Africa has been a laggard in ecommerce for many reasons, including lack of internet access, poverty, a high rate of illiteracy, and logistical inefficiencies. Most of these problems persist but technology advances — notably smartphones — have given millions more Africans access to the internet and mobile payment systems.
Consequently, the continent may be the next emerging market to make significant strides in online shopping. Research firm Statista estimates that the ecommerce sector in Africa generated $16.5 billion in revenue in 2017 and forecasts revenue of $29 billion by 2022.
Three countries — Nigeria, Kenya, and South Africa — dominate e-commerce sales. Kenya has a population of 48.5 million and an impressive 79 percent internet penetration. This is because Kenya is home to M-Pesa, the mobile wallet provider started by mobile telecom provider Safaricom. The availability of a secure payment system encourages internet access and online buying.
More than 45 percent of Kenyan adults use M-Pesa according to Emergent Payments. Safaricom also recently established a partnership with PayPal to enable Kenyan customers to easily transfer money between PayPal and M-Pesa mobile wallets. This collaboration will open global marketplaces to Kenyan entrepreneurs and businesses that wish to sell abroad.
Safaricom’s partnership with Western Union.
In November 2018, Safaricom announced a partnership between the telco and financial services company, Western Union. This partnership was set to allow Western Union and M-Pesa customers to transfer funds between themselves.
The new service is part of Safaricom’s new M-Pesa Global product that aims to expand the reach of M-Pesa beyond Kenyan borders. Through M-Pesa Global, M-Pesa users are now able to send money to any of the 500,000 Western Union agent locations. The service also enable M-Pesa customers to receive money from any Western Union agent.
At the same time, Amazon started an initiative dubbed Amazon PayCode. At its core, it is set to enable Kenyans to pay for their purchases on e-commerce platform Amazon through Western Union. The new service aims to give access to online goods for customers who have largely been excluded from e-commerce shopping due to lack of accepted payment methods such as debit and credit cards.
Amazon PayCode leverages the reach of Western Union to make cross-border online shopping a reliable and convenient experience for customers who do not have access to international credit cards or prefer to pay in cash; or more relevant in our case, our own local, very robust M-PESA that’s not as widely accepted internationally.
Is Jumia in trouble?
For most Kenyans, e-commerce is synonymous with Jumia. And that makes sense as it is the first company of its kind to go this big. But it is easy to forget that we don’t live in a bubble and to ignore the global giants in the industry, the likes of eBay and Amazon, would be doing ourselves a disservice.
There are countless goods that aren’t available on Jumia. Case in point, the other day I was on the market for a Solid-state drive for my now ageing beast of a laptop, but Kenyan e-commerce platforms like Jumia, Kilimall and Masoko either didn’t have them in store, or had them priced thrice as much as a decent one on Amazon.
Shipping and Duties are still a challenge
As a proof of concept, it is now possible to buy stuff on Amazon, pay for them through Western Union via M-PESA and have them shipped. But the cost of importing these items is still prohibitively high. Also, finding a reliable and affordable shipping service, outside the internationally accepted and reputable DHL, which is very pricy, is honestly not worth the hustle.
Jumia’s intergration with M-PESA is a lot more seemless
Also note how Amazon doesn’t directly accept M-PESA? You have to jump over these hoops, transfer your money from M-PESA to Western Union, then from Western Union to Amazon. This isn’t as elegant as Jumia’s direct integration with M-PESA, on top of MasterCard and VISA and lesser known Mobile money solutions available in Kenya.
For that, Jumia’s dominance in the local e-commerce platform will remain…for now. The endless innovations and partnerships should however be a wake up call to Jumia. The company needs to constantly reinvent itself and be on top of the game in terms of products on their site and customer satisfaction because if their experience gets any worse, I am sure I’m not the only one that will be willing to go through all the fuss to purchase stuff from Amazon.