Africa has a rapidly growing communications infrastructure supported by the growth of Internet usages, accessibility to smartphones and the growth of the middle class income population. All of this adds up to one thing – massive economic growth for e-commerce in Africa. On the same note Africa posses heaps of challenges and inefficiency that have to be filled so that we can all enjoy the massive potentials of African e-commerce.
The people to fill those gaps are entrepreneurs and startups. See below challenges and opportunities that lie beneath…
i) Delivery This problem is not unique to Africa –but based on our poor infrastructure it is more pronounced here. A lot of businesses have opted for motorbikes to deliver goods but this is expensive and inefficient, not to mention difficulty in scaling it to deliver packages over hundreds of miles.
The opportunities that lie in this for startups include crowd shipping (using a social network to deliver parcels) with a pay-on-delivery solution built in.
ii) Illiteracy is high in many African countries. Shopping online currently requires literacy. Opportunities include building educational apps supported by e-commerce advertising, as well as rebuilding the e-commerce experience in a way that requires less reading, for instance, through less text and more images, perhaps a sound addition?
iii) Broadband costs mobile Internet bandwidth costs significantly more in Africa. This will change as years go by as competition drive down prices.
Political risk and instability means that Africa is a high-risk environment therefore companies have to charge a higher price to justify the riskier investment.
Internet based on mobile networks is inherently more expensive than wired Internet. But because of cable theft Internet companies continue to rely more on expensive wireless transmission as much as possible, and pass the costs on to the consumer.
Startups that can minimize the consumer’s bandwidth usage while allowing them full e-commerce functionality can profit tremendously from this opportunity.
iv) Fraud Africans worry about being scammed, which prevents them from buying high-value items and putting their financial details online. Currently a lot of African e-commerce companies are using cash on delivery payment model to solve the problem which cause problems for sellers including theft, cost of returns, which wipe out losses from successful sales, couriers returning cash late, etc.
One of the emerging solutions is mobile-based e-commerce third party payment. In general, there is a huge opportunity for startups, which can act as a trusted third party between buyer and seller to handle money.
The thing is that challenges create an opportunity to innovate and fill the gap. When you look at all “the problems: around you, spend some time to think on how you can solve those issues, then think further on how you can use technology to help your solution work better. What the youth has is time. Time to research and time to make mistakes. All are great pre requisites for running successful ventures. Spend you time researching and learning from other startups across the world and venture into your startup and who knows, you could end up being one of the African e-commerce billion-dollar acquisitions within the next 10 years.