and calls.

Despite these challenges, the growth of ecommerce in Africa is expected to be significant, and the McKinsey Global Institute estimates that ecommerce will be worth $75bn by 2025 in Africa’s leading economies, such as South Africa, Nigeria, Kenya, Egypt and Morrocco. Additionally, the number of digital shoppers in Africa is expected to double between 2015 and 2021, driven by the increasing availability of 4G networks and smartphones.

While digitalisation has yet to drive significant transformation in traditional or informal retail in some countries, it is playing a significant role in modernising the sector in countries such as Morocco and South Africa.

In Kenya, the ecommerce sector has been growing rapidly, as the country is leading the way on the continent in terms of digital payments, with a lower percentage of people using cash as a means of payment compared to markets like South Africa and Nigeria. This has been driven by the widespread adoption of mobile money platforms such as M-Pesa, which has made it easier for people to make digital payments. The government of Kenya has recognised the potential of ecommerce and has been taking steps to support the sector, such as the development of a national ecommerce strategy, the establishment of an ecommerce association, and the launch of a digital payments policy.

As a result, the African retail market has reached a pivotal point and presents an opportunity to adapt to customers’ changing behaviour and preferences to foster long-term customer loyalty. Retailers that do not prioritise the customer experience risk missing out in this new market. Especially with Amazon lurking in the wings.

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