E-commerce offers both opportunities and threats to local suppliers – but more opportunities than threats for logistics companies. Mckinsey’s Global Institute estimates that the African market could be buying $75 billion worth of goods and services online by 2025.
According to the KPMG “The Truth About Online Consumers 2018 Report”, around half of online purchases in the African/ Middle Eastern markets are from other regions, making the region the world’s top online importer.
“As consumers in subSaharan African countries have increased access to mobile phones and exposure to products and services they can’t normally get from local providers through online shopping, crossborder payment enablers have a huge opportunity to expand their service offering and empower consumers and business owners in the region,” says Efi Dahan, PayPal general manager, Africa, Middle East, Russia and Turkey.
International apparel platforms such as Asos offer free international shipping to many African markets, including South Africa, making delivery cheaper from London than a supplier in the same country.
For logistics companies the opportunity lies in the fact that, whether goods are bought online from China or Johannesburg, they still need to be warehoused and distributed. But, there will be pressure on rates. “For 2018, South African online shopping sites wanting to step up their logistics game should look into contracting a low-cost courier service to meet the new demand for faster shipping,” says online payment service provider PayU in its 2018 forecast.
Poor infrastructure adds to the cost of African companies wanting to sell online, according to the International Trade Centre (ITC). It states “poor domestic and regional physical infrastructure, such as roads, ports and air transportation as well as the reliability of electricity supply are serious obstacles to e-commerce in much of Africa.
“While this can be overcome to some extent by local solutions, such as motorbike delivery, international logistics are far more complicated and costly, which puts many African companies at a particular disadvantage when competing globally”.
The report recommends: “Logistics partners in developed countries can develop optimised transport and logistics solutions, including e-commerce-enabled storage and handling (“e-fulfilment”) in international markets. “Such solutions should be tailor-made to the type of goods and marketing strategies of the African firms”.
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International apparel platforms make delivery cheaper from London to many African markets than a supplier in the same country.
