E-commerce In Africa A Sector Powered By Trust

E-commerce vs Traditional retail

When Jumia listed on the New York Stock Exchange in April 2019, there was an expectation that e-commerce was on the cusp of explosive growth in Africa. While this growth came in dribs and drabs since their listing, all signs are pointing towards more sustained growth going forward.

“E-commerce in Africa was valued at $16.5 billion in 2017 and this value could cross the $75 billion mark by 2025.”

There are a number of reasons I believe we are seeing this. Firstly, the infamous COVID-19 pandemic forced a lot of people and businesses to adjust their day to day processes. When most countries were under lock down, people finally switched to purchasing goods online. The frequent purchase of items online enforced a habit that is still being exercised today even as most countries remove restrictions. This newly entrenched habit (and the convenience that comes with it) is one of the reasons why e-commerce is growing faster.

“More than 30% of consumers surveyed in Kenya and Nigeria said they are shopping online more frequently amid the COVID-19 pandemic.”

The explosion of fintech and technology in Africa has also played a role in the increased adoption of e-commerce. There have been major breakthroughs across the continent that have allowed Africans to:

• Make and receive payments easier & quicker (Flutterwave)
• Move goods from one part of the continent to the other and have them delivered to their doorsteps (Sendy)
• Roll out data-driven solutions like Buy Now Pay Later have allowed them to purchase goods upfront and make flexible payments over a duration (Aspira)
• Get easier access to financing allowing them to purchase things they would have otherwise not been able to (Kuda Bank); and many other applications that have led to the increased adoption of e-commerce.

“Fintechs in Africa accounted for almost two-thirds of all investment into Africa in 2020 — $3billion.”

Lastly, and in my opinion most importantly, is the ability to verify the identity of individuals and businesses online. E-commerce in Africa is built on the backbone of trust. In most countries, individuals only purchase goods online if they have the ability to pay for what they are purchasing on delivery. This gives them the ability to ensure that the goods they ordered are actually delivered and that they are of the desired quality — trust. As a merchant, you want to ensure that if you send out goods that are yet to be paid for, someone cannot take possession of them before they make payment and if they do, you are able to trace them and get your goods back or get paid — trust. With a trust system in place, e-commerce in Africa has the ability to thrive.

“According to a study, the most common type of e-commerce fraud causing concern among merchants is identity theft.”

Today, when a customer is signing up to an e-commerce platform, most merchants are requiring them to undertake some form of KYC. This prevents nefarious characters from creating pseudo accounts that they can then use to swindle merchants. Merchants are more confident supplying goods to verified customers because they know they have a course of action should things go awry. This extra level of trust has allowed sellers to be more confident sending out their goods + adopting technologies like BNPL knowing that they are good for their money. As more merchants in e-commerce adopt verification services, I foresee not only sustained growth in e-commerce but adoption of higher value transactions as trust between merchants and customers is built.

Schedule a free identity verification demo here and see how it works

Smile Identity offers e-commerce providers and other companies identity verification services that enables them to onboard verified authentic users and businesses quickly allowing them to focus on their core business.

“Smile Identity rapidly accelerates our ability to acquire real users and win market share — they are critical infrastructure for hyper growth in Africa.” — Maijid Moujaled, Co-founder Chipper Cash

If you are looking to scale your solutions in Africa while maintaining the integrity of your customer base, reach out to me on sales@smileidentity.com