Africa boasts over 1 billion potential customers, coupled with a growing middle class, African retail investors are starting to take note. There is a slow steady shift towards online trade, with several retail start-ups successfully entering the market.
Africa’s online marketplace, Jumia, is leading the charge, receiving investment from Goldman Sachs, as well as prominent French, South African, and German companies.
In Nigeria, Jumia makes thousands of daily deliveries. In 2015, the first nine months generated €206 million. A year on year increase of 265%. It is one of the largest e-commerce enterprises operating in Africa, all of which are seeking to tap into the continent’s growing consumer market.
McKinsey Global Institute projected that eCommerce will be worth $75 billion in Africa’s leading economies by 2025.
There are challenges ahead for African eCommerce and cross border ecommerce faces barriers of poor infrastructure, underdeveloped logistics and difficulties surrounding international bank transactions. Most African countries don’t have formal addresses and this can result in difficulty locating customers. Low credit card penetration in a number of regions and customer’s anxiety over fraud, mean that cash on delivery is preferred in many African countries.