EBay gives MallforAfrica a shot in the arm

The Kano, Nigeria-based MallforAfrica (MFA) e-commerce Company got a big boost last week when the American-based e-commerce giant eBay agreed to partner with the Nigerian enterprise. With this agreement, western consumers can order purely African-made goods - arts, crafts, items of clothing, etc. online from eBay with MFA as the “middle man,” by ordering via MalforAfrica.com. On the flip side, beginning from last year, Africans in Africa could access over a billion eBay listings worldwide, with items that include clothing, electronics, sporting goods, toys, household goods, books, jewelry, parts & accessories. Africans ordering goods from the US and UK can use ebayforafrica.com. In either direction, MFA serves as the middle-man.

Thus, starting from last week, Americans can now buy African goods on eBay through the company’s partnership with MallforAfrica.com. Products from vetted vendors in five African countries - Nigeria, Kenya, Ghana, South Africa, and Burundi - are available on eBay’s US shopping site. MallforAfrica selects the African retailers and handles payments on its platform. The American company DHL is the shipping partner. You are able to browse the entire collection on eBay’s Mall for Africa Store. Selected African vendors must have their products “Made in Africa,” while the products are vetted for the highest quality.

MallforAfrica was founded in 2012 by Christopher Folayan, to fill the needs of Africans who desire goods made in the West but do not have ways to order them. Specifically, MFA was designed to help shoppers in Africa buy goods online from major US and UK retailers. Now African can order through MFA. So, want to order stuff online from US or UK but don’t’ want the hassles? Tired of being told your credit/ATM cards are not acceptable for purchasing goods directly from abroad? Scared stiff of “419?” If you answer “yes” to any of these questions, then MFA could be the solution to your shopping problem. According to MFA, you do business with them at zero risk, because “Mall for Africa takes away all the risks of fraud, charge backs, customs clearing and the inability to verify if a shipment has even arrived.”

It’s my profound wish to see MFA succeed in a spectacular way, which is why I was thrilled to learn that the potential market for digital sales in Africa has been estimated to exceed $75 billion by 2025, according to Mr. Folayan, even though reliable estimates may not be available for the potential market for online African goods in the U.S.

There are a few concerns that have not been adequately addressed in the campaigns. One of these is the cost of the service to Africans. Specifically, to be worth an enterprise’s while, the markup may have to be astronomically high. Here, I am talking of markup for the notoriously risky business environment in Africa. For example, endemic poor power supply and the cost of transporting goods locally and internationally. The DHL or FedEx service is extremely costly to use, such that a sheet of paper mailed from the US to Abuja could cost you as much as a hundred dollars. Whereas labor is generally relatively cheap in Africa the costs in the US or UK leg of the transactions may eat up a chunk of any potential savings.

Also, risk is a big issue for businesses operating in Africa, especially Nigeria. Anyone that plays down this factor is either terribly ignorant or has integrity problems. The MFA idea sounds good and business potential looks promising. However, with no real financial information to help prospects assess MFA’s capitalization, revenue, cash flow; and, to a lesser extent for now, income; it becomes a little tricky taking an enterprise too seriously. Also, we do not have the details of the behind-the-scene problems that are associated with the operations. For example, the goods have to ultimately be delivered to customers. In a country like Nigeria where there are logistical problems of all sorts, it would be great to know what an enterprise has in place by way of plans. What is the turnaround time like? For the African cities with international airports, a few of these logistical concerns may be mute. But for all other cities, towns, and villages, the problems will be real.

The refund policies are going to be crucial, since invariably some products are going to be rejected by the customers for a variety of reasons - damaged, wrong, selected in error, arrived too late, etc. And then, there is Custom. Is an enterprise going to “appreciate” custom officers, pay the legal fees, or have a big shot behind her to help bypass the regulatory processes - as is common in Nigeria?

This is obviously an exciting time for e-commerce in Africa. While MFA caters to a niche market (international), Jumia and Konga appear to operate locally in Africa, at least for now. I guess the competition may be on.