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Why Hasn’t E-commerce and M-commerce Still Taken Off In Africa
Why Hasn’t E-commerce and M-commerce Still Taken Off In Africa
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The history of e-commerce and m-commerce can be traced to the early 90s, when the Internet became commercially available to the public, allowing people to buy and sell online. Since then, numerous businesses the world over, have adopted the technology in one business model or another.
M-commerce and e-commerce are essentially the same function, with the only distinction being that m-commerce places an emphasis on mobile devices and mobile connectivity.
The adoption of e-commerce and m-commerce as a way to do business has however, not been universally adopted globally. Most of the adoption in e-commerce and m-commerce has taken place in the West, with Africa seeing very little of the observed adoption rates.
The Marvel Of The Shopping Experience Through Convenience
To be clear, one cannot make the mistake of assuming that e-commerce and m-commerce in Africa have not taken off because it is a fallible concept. In fact, e-commerce and m-commerce present so many advantages, to both the seller and the consumer, that it is surprising that Africa has not gravitated to it in droves.
Convenience is the single characteristic that most defines e-commerce and m-commerce transactions. What could be better than making your shopping from the convenience of your home or office, armed merely with a computer or a mobile device.
To sweeten the deal, the purchase will even find its way to you at your specified address, and if the system is sophisticated enough, you can even track the progress of your delivery.
Furthermore, there are savings to go all around wherever e-commerce and m-commerce transactions are taking place. For the seller, e-commerce and m-commerce mean that huge costs involved in inventory management, are eliminated as there is no display space required for products. Often the savings are passed on to the customer.
The customer also saves a lot on time and effort, as they don’t have to physically visit the store, and their delivery comes to them. Of course there are also savings in the time and expense that would otherwise be required to visit a brick and mortar store.
The seller also benefits from the numerous opportunities that come with an online store, such as the ability to stay open 24 hours a day, and be able to sell to customers beyond borders. An online store also provides the store owner with analytics of customer behaviour that provide valuable insights into the business.
The State of E-commerce and M-commerce In Africa
Let’s not get carried away here. E-commerce and m-commerce are not all fabulous. There are disadvantages that come with them, such as the glaringly missing human touch, or the risk of fraud. But it can be generally agreed that the benefits far outweigh the disadvantages. That being the case, then why hasn’t e-commerce and m-commerce taken off in Africa?
According to Statista, share of global Business-to-Consumer e-commerce sales in the Middle East and Africa from 2013 to 2018 grew from 2.2% to 2.5%. By comparison share of global Business-to-Consumer e-commerce sales in North America from 2013 to 2018 shrank from 34.9% to 30.6%. Even with the small decline in North America, it is clear that the proportion of e-commerce sales in North America are significantly higher than in Africa and the middle east.
Several factors work in tandem in order to bring about this state of e-commerce and m-commerce in Africa, the most notable of which follow.
Connectivity Issues
In order for e-commerce and m-commerce to truly take off, a well connected population is a must. After all, how are you going to shop online, if you are not online or if getting online is a major hurdle for you?
Internet penetration is the term used for how ubiquitous the Internet is, and Africa fares below average when it comes to this measure. According to Internetworldstats, Internet penetration for Africa stands at 35.2% which compares to 54.4% and 58.4% for the world average and the rest of the world respectively as of 2017.
Not only does low Internet Penetration limit the use of e-commerce and m-commerce, it also slows its development and propagation. If few people have exposure to a technology, it translates to even fewer being in a position to make use of and develop that technology for the rest of the population.
Security and Trust Issues
Another hurdle for the adoption and common use of e-commerce and m-commerce in Africa is security and trust issues. There are a lot of fraudulent activities that underlie online transactions, such that people are not easily trusting of the technology.
One factor that compounds this is the limited government regulation that exists in most African countries, a situation that leaves most people in the lurch when confronted with fraud, without a lot of options for recourse.
It is also not easy to establish the authenticity of sellers online in Africa, when it comes to trusting sellers with credit card information, further increasing the fraud risk.
Proliferation of Payment Methods
In the West, the standard method of payment for online transactions is the credit or debit card and it works well in such places because the credit and debit card as a payment instrument is well established. On the African continent however, the credit card is far from being universally established as a means of payment.
In most of Africa, cash is King and credit card ownership is sparse, with South Africans owning about half of all credit cards on the continent, with the runner up countries owning about 10% and most below 2% of all card ownership, with a handful of countries taking up percentage points in between. This is according to Statista.
A lot of people in the African context are located in rural settings, and have no access to credit cards. Even in urban settings, credit card use is limited. However, in some countries such as Kenya, mobile payments have taken off in a big way and make payments practical, although this method has not been pervasive with most nations on the continent.
Creative approaches such as cash on delivery or mobile payments, are some of the innovative methods that are required to serve the African continent, but they however also have their challenges.
Limited or Nonexistent Physical Addresses
The conclusion of any online transaction, where physical goods are involved is the delivery. There is however a complication for Africa, when it comes to this crucial step in the process of delivering a product: the physical address.
Most cities in most African countries, do not have a formalised physical address system. What this means is that it is in most cases difficult to pinpoint the final address for a delivery with any reliable accuracy.
Some approaches that have been taken to overcome this obstacle is the use of GPS, or some drop-off zones where customers can collect their deliveries in a designated area. Even with these approaches in hand, they do pose challenges for the online seller, that have led to e-commerce and m-commerce not taking off as it would otherwise have.
Rising To The Challenge
This blog post has discussed some of the advantages of e-commerce and m-commerce and explored how some challenges have slowed down e-commerce and m-commerce adoption in Africa.
Challenges are not meant to prevent us from excelling, once we realise that identifying them is the first step. In coming up with innovative ways to tackle these challenges, lies the opportunity for entrepreneurs of our time, to take on e-commerce and m-commerce on the continent, and reap the benefits.
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