Interview: Jeremy Hodara
What are the greatest hurdles e-commerce firms face in expanding their client base in Africa?
JEREMY HODARA: Building up trust in and awareness of online retail platforms is a key challenge. Trained team members can show new customers how the platform works, so they feel comfortable using it. More recently, various governments in Africa have embraced e-commerce and engaged stakeholders in discussions to improve communication processes. African countries simply do not have the same infrastructure as many other countries where online retail is present. The road networks are often poor, there is a lot of traffic and houses often have no listed physical address, making them difficult to locate and deliver to. We have set up courier systems, and with Jumia we have our own delivery fleet, which is a considerable upfront expense.
What major demand-side factors do you expect to drive growth in the adoption of e-commerce?
HODARA: Nigeria is experiencing rapid economic growth. Over the past few years the country has seen average annual GDP growth of 7%, and this is set to continue in the foreseeable future. People are starting to have access to more disposable income, driving the demand for consumer goods. In addition, internet penetration is growing, largely thanks to the rising popularity of smartphones. Basic smartphones have already dipped below the “tipping point” of $100 per unit, with prices as low as $15 or $20 for the simplest devices.
How much scope is there for new start-ups in the online retail market?
HODARA: The online retail market only has a small number of major players, so the scope for development is huge. Nonetheless, logistical challenges, lack of consumer confidence and low internet penetration mean that there is the possibility of failure if entrepreneurs do not think through all the possible scenarios they may face. When launching a start-up, a lot of capital needs to be in place. For example, the Africa Internet Group has strong partners such as MTN and Tigo to build long-term success. The opportunity to receive funding from partners backed with expertise provides the opportunity to drive start-up ideas in the right direction.
What are the biggest distinguishing factors between e-commerce operations in African markets?
HODARA: Especially in countries like Nigeria, people are very wary of online fraud, so companies need to reassure them that their websites are secure. Within the last two years of operating in Africa we have already engaged in a variety of marketing and PR activities to reach audiences in remote areas and provide information and education. There is also a difference in the way the internet is used across the different markets: in Africa only a small percentage of the population uses a PC or laptop; thus, Africa is leading in the mobile segment.
Cashless payment is certainly less established in Africa than in Europe or the US. In fact, cash-on-delivery payments are still a viable option for e-commerce retailers in Africa. Cashless payments need to be developed in order to bypass the costs associated with cash on delivery. Online payment options are currently expanding, particularly in East Africa. This development is being driven by mobile money. In Kenya, Tanzania and Uganda there are actually more mobile money accounts than traditional bank accounts.
In terms of fraud protection and prevention, what efforts are being made?
HODARA: Secure socket layer technology is used to encrypt payment cards and ensure that buyers’ details are safe, and retail websites typically feature authentication screens to ensure the purchase is coming from the registered cardholder. The information is submitted via a secure process to the user’s bank so it is not viewed or stored by third parties. Ultimately, people actually pay the moment they can see the product. On the product side of things, e-commerce platforms ensure authenticity by providing a manufacturer’s warranty.
You have reached the limit of premium articles you can view for free.
Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.
If you have already purchased this Report or have a website subscription, please login to continue.