Since the outbreak of the coronavirus disease, ecommerce has played a critical role in reducing the rate of the spread; as buyers across the world turned to online buying to avoid crowded physical shops. It provided shoppers with access to a substantial selection of products and services online; from the safety and convenience of their homes. Furthermore, while most businesses closed and others laid off staff during the lockdowns, ecommerce remained central in enabling agile companies to keep operations running despite physical restrictions.
However, the impact of the COVID-19 pandemic on the industry has been detrimental not only on start-ups but also on industry giants. According to UNCTAD data published in November 2020, a lot of e-commerce businesses still recorded a nose-dive in sales by the end of the just concluded year. As 2021 begins, ecommerce actors are now structuring their models from surviving to thriving in yet another year of the pandemic, whose outbreak began at the end of 2019. Here are some tips on how to re-imagine the COVID-19 conquest approach, even as we hope for better yields in the new year.
Technological Innovation and Adaptation to Change
As the pandemic persists, we continue to experience shifts in ecommerce trends as businesses in different industries re-imagine their models. Technology has been adopted to accommodate the need to operate remotely as physical restrictions continue to be observed. Physical meetings have been replaced with video conferencing, while the traditional working-from-the-office has now popularly become a working-from-home phenomena. Along the food supply chain, we have seen farmers adopt digital technologies to sell their produce online to household consumers, to restaurants delivering food to homes and supermarkets with grocery delivery services.
In the entertainment sector, although physical concerts and events still remain popular, entertainers have adapted their performances to the contemporary online concerts; enabling them to keep their fans entertained and even reaching more masses who otherwise had limited access due to geographical and monetary constraints. These are but a few examples of why any type of business needs to remain innovative to survive in today’s crisis and in the future.
Adopting Third-Party Online Marketplaces
The crisis has boosted vitality in the e-commerce sector in Africa; with more sellers turning to online platforms including social media pages to reach a wider range of buyers. Yet, to survive and conquer the market in times of the pandemic and even post Covid, displaying one’s products and services on third-party online marketplaces which link sellers to buyers; provides more mileage for any ecommerce business. Platforms such as BlakMaket, one of Africa’s emerging ecommerce marketplaces, are helping the industry grow to higher levels, with a reach of millions of consumers across the continent.
They provide businesses with cost-saving all-inclusive digital models, since a third-party marketplace is responsible for the display, selling and even delivering the products across the region. More advanced ones have incorporated payment solutions and fully operational logistics channels, thus creating a one-stop shop for the users; and have been reported to perform better than basic ecommerce sites during the coronavirus crisis. A business therefore will save on the cost of renting a physical space and deliveries, being only responsible for ensuring the constant supply of their inventory. As for the buyers, they get a broader selection of products that fit their budget and convenience.
Product and Service Diversification
African ecommerce is still nascent, with most buyers in the past being centred on high tech and luxurious goods and services. This meant that ecommerce was for a select percentage of the larger population, with a higher spending power. The rise of Covid-19 however, has seen a shift from this trend to a situation where consumers are not only seeking for indulgence but also for the basic supplies including household goods, medicine, groceries among others. We have seen a shift from just comfort to safety, which remains most relevant in the Covid era. To remain afloat and competitive, ecommerce companies must therefore diversify their products and services online, to accommodate all the needs of their various consumers, while ensuring high standards of hygiene and safety.
Close Digital Divides
The coronavirus global pandemic is yet the worst of its kind in our lifetime, and if its impacts have done anything especially in Africa, is to expose the extreme digital divide that exists in our continent. With movement and physical confines, came the need to move most operations online. From remote working and e-learning to online selling and buying, we all needed to be digitally connected to function.
While Africa is said to be the next frontier for the internet, boasting approximately 39% internet penetration in 2020 according to Internet World Stats; significant and persistent gaps still remain especially in relation to reach, affordability and skills. The GSMA Mobile Internet Connectivity Index 2020 indicates that in Sub-Saharan Africa, the biggest barrier to mobile internet adoption is a lack of digital skills especially for women and rural populations. The average affordability of the cheapest internet device and 1GB monthly cost remained at 30% and 4.2% respectively in 2019, meaning the larger population could barely afford the internet demands brought about by the crisis.
It also means that while some students continued e-learning, others especially in remote areas did not have the digital power; both at the institutional and household levels for students to continue learning from home. That the vendors selling groceries at the local markets and who would highly benefit by selling their produce online remain unreached. That the elderly population in rural areas who would predominantly need to remain at home and order their necessities online remain digitally disabled.
There is a crucial need to close these gaps by making internet connectivity available and affordable to all, if African ecommerce is to conquer during and post this pandemic era. Governments also need to put in place reasonable regulatory policies and tax regimes that will create an enabling environment for e-commerce to thrive, support SMEs and in turn create jobs for the highly unemployed youthful population, whose number has increased due to the implications of the pandemic on businesses.
The African Continental Free Trade Area (AfCFTA) is now effective as from 1st January 2021, and is an enabler of ecommerce and digital trade across the continent. It offers African countries an opportunity to have a share of the exponentially growing ecommerce market, which McKinsey & Co predicts could reach US$75 billion by 2025, and which now contributes over 1% to the GDP of several African countries. These include Senegal (3%), Kenya (2.9%), Morocco (2.3%), Mozambique (1.6%), Nigeria (1.5%), South Africa (1.4%) and Ghana (1.1%). Egypt, Tanzania and Cameroon share 1% ecommerce contribution to their GDP. The AfCFTA is a key gateway to conquering African ecommerce in the Covid-19 era, by creating a vast market incentivizing companies to join the digital space and grow ecommerce; providing customers in Africa with a wider range of goods and services at the safety of their homes.
The advent of the COVID-19 crisis has enhanced the adoption of innovative trends and especially the need for e-commerce expansion. It is therefore optimistic to state that despite the challenges, the future of the industry is still full of opportunities especially for firms that are supple to acclimatize with the changing times and the needs of consumers. When explored, these opportunities will help Africa conquer ecommerce during and post Covid-19. Happy New Year!
About the Author
Josephine Wawira is a Kenyan writer with broad experience in African ecommerce.