Business
African retail finds growing e-commerce outlet online as middle class expands
Young Ghanaian entrepreneur Nana Tamakloe could hardly have a simpler business plan. When people order clothes from his website, he buys the items from stalls and shops in Accra, ships them with DHL and gets paid online.
His suppliers love him as a regular customer and don’t care that he doubles their prices to cover his costs.
“Most of the clothes sellers and tailors do not have a way to reach clients abroad, so I was like: ‘Let’s create an e-commerce platform,'” said Tamakloe, whose www.fashionghana.com website serves customers in the West and some in Africa.
Tamakloe’s business is small but he is tapping into a market manufacturers and internet companies say will be big: online retail in Africa.
The backdrop is simple. The growth of Africa’s middle class has created demand for products that conventional retail struggles to satisfy due to a shortage of malls and grinding traffic in many cities that deters shoppers.
At the same time, giants such as Amazon and Chinese e-commerce firm Alibaba are out of reach for most consumers. Step forward companies who tailor their service to African markets.
The sector is still in its infancy. The internet’s contribution to Africa’s gross domestic product (GDP) stood at 1.1 percent in 2013, much lower than other emerging markets. This is estimated to rise to 10 percent, or US$300 billion, by 2025, according to a report by consultants McKinsey’s & Company.
Last year, hedge fund Tiger Global invested US$100 million in South African online e-commerce shopping company Takealot. European firm, Rocket Internet invested 120 million euro (US$136 million) in Nigeria-based online retailer Jumia in November.
Rocket, emerging markets telecoms group Millicom and MTN South Africa have partnered to create Africa Internet Group (AIG), an e-commerce company that operates in 27 countries and is working with firms that include Jumia and Lamudi, a to trade in the growing real estate market on the continent.
