The e-commerce business is booming at the moment all over the world. Companies are expanding their market by creating the best online shopping experience with worldwide shipping. This is a fast-growing industry in it is set to become the most valuable industry in the world. That is why so many people want to start their own e-commerce business and have the opportunity to make money online.
The situation is similar in Africa. The industry is growing day by day, but there are many obstacles along the way. Africa is a large market with a large variety of products, which is why it has the potential to become one of the biggest e-commerce retailers in the world. However, in order for this to become true, the African continent has to do a lot of improvements just to get this business opportunity closer to everyone.
Looking at the statistics, African countries are not on the top of the list for global e-commerce users even though the market is bigger than some regions. In 2017 the e-commerce in Africa was estimated at $16.5 billion and experts are predicting that this number could go up to $75 billion in the next 5-7 years.
These predictions seem optimistic just because Africa has to face a couple of problems before it can
become a top player in the e-commerce industry. Just to make things clearer let’s look at the global ranking made by UNCTAD (United Nations Conference on Trade and Development) that analyses each country and ranks it based on four indicators: a population with access to the internet, population with access to a bank account, the security of web services and reliability of postal services.
Countries like Nigeria, South Africa, and Mauritius which are considered as the most developed countries and the best scoring in Africa according to UNCAD, but they are still on the bottom of the ranking worldwide.
As we mentioned there are many obstacles and still opening a successful business in Africa is as tricky as guessing the winner of the Super Bowl in the football odds. Still, it doesn’t mean it’s impossible.
It is true that Africa has to overcome many barriers before it can be able to fully incorporate the e-commerce business. The first and biggest obstacle is access to the internet. According to a study done by Deloitte in 2016, only 20% of the Africa continent has internet access. This has changed over the recent years but not drastically. Just because the internet is limited it tends to be expensive and with low speed, which means that there is plenty to be done to improve the system.
However, even when the whole African continent has internet access, the e-commerce business will be hard since many of the people do not trust this kind of transactions. This cannot be changed overnight so people will need more time to be convinced to buy something online without seeing it first.
If Africa surpasses these obstacles, the next one will be logistics and infrastructure. There are many problems here such as undeveloped roads, confusing and absent address numbering, the reliability of the postal service and the added costs to cross-border connections, which can be sorted out only by creating transfer free zone.
After dealing with all these issues we come to also a big one which is payment methods. Until now 90% of the people use cash on delivery payment method as we mentioned people have trust issues with online services and delivery of the products. Bank access is also strongly limited with only 10- 15% of the people with access to a bank. All these situations do not help the e-commerce business to grow with the rate of other countries.
There are plenty of things to be done before Africa could be considered a big e-commerce user, but of course, this will need time as most of the problems are complicated. We hope that all these issues will be addressed and Africa will be able to compete with other countries in the e-commerce business.