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Logistics: The Backbone of Africa’s E-commerce Boom

There has been a lot of growth and development in Africa’s communications infrastructure. The deployment of broadband fiber optic cables along the coast has in a great way, helped to pace the revolution. Based on GSMA’s report, roughly half a billion Africans own a smartphone. ”Some of these key developments across the continent have been responsible for spiraling the growth of the e-commerce sector in particular pockets of Africa”, LogupdateAfrica reports.

e-commerce market

With these developments, Mckinsey’s Global forecast that Africans could be buying $75 billion worth of goods and services online by 2025.

”Interestingly, Nigeria, the continent’s largest consumer market, revenue has doubled each year since 2010. Five years ago, Internet penetration in Africa was just was about one-third of the world average and in 2016, it improved to 28.6 percent, which is just 61 percent of the global average. This clearly indicates that the retailers no longer have the fear that they have been selling the products to people who aren’t online”, as quoted by LogUpdate Africa.


Eyeing potential in Africa’s e-commerce market

Experts say that there remains a lot of positivity for Africa’s ecommerce market. Speaking at the opening panel session, IATA’s Global Head of Cargo, Glyn Hughes estimated that by 2050,  the continent’s population could reach 2 billion people, representing 20 percent of the world’s population, while it was also the world’s youngest [population median age] continent and would remain so. “This means there is an increased labour force potential and huge potential consumer market,” he said.

He added, “With regards to the internet connection, 28 percent of the continent is actually connected to the avid use of internet versus 54 percent of global average. Leading the ways are Nigeria, Kenya, South Africa in terms of connectivity.”


Room for improvement

One of the major areas for improvement identified by Atlas Air Vice President, Sales and Marketing, Graham Perkins was in customs rules and regulations, which he said in some countries “dated back decades”.

”In some places 100 percent of shipments required inspection by customs, while in others transit cargo could not process through customs, which meant it would be impossible to set up a regional hub in that country. Wealthy Africans also worry about being scammed, which prevents them from buying high-value items and putting their financial details online. On the other hand, Cash on Delivery (COD) poses to be a problem for sellers: theft, the cost of returns, which wipe out losses from successful sales, couriers returning cash late, etc.”, he stated.

”One of the emerging solutions is mobile-based e-commerce third party payments.There exists a huge opportunity for startups which can act as a trusted third party between buyer and seller to handle money”, he continued.

Those who are in the e-tailer business would look at the fast and on time delivery of the products to the end customer. Since the Logistics infrastructure is not adequate in the African countries, e-commerce sector is yet to reach where it should be. The last mile delivery boys on bikes ride on the poor road infrastructure to ensure timely delivery of the product.

Perkins suggested the need for African countries to create a free trade zone as this could benefit e-commerce retailers and air cargo businesses investing in regional hubs.

New wave of technology: How Logistics can drive E-commerce
Since Africa’s complex Logistics requirement encompasses multiple logistics vendors to move goods from one region to another, what happens is that the data get processed in different levels and resulting in transparency issues between service providers and customers. Technology can bring multiple vendors together to a single platform where they can exchange data and work in a synchronised manner. E.g: Shipment is booked from Nairobi by Company A, Moved to Mombasa through a Bus Fleet company B. Delivered locally in Mombasa by bikers associated with Company C, and all of them are hooked to each other so if customers track the package on a website they will be able to get full information.

It is an unarguable fact that the operations of e-commerce companies such as Jumia, Konga, Carmudi, Easy Taxi, Everjobs, Jovago, Kaymu, Lamudi, Vendito and Zando across 23 African countries has greatly helped to facilitate the e-commerce boom in the continent.

With regards to the E-commerce boom in Africa, Perkins pointed out, ”I would say that Africans are ready to take [e-commerce] on, the question is, is Africa itself willing to take it on?”.

Culled from Logupdateafrica.

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