Having an internet business in Africa is not like what it is in the Western world. In the past couple of years, Africa’s economic growth rates have increased but still running an online business is very hard in the region because of so many problems faced by the business owners there. In this article, we will be discussing the major challenges being faced by African e-commerce startups that are hindering their growth:
Online Scam
Online fraud in Africa is on the rise and Africans yet have to embrace online shopping. Because online fraud is so common in the region, people have a hard time trusting other people because most of the people on the internet are looking to defraud others.
People are reluctant to enter their credentials online and without people spending money on the internet, it will take a long time for this sector to actually reach its due heights. It will continue to cater to the needs of the youngsters but rich Africans try to stay away from this. Some companies have introduced the option of cash-on-delivery to resolve this problem of online fraud but even with cash-on-delivery, the customers receive damaged or counterfeit products.
High Cost Internet
In the past few years, we have seen mobile internet enjoying a huge increase in the number of active customers and the internet growing popular among the people of the region. Through the Internet, people can access the web and different services such as social media platforms, online shopping platforms, online gaming websites to play games like Klondike Solitaire, etc.
On some telecom networks, social platforms like Facebook are free but if we talk about other services such as watching a video or surfing the web then the cost of the internet in the region is very high. Due to the high costs of the internet, e-commerce startups are not able to flourish as they should have.
Poor Logistics
Logistics are another problem for e-commerce startups in Africa. Usually, people are accustomed to websites like Amazon & eBay where you can order a product and get it delivered to your doorstep for free without any delivery charges but in Africa, that is not the case.
In Africa, the logistics are poor and the postal systems are almost nonfunctional in the region. Online startups that have to deliver their products do so privately through delivery motorbikes or any other way which ultimately increases the logistics costs and the costs of doing business there. Even simple products like playing cards for games like Solitaire can add up a lot to the costs of the delivery & logistics services.
Open Markets
In almost every nation of Africa, you would find open markets everywhere. But that is not it, you would not only find open markets but also all sorts of other markets such as supermarkets, shopping malls, and sometimes unemployed youngsters selling things. For an e-commerce startup to thrive in such a competitive market, it must beat all of these aforementioned entities either on the basis of price or features.
But even after beating all these entities, these online startups are further at a loss. Since most of the e-commerce startups are linked with banks, they have to pay taxes that their other competitors don’t have to, putting those doing online business at a disadvantage.
Fragmented Markets
Many people who are not familiar with Africa may consider it as one, a whole market but it can’t be farther from the reality. Africa is simply a continent that contains different nations and each nation has its own laws, regulations, and other things that the businesses need to follow.
To be able to flourish in the African market, a company will have to set up a country-specific website in every country and integrate things such as maps, languages, payment gateways, etc according to that country. And since the laws, rules, and regulations of every country are different from that of others, it can become easier for companies to comply with the rules and regulations of all the countries on the continent.
Poor Literacy Rates
Even if all of the above-mentioned problems are resolved and we have proper infrastructure and integration in the region even then citizens would have difficulty using e-commerce websites because of poor literacy rates in the region. There are some countries in the continent that have literacy rates of less than 30%.
Even if the leaders manage to solve all the other problems, illiteracy is still going to remain a huge problem for the people of Africa. Without having a proper education system and investments being made in the education sector, African nations won’t be able to grow in any sector, let alone e-commerce.
