Tanzania: The success story of E-commerce

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Africa is a booming investment hub which holds numerous benefits for foreign corporations looking to expand their business, boost brand visibility and reach new markets. In today’s Africa, e-commerce is in and gaining popularity fast as local consumers prefer easy-access information on products and services to traditional shopping practices. Unlike brick-and-mortar stores, online shops are open 24/7 so potential buyers can check in any time they want and browse through the offer for as long as they like. In addition to that, web-based sale is a convenient way for brands to gain local and international exposure, reduce merchandise promotion costs and stock-keeping expenses, up corporate profits and ensure business sustainability in the long run. These are some of the main reasons why more and more companies in Africa are embracing e-commerce, and e-markets are gradually becoming one of the driving engines behind the region’s fast-paced economic growth. From Morocco and Algeria to Tanzania and South Africa, Internet shopping is rapidly climbing up the business ladder across industries. Here, we will take a quick look at e-commerce benefits and figures in the region, as well as successful e-marketing examples in Tanzania in particular.

As the number of mobile device owners on the continent continues to increase, Africa’s companies are starting to appreciate the advantages of e-commerce and are gradually moving their line of business from real-life to virtual space. Enterprises that have recognized the potentials of the Internet in the early stages of e-commerce development (e.g. Naspers, Africa Internet Group, One Media Africa, French investor Casino and Switzerland’s Ringier) now rank at the top of the list of businesses classified according to growth rate, net profits and corporate performance. In the report “Lions go digital: The Internet’s transformative potential in Africa”, McKinsey Global Institute experts estimate that the region’s consumer-oriented industry would increase by a staggering US 400 million in 2020, with the impact of e-commerce on GDP growth across countries swiftly rising as businesses continue to optimize their websites for mobile use. A careful analysis of latest data indicates that commercial queries by local consumers driven by intent to buy are high (55% in South Africa alone) and are already beating the figures recorded in mature economies. Inspired by such figures, McKinsey went on to create a reliable metric known as iGDP which aims to scale the percentage-based impact of online sale on economic growth in individual countries. Early estimates show that Africa’s iGDP is expected to grow to at least 5-6% in the next 10 years, matching e-commerce figures in the world’s leading economies such as Taiwan, Sweden, and the United Kingdom. Based on iGDP, businesses can gain precious insights into local demand and structure their offerings in the manner that will reduce in-house stock costs and bring in higher profits.

E-commerce hubs: Fastest growing online markets in Africa

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According to recent studies, Africa’s leaders in the e-commerce domain include Tanzania, Egypt, Kenya, Nigeria, Ghana and Morocco, but Uganda and Cote d’Ivoire are not far behind either, as investors are starting to accept that both big and small markets have their specific advantages and downsides. Namely, the shift from shop-locked to online sale in bigger countries entails certain start-up launch difficulties although the market size and probability of higher profits are proportionally greater, while smaller countries have to make up for fewer consumers by facilitating business-related procedures for potential investors. That is the reason why Zambia, Senegal and Kenya rank high according to the ease of completion of business launch processes, while Tanzania, Angola and Ethiopia are known for complicated administration and costlier business conduct. Scaled according to iGDP, Senegal ranks highest (3.3%), followed by Kenya (2.9%) and Morocco (2.3%). The next on the list are Mozambique and Nigeria (1.6% and 1.5% respectively), with South Africa and Ghana slightly lagging behind (iGDPs set at 1.4% and 1.1%). In addition to that, fast evolving e-commerce is encouraging growth in niche industries, such as clothing manufacturing and florist services in South Africa, or real estate sector in Mozambique. This trend is highly beneficial for up and coming entrepreneurs looking to capitalize without initial investments required for sustaining a brick-and-mortar store. The figures are pretty clear: the importance of e-commerce is on the rise across the continent, and it opens the door to international companies eager to maximize their revenues in a booming market which holds enormous potential for further online growth.

Tanzania’s business lions: One market for all

Tanzania is seeing a steady rise in the number of mobile users who are showing growing interest in e-commerce practices, so it is no wonder many local companies have already switched to Internet marketing and are already devising new tools to reach critical audience, such as social network campaigns and custom-designed apps. One example of successful Internet business, Kupatana has recently launched a special application which allows users of Android devices to access products featured on the website, browse through the categories, take part in individual bids, track their favorite item searches, and instantly create lists of niche products on sale. By ordering merchandise via the application, customers can expect prompt delivery regardless of unanticipated delays common with traditional shopping modes, such as national holidays, strikes, and out-of-stock products. As Google queries driven by intent to buy continue to rise in the region at an unabated speed, businesses in Tanzania are starting to realize that the market is maturing to the idea of the Internet as the shortest path to new clients and higher profits. Though online purchases, local population is promised instant access to product information, prompt delivery, more diversified merchandise offer and increased purchase safety.

E-commerce is a force to be reckoned in Africa: from the Heart of Darkness to the era of Internet enlightenment, investors should keep a close eye on the national markets in the region, particularly Tanzania as the home to population increasingly fond of mobile purchases.

All pictures are courtesy of pixabay.com

11053695_163063147361453_3624048024435059885_oAbout the Author – Guest post

Amy Goldsmith is a business assistant from Melbourne. Her job allows her to travel a lot, which also happens to be one of her greatest passions. Find out more about her travels on Twitter.

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