Maximizing Africa’s E-Commerce Potential
Maximizing Africa’s E-Commerce Potential

Maximizing Africa’s E-Commerce Potential

September 21st, 2016

With African e-commerce promising enormous activity for online retailers, many are turning to local logistics experts to create efficient, Africa-adapted supply chains

​With Africa’s impressive economic expansion and emerging middle class of 300 million people expected to surge further, e-commerce promises enormous activity by bridging the continent’s traditional small shop retail structures and limited big chain distributors or malls. To assure that potential is fully realized, e-retailors are working to adapt supply chain models from other regions to the complex and vastly contrasting challenges Africa poses. As they do, many e-merchants are striking partnerships with logistics experts whose experience and insight in Africa help avoid errors early on that could undermine future activity.

“The advance of digital capacities in Africa, including for retail, hasn’t erased the supply chain challenges that exist across the continent, like limited transport networks, enormous distances, security concerns and strict administrative procedures,” notes Xavier Personnic, head of fast-moving retail goods and e-commerce activities for Africa at Bolloré Logistics. “Cutting and pasting distribution strategies from other regions won’t work in Africa, so e-retailers are adjusting. ”

Assessing complexities particular to African markets is vital, he adds, with all having potential impact on delivery time. “The African e-consumer is just as demanding and sensitive as those in Europe or the U.S.,” Mr. Personnic explains. “If retailers can’t respect product or delivery promises, disappointed African consumers won’t come back.”

That risk makes proper analysis of supply chains in Africa – and complications they encounter – a crucial consideration from the outset.

Sales volumes often make maintaining large stores of imported products financially impractical, for example. Consequently, many retailers use longer maritime transport of spot shipments – but which lengthens the arrival of goods buyers want quickly. That impatience requires analysis of what popular goods may instead be stocked in limited quantities locally to speed delivery time, and when that trade-off isn’t worth it.

Similarly, restricted warehouses offering full security, cold chain and other services can limit and complicate storage choices. But implanted logistics experts can also advise on when storage compromises are merited to speed supply chains. Faster delivery of highly sought-after items like tablets and smartphones, for example, is mooted if they face high security risks during storage.

Local experience – and human representation – also greatly facilitates e-retail clearing African customs. Those document-heavy, time-consuming procedures are still designed for bulk container cargo. Consequently, the variety, type and volume of goods popular in e-commerce tends to clear inspection faster when ushered through by a local customs broker working with retailers.

In addition, pricier items like watches, jewelry or products posing competition to protected local goods face dizzying customs tariffs. Determining the type and volume of merchandize worth importing is another supply chain decision e-retailers make early on to avoid prohibitively high import costs.

Movement of orders from ports towards final destinations can also create challenges.
Enormous distances must often be covered using limited and at times rough road systems -- or through urban centers infamous for crawling traffic flows. Perishables like food or chilled goods can be ruined by excessive unexpected delays, and security measures for less fragile merchandize should also be conceived based on local factors.

Other complicating considerations include last mile delivery, which can require a full range of available transport options – some quite unorthodox. Limited e-payment capacities among African consumers makes cash-on-delivery compensation frequent, meantime, yet creates questions about the reliability and security of cash paid out.

The number, complexity and potential expense of those considerations have many e-commerce companies turning to locally experienced logistics partners as they create rational and realistic African supply chains.

CDiscount, for example, scaled down its product catalogue to a narrower range of goods better adapted to African consumer demand and supply chain capacities. Sportswear giant Decathlon, meantime, established an e-commerce model in partnership with Jumia, allowing allows it to tailor goods it markets to online demand.

“This isn’t an activity anyone wants to compromise with early errors that costs them customers and activity in the long-term,” Mr. Personnic says. “Getting input from logistics partners operating in Africa can help avoid that.

Key Figures
  • 20%

    More fuel-efficient for the Boeing 787 and the Airbus A350

  • 70%

    of Urbanisation is expected by 2050

  • 27

    mega-cities are expected by 2050, with at least 10 million people, compared to 1...

  • +18,4%

    of growth for E-commerce retail market in Europe in 2015

  • 82%

    of goods are moved by road

  • 1 billion

    Population in Africa

  • 60%

    of Africa’s population will be urbanized by 2050

  • 7,5%

    of growth for Indian GDP in 2014

  • 4,9%

    of growth for African GDP in 2016

  • 6,1%

    of growth for East Asian GDP in 2015, the world’s fastest-growing region

  • 19 224 teus

    transported by the MSC Oscar, the largest container ship in the world

  • 396 m

    is the size of the MSC Oscar ship

  • 120 h

    is the Non-Stop Flight Record done by Solar Impulse

  • 4,5%

    of growth in 2015 for Global Airfreight demand