Big e-commerce brands from China are turning their attention to Africa, believing they can succeed where others have so far failed, hampered by infrastructure problems and a lack of consumer trust.
Africa’s e-commerce market is not short of positive projections – it was worth an estimated $16.5 billion in 2017, and is forecast by Statista to grow to some $29 billion by 2022. By 2025, according to McKinsey, half of Africans will have internet access, and the e-commerce sector could hit over $75 billion.
Domestic pioneers, however, have been largely unable to fulfil continent-wide ambitions, even with strong investor backing. As well as logistical issues, efforts have been dogged by the quality of goods, and the poor conduct of staff. Others have blamed a lack of knowledge of local shopping preferences.
Disrupt Africa, a platform for African startups, says there are now almost 300 e-commerce ventures across the continent’s 54 countries trying to unlock the market’s potential.
And China has signalled its intent, the China Economic Review noted: the China-Africa E-commerce Industrial Development Forum, held in Chengdu last November, saw hundreds of representatives from 19 African nations meet with the leaders of China’s tech sector.
Alibaba – which has set up a number of projects aimed at sourcing African technology talent – already has 4.2 million customers on the continent and, as the Review reported, its portal AliExpress saw transaction value go up almost fourfold in 2017, mainly driven by customers in the core markets of South Africa, Nigeria and Kenya.
Most important now, observers say, is for China’s e-commerce brands to adapt services to the highly diverse range of markets across Africa. But the rapid growth of mobile phone ownership, dominated by Chinese brands, is a good first step.
There are a myriad of challenges ahead, however. An efficient delivery service, with individual postcodes, is lacking in many regions, even in the richest countries. On top of that, there is the low penetration of personal bank accounts and widespread distrust of spending via the internet.
Significant returns then for pioneering Chinese brands may be some way off. But Aubrey Hruby, senior fellow with the Africa Center at the Atlantic Council, says Alibaba’s strategy is a smart one.
“They aren’t trying to go global everywhere at once,” he told the Review. “It has been the company in China’s e-commerce market. They see poorer countries that have little infrastructure, as China before, so they know exactly how to deal with this sort of aspirational consumer base.”
Africa’s e-commerce market is not short of positive projections – it was worth an estimated $16.5 billion in 2017, and is forecast by Statista to grow to some $29 billion by 2022. By 2025, according to McKinsey, half of Africans will have internet access, and the e-commerce sector could hit over $75 billion.
Domestic pioneers, however, have been largely unable to fulfil continent-wide ambitions, even with strong investor backing. As well as logistical issues, efforts have been dogged by the quality of goods, and the poor conduct of staff. Others have blamed a lack of knowledge of local shopping preferences.
Disrupt Africa, a platform for African startups, says there are now almost 300 e-commerce ventures across the continent’s 54 countries trying to unlock the market’s potential.
And China has signalled its intent, the China Economic Review noted: the China-Africa E-commerce Industrial Development Forum, held in Chengdu last November, saw hundreds of representatives from 19 African nations meet with the leaders of China’s tech sector.
Alibaba – which has set up a number of projects aimed at sourcing African technology talent – already has 4.2 million customers on the continent and, as the Review reported, its portal AliExpress saw transaction value go up almost fourfold in 2017, mainly driven by customers in the core markets of South Africa, Nigeria and Kenya.
Most important now, observers say, is for China’s e-commerce brands to adapt services to the highly diverse range of markets across Africa. But the rapid growth of mobile phone ownership, dominated by Chinese brands, is a good first step.
There are a myriad of challenges ahead, however. An efficient delivery service, with individual postcodes, is lacking in many regions, even in the richest countries. On top of that, there is the low penetration of personal bank accounts and widespread distrust of spending via the internet.
Significant returns then for pioneering Chinese brands may be some way off. But Aubrey Hruby, senior fellow with the Africa Center at the Atlantic Council, says Alibaba’s strategy is a smart one.
“They aren’t trying to go global everywhere at once,” he told the Review. “It has been the company in China’s e-commerce market. They see poorer countries that have little infrastructure, as China before, so they know exactly how to deal with this sort of aspirational consumer base.”
Sourced from China Economic Review, Brand Spur Nigeria; additional content by WARC staff
