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    Diasporians supporting e-commerce in Africa

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    I’ve often wondered why Amazon did not take the big leap into Africa. Conversations with locals across the continent and in the Diaspora always end up in a ‘logistics’ debate. How does one ensure that goods get from one city to another city? Ugandans, Mozambicans, Nigerians, Senegalese and South Africans all challenge me on this point.

     In 2009, a friend mentioned Nairobi based e-commerce site ‘Mama Mikes’ and through a bit of networking, I got the opportunity to meet with the founder, Segeni Ngethe a TED Fellow. Sengeni and the team were developing the ‘Hapa TV’ and growing the Mama Mike product portfolio when I met with them in their Nairobi office. The conversation focused on the effect of the global financial downturn on sales. Mama Mikes primary market was from Kenyans in the U.S.; local uptake was slow, forcing Sengeni to diversify to mitigate the lack of growth. This was an African initiative with incredible potential but locally generated e-commerce revenue was still a long way away despite all the talk of broadband fibre optic cables being laid down and Kenyans being able to access internet at reduced rates.

    Similiarly, South African based Kalahari was providing a world class service, albeit with a 7-14 day delivery window.  Its product range slightly smaller than that of Amazon but offering a better selection than local book sellers. So, Kalahari’s expansion into other African territories signalled a positive trend. Africa was finally entering the e-commerce era. Mama Mikes sold basic products and gift vouchers while Kalahari sold books.  

    Internationally, according to global online retail data analysed in the Worldwide Worx report, growth slowed in most regions during the global financial crisis, but did not turn negative: total sales never fell anywhere in the world. Industry estimates for the total value of global online retail in 2010 come to an average of about $545-billion. The figure for 2009 was $469-billion.  This indicates that globally, online retail is recession-proof for now, while it still makes up a small proportion of total retail worldwide.

    The news of Kalahari withdrawing from Kenya and Nigeria raises two questions: is Africa ready for e-commerce and/or was the offering not suitable for these markets? While Kalahari purports its difficulties to high delivery and marketing costs, the lack of an active purchasing user base could ultimately be the decision that forced Kalahari to withdraw its services. Any enterprise considering business across Africa will deal with the lack of infrastructure by adapting its business model to the local landscape and implementing suitable operating strategies, but trying to create demand or base its forecast on customers realisation of how much they need a service or product once they are introduced to it can be prove difficult, infact very few businesses are able to do this as successfully as Apple or Scojo.  Converting an observer into a loyal customer takes time and a lot of advertising spend.

    Sengeni noticed early on that it was the African Diaspora actively completing purchases and included vouchers and gifts to his e-commerce product range.  Even, Mama Meals on Wheels caters for the Diaspora wishing to send ready made delivered meals to their loved ones in Nairobi within 45 minutes.  Mobile commerce will happen in Africa, but it will, like mobile banking take a different form to that in the developed world.  If one refers to mobile commerce in  Kenya, immediately the association is made with “Just like I can sent my mother a bunch of flowers from the States via Mama Mikes”, so one is left to consider if e-commerce and m-commerce in Africa will be supported by the Diaspora for the foreseeable future?