What is the true size of the African e-commerce market?
How many potential customers can an entrepreneur bet on when they want to target the African market?
Which country would offer a big market and what are the indicators of a big market in a specific country?
African startups are usually limited in terms of potential market compared to startups in places like Europe, China or the USA. For one to reach a bigger market, African startups have to attempt to do cross-border trading, which is hard. Even in the e-commerce sector, cross border trade is constrained due to a number of factors such as tariffs, cultures, payment options, delivery logistics and different regulations.
This means that they have to work harder to reach a bigger market or they have to stick to a smaller market of one country.
Size of Africa’s consumer Internet market
The size of a market when it comes to e-commerce is defined by the number of people who have the financial and technical capacity to purchase. Financial because one needs money to buy, but also technical because one needs to be tech-savvy enough to order online, as well as being adequately connected.
When the above two factors are combined, the size of Africa’s online consumer market shrinks from 1,3 billion people to, if I am to be honest, an unknown figure.
Is there a way to tell for sure how big this market is?
There is one indicator which although not very accurate, can give a picture of how Africa’s e-commerce market compares in different countries.
CountryNo. of domains per 1000 peoplePopulation1Seychelles837.9797,7392South Africa18.1958,558,2703Mauritius13.951,269,6684Namibia5.672,494,5305Comoros3.60850,8866Tunisia3.5711,694,7197Botswana3.242,303,6978Morocco2.8636,471,7699Gabon2.162,172,57910Egypt1.93100,388,07311Nigeria1.43200,963,59912Ghana1.4330,417,85613Kenya1.3052,573,97314Congo1.295,380,50815Libya1.106,777,45216Senegal1.0916,296,36417Benin1.0111,801,15118Côte d’Ivoire0.9725,716,54419Zimbabwe0.8014,645,46820Algeria0.7343,053,05421Mauritania0.664,525,69622Cameroon0.6625,876,38023Uganda0.6144,269,59424Togo0.528,082,36625Zambia0.5217,861,030
From the statistics on domain names, Seychelles leads while South Africa and Mauritius follow closely. From there, the number of per domain gets very small. When you consider other countries that did not even make it to that list, the number gets to 0.05 for places like Sudan. There is one domain for every 20,000 people in Sudan!
In comparison, the USA stands at 285 domains per 1000 people, France 111, Israel 58, Japan 50, China 20, Brazil 20, and Russia at 11. In fact, Africa has almost all of its members at the bottom of that list. Seems like Africans are not buying domain names.
What do those domain registration numbers signify?
Buying a domain name correlates to using online services. This means that countries with a high number of domains per 1,000 people have a potentially high proportion of population that can probably use online services, and would thus be potential e-commerce clients.
However, population also matters. Countries like Seychelles would not be a suitable place despite the high number of domains, as the population is very small.
Compared to the rest of the world, these numbers are low. It is not a wonder that several e-commerce platforms have failed to gain traction in Africa.
Jumia vs Copia
Jumia had mapped their market well. Out of the 12 countries that Jumia operates in, 11 are on the list above. In fact, the other 14 countries in that list where Jumia does not operate have one thing in common; low population. It would seem like Jumia took that list and went for the countries with high population.
However, Jumia seems to be struggling in those markets.
Does it mean that there is little or no room for e-commerce in Africa?
One company that is taking advantage of the African market is Copia Global. Their approach to e-commerce involves combining a form of e-commerce and offline shopping, where people can go to an authorized distributor who can place order on their behalf. They have over 5,000 agents who serve as ordering and delivery points, successfully breaking the ecommerce barrier. They have also focused on USSD platform as opposed to ecommerce websites.
Even though e-commerce may not be thriving in many parts in Africa, it does not mean that people are not purchasing. We need to design ecommerce platforms that accommodate people who are not tech-savvy and are rarely online.
We should design with Africa in mind, as opposed to copying business models from different markets.