According to a recent study conducted by Ipsos, cross-border shopping is a growing trend with around 80% of shoppers going international when purchasing goods online.
In Nigeria an impressive 47% of the online spend is already taken internationally, while in South Africa shopping across the continent continues to rise in popularity. The two countries are playing no small role in boosting e-commerce on the continent, offering a much-needed shift that can potentially have a positive impact on both economies.
The Worldpay Global Payments Report 2015 found that the current global e-commerce market is worth around $1,66-trillion with an expected value of $2,4-trillion by 2019 – to date, an estimated 23% of this spend has taken place exclusively on a mobile device.
Nigeria, the largest market in Africa, has 147-million mobile connections with internet and mobile penetration rates averaging 59%, along with growing internet and mobile users at 82-million and 93-million respectively. South Africa’s internet and mobile penetration stands at around 50%. The Ipsos also survey found that 90% of online shoppers own a smartphone or feature phone and use it to complete their purchases. More than half do so more than once a month.
It is the era of e-commerce for the African continent. For both South Africa and Nigeria, the burgeoning relationship that sees consumers snap up deals across international lines can be used to enhance offerings and woo a new generation of consumers to the online table.
Currently Nigeria leads the way when it comes to the volumes of online shoppers at 89%, South Africa comes in second at 70% and Kenya in third at 60%. Within these numbers, around one third of Nigerians are using South African online retailers and spending their cash across the borders. From a regional perspective, these statistics highlight one very important fact – opportunity. The online retail market has a chance to tap into these trends and to deliver both products and services that map back to market demand.
According to PayU Nigeria’s Juliet Nwanguma, the e-commerce payment landscape in Nigeria is sophisticated and unique with intense competition, co-opetition and innovation among market participants at all levels.
Nwanguma ascribes the success to improved regulatory oversight, increased awareness by consumers and stakeholders, and the growth of channels for transactions. Add to this an organised retail industry, a growing Nigerian middle class and the obvious appeal of convenience and you have an e-commerce recipe that South Africa can look to replicate.
As the size of the Nigerian economy and population have grown, says Nwanguma, so has the volume of electronic transactions. Nigeria’s total payments volume for 2014 was US$222 billion, amounting to more than 526-million payment transactions in total; mobile and web payments equaled roughly 10% of that amount.
“What we see at the cold face is that cross border transactions between South Africa and Nigeria are showing significant increases and this could play a pivotal role in the further development of the e-commerce market in both countries. Wider e-commerce success very often follows other mobile money services prevalent on the continent,” says Nwanguma.
MTN’s chief digital officer Herman Singh adds: “You must deliver a service people want by following the money corridors in a country. What works particularly well in Nigeria is bill payment via mobile.”
Once you have traction, “it’s all about continuous promotion and incentives,” says Singh.
E-commerce success across Africa is never far from the mobile device. This may be the logical route to increased e-commerce volumes. “Mobile banking apps have received significant downloads by bank customers in Nigeria,” says PayU’s Nwanguma. Similarly, the rise of mobile wallets – most notably in South Africa – presents another opportunity.
According to research house Ovum, there were 102-million registered mobile financial services users in Q3 2015 across the continent. Ovum’s Thecla Mbongue also estimates that those registered users contributed 5% of Africa’s mobile revenues in the first half of 2015, totalling $3-billion.
An increase in the number of consumers using mobile wallets will encourage online stores to accept mobile payments, and lead to the emergence of sustained offerings such as money transfers, remittances, agent banking and other market based solutions. Very often it’s about simplicity in payments functionality and enhanced speed.
Africa beckons for SA e-commerce
