The growing pains of e-commerce business in Africa

• Main Author: Gopaldas, Ronak
• Other Authors: Nanyang Business School
• Format: Newsletter
• Language: English
• Published: 2023
• Subjects: Business::Finance; E-Commerce; Africa; Logistics
• Online Access: https://www.ntu.edu.sg/cas/news-events/news/details/the-growing-pains-of-e-commerce-business-in-africa; https://hdl.handle.net/10356/166343
• Institution: Nanyang Technological University

E-Commerce has long been touted as Africa’s next high-growth market. Several reasons are cited for the optimism, among them the continent’s large, relatively young, and tech-savvy population, increasing mobile internet penetration, a fast-growing middle-class and rising disposable income. The burgeoning industry has seen the birth of homegrown e-commerce platforms such as Jumia (Nigeria), Takealot (South Africa) and Kilimall (Kenya), and the market’s potential has not gone unnoticed by bigger international players like Amazon, Alibaba, Shein and even Facebook, all of whom are positioning themselves for a piece of the e-commerce pie. Africa, however, is a truly unique operating environment and presents its own challenges, from logistical constraints, underdeveloped infrastructure and limited payment gateways to security, access to capital and a customer trust deficit. The playing field, which is becoming increasingly crowded and putting pressure on margins and profitability, is ripe for both consolidation and disruption. Of the continent’s e-commerce markets, South Africa, Nigeria, and Kenya are among the most advanced and offer valuable lessons to potential entrants and upstarts about how to overcome Africa’s idiosyncrasies, and what happens when you don’t.