December 14, 2021
Kenya's $1.5-billion e-commerce industry
Original article by Patrick Ndegwa, SEACOM East Africa Business Sales Lead
Kenyan e-commerce revenue is expected to surpass $1.5-billion (~TZS 3.5-quadrillion) per year, as more of Africa's 526 million internet users opt to make online purchases. This is an opportunity that digital platforms have seized with both hands, investing extensively in enhancing their digital infrastructure.
So, what does this mean for Kenyan e-commerce overall? Here's a look at Africa's biggest e-commerce platform, as well as what key policies and trends in online commerce we may expect to see at present and going forward.
New trends for e-commerce
To cater to the increasing demand, e-commerce businesses are devoting significant resources to enhancing their digital infrastructure. As more customers make purchases via mobile devices and seek out credit options, transaction-management capabilities remain a top priority.
Providing customers with personalised, omnichannel experiences that include the ability to utilise their preferred payment platforms is no longer an option to be disregarded - it's expected and essential for businesses to continue to grow and thrive in this ever-evolving digital world.
Shoppable video ads on platforms like TikTok and Instagram are creating a significant shift in the industry, demonstrating that e-commerce on social media platforms has a promising future. Businesses that target young audiences stand to benefit greatly since they influence purchasing decisions by engaging directly with a generation that is tech-savvy.
The importance of perseverance and having a long-term vision
E-commerce provides Africans with a one-of-a-kind opportunity to reach international markets while also stimulating domestic economic growth. Jumia, Africa's largest online retailer, shifted its focus from selling a wide range of products to facilitating e-commerce for other African businesses.
It is vital for companies to evolve in order to thrive in today's digital market. Jumia downsized its inventory in 2016 and began investing in marketing and digital infrastructure, as well as allowing sellers to profit from online sales. This enabled them to expand into new markets and provide smaller enterprises with easier access to online retail infrastructure. Jumia was the first African start-up to be listed on the New York Stock Exchange and their marketplace boasted over one billion visits in 2019.
Similar to other highly successful digital disruptors, Jumia went eight years without making a profit. It emphasizes the value of having a long-term strategy and investors that believe in you. Set clear e-commerce goals for your business and stick with them for the long run - it may pay off like it did for Jumia.
The way forward for African e-commerce
The World Economic Forum and the International Trade Centre have released a Roadmap for Action for African e-commerce, which focuses on developing a broader ecosystem of digital technology to support e-commerce-based enterprises. Re-evaluating important policies, expanding connectivity, upgrading logistics, improving electronic payment systems and promoting entrepreneurship for start-ups are all part of this multifaceted action plan.
Given that Africa has seven of the world's ten fastest-growing internet populations, owing largely to rapidly increasing mobile usage, there is no doubt that challenges such as a lack of ICT and logistical infrastructure, customer trepidation (exacerbated by the rise of cybercrime), low internet penetration and inadequate digital literacy can be overcome.
Africa is moving rapidly toward a digital future, thanks to the economic activity generated by local and cross-border e-commerce. African governments are starting to collect taxes from this multibillion-dollar industry, such as Kenya's new Digital Service Tax, which went into effect in January 2021. However, if we truly want to see African e-commerce become a world-class marketplace, we must equip more Africans with fast and reliable internet access.
The more we connect and trade with the rest of the world, the more international markets will recognize and appreciate Africa for what it is truly able to offer. For more information or to get a quote for our various connectivity solutions, email us at marketing@seacom.com or leave us a message.
SEACOM owns Africa’s largest network of information and communications technology (ICT) infrastructure, including fibre optic networks and subsea cables. We offer a wide range of industry-leading scalable ICT solutions for large companies that operate throughout the region.
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