How viable is Africa’s E-commerce space?

The Amazon of Africa”, a tag it shares with rival e-commerce platform, Konga. But does this translate to success of these start -ups?

The e-commerce sphere in Africa made headlines last week with Jumia’s listing on the New York Stock Exchange. The $326 million funding from AXA, Goldman Sachs and MTN set a foundation that matured into a $1billion valuation.

According to a report on McKinsey’s Lions go digital, online shopping has been projected to account for up to 10% of retail sales (with a value of around $75 billion) by 2025- a fact propelled by more Africans gaining access to the internet across the continent. Jumia has been called “The Amazon of Africa”, a tag it shares with rival e-commerce platform, Konga.

But does this translate to success of these start -ups?

Jumia

Founded by Harvard Business School Alumnus, Tunde Kehinde, Rapheal Afaedor and their partners, Jeremy Hodara and Sacha Poignonnec, Jumia became a middleman- linking buyers with sellers. It had integrated other business units into its arsenal with logistics, Jumia Pay and other offerings to further enhance its offering since its initial introduction in 2012 with the merger of Kasuwa and Sabunta.

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Promising reviews however became cold and almost unforgiving as customer reviews and complaints on inconsistency surfaced over-time.

Jumia’s IPO launch in NYSE, would boost investor confidence and earnings but the service delivery and customer observations need to be taken into consideration more than before. Prospect of growth looks positive if service is improved.

Konga

Sim Shagaya’s Konga -the 2012 start- up that came a year behind DealDey, has lasted longer than most of its generation from a Lagos metropolis- only e-commerce site that specialized in baby care and cosmetics line. The online platform grew over the years into a major online retailer / marketplace.

By 2015, KongaPay came online- bringing  about a safe and convenient payment system that tackled the issue of trust in Africa when it comes to online payments. It also provided a basis for the Pay on Delivery (PoD) model, which was, and still is, a factor that encourages online shopping.

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Investments and growth still looked optimistic with South African media conglomerate, Naspers, investing US $50 million in 2014 for a 50 percent stake in the business.

Takealot

This is a pioneer in the online retail start-up business since its inception in 2002. The simplicity of its broad catalogue and variety of products -books,games, computers and TVs – providing its ever-growing customer base with the latest products in the market, coupled with an up-to-date product specification.

Funding had been a major booster to this success story. For instance in 2017, Takealot got boosted with Tiger Global Management’s US $100 million and then Naspers invested US $69 million. These earned both firms 34 percent and 53.5 percent stakes in the promising business.

The vast array of product and customer service makes it a business that should grow firmer across the sub -region and indeed the continent.

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Kilimall

This is a relatively new start up, Kilimall has created a large following from East Africa to West Africa, specifically Kenya, Uganda and Nigeria since it came online in 2014.

This firm also provides a large and growing variety of new products from smartphones, books cosmetics range etc.

It has a unique selling proposition of a 7-day free return policy that had and still does endear it to its growing customer base.

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