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Sub-Saharan Africa’s online retail space is experiencing heightened activity lately with numerous new ventures being launched, as well as industry consolidation such as the merger of major South African e-tailers Kalahari and Takealot. And a growing number of SMEs are also discovering the potential of selling their goods online.
Sumesh Rahavendra, Vice President of Sales for DHL Express Sub Saharan Africa, says that Africa offers enormous growth potential for e-retailers given that online shopping is in its infancy in the region. “Understanding your consumer, knowing how to target communications to them and ultimately deliver what they want, when they want it, is key to the ongoing success of e-commerce in the region.”
Major takeaways from February’s 2015 eCommerce Africa conference, where leaders from Google, PayPal, Visa, Spree, Konga and PriceCheck shared their thoughts on what it takes to succeed in the region’s e-commerce arena, were as follows:
1. Differentiate your offering
It is becoming increasingly difficult for newcomers to stand out from the crowd or take on the established players. But one way is to differentiate their offerings, or sell niche products. South African online clothing retailer Spree has found success by focusing on smaller fashion brands and top designer items. South Africa has also seen the emergence of e-tailers specialising in niche products such as socks and cupcakes.
2. Take advantage of cross-border opportunities
An executive from payments company PayPal revealed that cross-border online shoppers spend twice as much as those only buying from local merchants. E-tailers not targeting international customers are thus losing potential profits. This was echoed in a 2013 DHL study that found internationally-focused SMEs are twice as likely to be successful as those only operating domestically. And some of the best ways to drive cross-border sales is offering customers free shipping as well as safe and trusted payment methods.
3. Ensure a seamless experience across all devices
Many e-tailers are not keeping up with consumers’ eagerness to buy goods on their mobile phones. Almost all the conference speakers highlighted the importance of a consistent user experience across all devices – whether mobile, tablet or desktop computer. A Google executive noted that more than 50% of the search giant’s commerce-related searches from South Africa now come from mobiles. And the number is even higher in countries such as Nigeria.
4. Clearly define your customer and prioritise
Although there are some similarities between African countries, they also vary greatly. E-commerce companies have to do a clear analysis of the customer they are targeting.
There is also a need to prioritise certain countries or cities. For most companies it is not feasible to have a physical presence across the entire continent. “There are no medals for being in many African countries,” said Sim Shagaya, CEO of Konga, one of Nigeria’s largest online retailers. Companies should focus their efforts where there is a large addressable market. For example, the percentage of middle-class Nigerians (12%) is more than double that of Kenya (5%), making it potentially more lucrative for companies targeting this demographic.
5. Have a long-term perspective
It is likely going to take a while for online retail in Africa to reach the same level of sophistication seen in the west. For example, in Nigeria many customers are not yet comfortable with paying for goods online, prompting e-tailers to allow cash payment on delivery. Companies should not expect overnight success, and need to work extra hard on building their infrastructure and educating consumers about buying online. Konga’s Sim Shagaya compared the journey to running a marathon.
“In the future, logistics will take over the role as an enabler for online retailers even more so than today. As a logistics company, we have a good overview on companies in various industries in almost all countries of the world. In Africa, we are continually noticing the rise of e-tailing on the continent and we are increasingly becoming an advisor to these businesses and partner for success, as opposed to a just a traditional service provider,” concludes Rahavendra.