Africa’s growing e-commerce sector brings city to rural areas
Innovative payment and delivery systems are connecting retailers with more customers
The rise and growth of e-commerce in the world, including in Africa, has created a lot of business opportunities, not only in urban but also in rural areas.
The good news is that there is undoubtedly increased connectivity, reaching even previously remote villages across the continent, providing them access to e-commerce.
Over the past three years the market has moved substantially in the direction of developing logistics meant to tear down barriers for e-commerce penetration in rural markets. Consequently, online retailers can now reach customers in remote cities, while locals have access to a variety of products from major urban cities.
While more than 50% of the world is connected to the internet, only 36% of the African population is, and rural areas are even more poorly served.
The penetration rate is, however, increasing across Africa, and together with that of mobile phones (now at about 80%), represents a significant growth opportunity for e-commerce to serve this otherwise underserved demographic.
With this in mind, it is important for e-commerce players to eliminate roadblocks that hinder penetration of rural economies.
Fulfilling the needs of the rural e-commerce consumer requires bespoke approaches that will especially break the mistrust around online commerce. For instance, e-commerce players need to provide digital literacy programmes towards educating users around online purchase processes.
Moreover, platforms should incorporate local languages in the markets in which they operate, which should also be the case for customer service departments, so as to drive better conversations and connection with customers. Understanding local languages also comes in handy when carrying out ground activations for new customers, and vendors looking to move their businesses online.
Consumers with varying spending powers require more diversified products to choose from. In an article she wrote for Unctad in October 2018, Jumia Nigeria CEO Juliet Anammah noted: “The reach of digital platforms can no longer be contained and captured by a small group to the exclusion of others. The primary means by which digital drives inclusion is via providing accessible information on products, services and price, as well as connecting buyers and sellers who may never have connected through traditional channels.”
Variety is key, and it requires breaking down your target markets and understanding their consumption behaviours to fully meet their expectations.
To make inroads in reaching and gaining the trust of rural consumers, e-commerce players must continuously remain innovative. One such company piloting diverse strategies to reach and activate rural e-commerce consumption is Jumia, operating in 14 African countries. About 25% of deliveries made by Jumia are in remote areas, where product choices in shops are extremely limited.
To achieve this, the panAfrican e-commerce platform is expanding into rural areas by building agent networks through its JForce programme, allowing agents to traverse the cities and make purchases for their clients for a commission.
In addition, it has also set up more than 380 pick-up stations and drop-off locations to facilitate deliveries for sellers and consumers, even in remote areas. Its recent partnership with Vivo Energy will enable more Jumia customers to place and pay for orders at select retail service stations.
Further, Jumia’s digital platform offers diversified services and products, from home appliances to electronics, mobiles, fashion apparel, fast-moving consumer goods and ondemand services at relatively affordable prices.
This has allowed them to attract every possible customer and vendor in the markets where they operate.
With fulfilment and transport being among the barriers to the growth of rural e-commerce, Jumia is working to smooth the delivery processes, both in major cities and in remote areas that are otherwise difficult to access, by building a logistics system using machine-learning and relying on GPS-enabled delivery apps.
Jumia’s logistics network includes 100-plus partners, ranging from individual entrepreneurs to large companies, enabling the company to handle more than 13.4-million packages across Africa in 2018.
Incorporating different payment methods has also enabled the e-commerce platform to gain the trust of more customers on the continent.
Cash-on-delivery remains the preferred method among online consumers, especially in rural markets that are dependent on touch-and-feel. Rural mobile money agents have also pushed the growth of mobile payments in remote areas, further facilitating the spread of e-commerce, even in places with unbanked populations.
The intrinsic value in African rural e-commerce cannot be overlooked. The success of early entrants is a clear indication of the huge potential of this unexplored rural sector.
The rising number of e-commerce users on platforms such as Jumia further cements the need for more innovative ways to satiate the growing needs of diverse African consumers.
VARIETY IS KEY, AND IT REQUIRES BREAKING DOWN YOUR TARGET MARKETS AND UNDERSTANDING THEIR BEHAVIOURS
CASH-ON-DELIVERY REMAINS THE PREFERRED METHOD AMONG ONLINE CONSUMERS, ESPECIALLY IN RURAL MARKETS