The pandemic accelerated the uptake of e-commerce
While internet and mobile subscriptions continued to grow in Africa in recent years, e-commerce in general was slow to gain traction and was hobbled by various challenges, ranging from consumer preference for in-person shopping, slow delivery times, logistical issues and informal home addressing systems. But the various stay-at-home orders last year meant many consumers shifted to digital channels out of necessity with the closure of brick-and-mortar shops.
Just like the rest of the world, once the COVID-19 crisis hit Africa, countries around the region introduced various forms of lockdowns to mitigate the impact of the virus. As a result, the restrictive measures have led millions of people in Africa to depend on digital platforms for shopping, work, entertainment, education and healthcare. The 2020 gains in African e-commerce compared favorably to the increase in online retail sales as a share of total sales in more economically advanced regions and were higher than many other emerging markets. Within Africa, Nigeria, Niger, Rwanda and Mauritius led the gains, followed by Kenya and Democratic Republic of Congo.
That Africa has been able to pivot so successfully to greater use of the online sales channel is all the more remarkable given the fragmentation and informality of its retail sector. With the exception of South Africa, the majority of commerce in Africa occurs in informal markets, accounting for 85.8 percent of total employment, according to the International Labor Organization.4 Pre-pandemic, business-to-consumer (B2C) e-commerce platforms reach did not extend much further than urban middle- and upper-class consumers.
The secret to Africa’s pivot to greater e-commerce sales was the faster growth in business-to-business (B2B) sales, which layers online sales onto of the existing network of informal retailers rather than supplanting them. SSA’s B2B e-commerce platforms thrived because they overcame issues of consumer trust and logistics by working with and tapping into the informal markets, rather than working around these sales channels. This allowed the B2B platforms to provide goods beyond urban areas and well into remote regions. The majority of SSA consumers purchased from the informal shops and over time have built a trusted relationship with them. That is why some informal shops provide loan services to their loyal customers. Informal retailers order goods through their mobile phones. These informal shops who know their customers very well continue to act as the middle-man between consumers and the B2B e-commerce companies.