February 26, 2021

Ecommerce in 2021: Kenya’s $1.5 billion industry

Ecommerce in 2021: Kenya’s $1.5 billion industry

By Patrick Ndegwa, SEACOM East Africa Business Sales Lead

As more of Africa’s 526 million Internet users are opting to buy goods at the click of a button, Kenyan ecommerce revenue is projected to hit $1.5 billion in 2021. Digital platforms are seizing this opportunity and have been investing heavily in improving their digital infrastructure. So, what might this year hold for online trade in Kenya? Here’s my take on what developments we can expect to see in online commerce today and in the future.

2021’s new trends

Ecommerce companies are putting considerable efforts into improving their digital infrastructure to meet increasing demands. Transaction-management capabilities remain a priority, as more customers are purchasing on mobile devices and looking for credit options. Giving customers personalised, omnichannel experiences that also enable them to use their preferred payment platforms is no longer simply advantageous – but expected.

With the constraints of supply chains due to the pandemic, order-fulfilment quickly became a challenge for online platforms. Delivery and transport costs not only make up a sizeable portion of ecommerce expenses, but many platforms have difficulties meeting customer shipping requirements. For this reason, more customers are opting to shop on marketplaces rather than individual ecommerce stores.

Shoppable video ads on platforms such as TikTok and Instagram are also creating a shift in the industry, and indicate a promising future for ecommerce on social media platforms. Businesses that target young audiences have much to gain as they can influence buying decisions through direct engagement with a tech-savvy generation.

The roadmap for African ecommerce

As many as 264 ecommerce start-ups were operating across Africa in 2017, and while ecommerce is certainly on the rise, the continent still faces a lack of ICT and logistical infrastructure, customer reluctance (exacerbated by the rise of cybercrime), low Internet penetration, and inadequate digital literacy. Ecommerce legislation in Africa has failed to meet digital advances, as only 33 of Africa’s 54 nations have regulations for electronic transactions and only 25 have online consumer protection laws.

Consequently, the World Economic Forum and the International Trade Centre have laid down a Roadmap for Action for African ecommerce that will focus on fostering a wider ecosystem of digital technology to support ecommerce-based businesses. This multi-faceted action plan includes re-evaluating key policies, expanding connectivity, upgrading logistics, improving electronic payment systems, and developing entrepreneurship for start-ups. Considering that seven of the ten fastest growing Internet populations in the world are in Africa, there is no doubt that these challenges can be overcome.

Looking forward

The economic activity generated by local and cross-border ecommerce is accelerating Africa into a digital future. African governments are even beginning to collect tax from this multi-billion-dollar opportunity, such as with Kenya’s new Digital Service Tax. But if we truly want to see African ecommerce rise to a world-class marketplace, we need to provide more Africans with fast and reliable connectivity. The more we connect and trade with the rest of the world, the more the world will begin to see what Africa truly has to offer.

Let the world see what your business has to offer with the help of an African leader in cloud and connectivity. Partner with SEACOM today and seize the digital future.