Over the past few years, Africa’s e-commerce space has exhibited significant growth potential, with the number of online shoppers growing at an annual average rate of 18% between 2014 and 2018 which is high when compared to the global average of 12% in the same period
In 2020, Africa’s e-commerce market value was estimated at $20 billion according to an article published by Tech Cabal (one of our portfolio companies), this growth trend is expected to persist in the coming years as Africa’s average annual online shopping spend reaches a new peak of $76 in 2024.
Figure 1: The average shopper in Africa will spend an estimated $76 on online shopping by 2024
Source: Tech cabal
According to the UNCTAD E-commerce Index Report 2018, Nigeria, South Africa, and Kenya accounted for more than half of the online shoppers in Africa in 2017. Nigeria is Africa’s largest business-to-consumer e-commerce market in terms of both the number of shoppers and revenue.
Alastair Tempest, the Chief Executive Officer of Ecommerce Forum Africa, in a special report by the South African Institute of International Affairs (SAIIA) titled, “The Digital Economy and E-commerce in Africa – Drivers of the African Free Trade Area?” looked at the development of the digital economy, and in particular e-commerce in Africa, against the backdrop of the African Continental Free Trade Area (AfCFTA). He noted that several factors are inhibiting the e-commerce market from reaching its full potential in Africa and these include low levels of Internet penetration, high cost of broadband for Internet access, lack of a national street address system, general distrust on an online transaction, low bank card penetration and limited e-commerce payment options. Read more here.
Most businesses in Africa remain small, offline, informal, and unseen.
They need a “one-stop-shop” e-commerce solution that allows for seamless payments, geolocated deliveries to avoid the address system issue, an easy-to-use format suitable for merchants in the informal market who may have a limited ability to read/write, and most importantly a cost-effective layout that does not consume very large data but provides quality user experience.
The Solution: Kloud Commerce to the rescue!
Headless commerce is a fancy word that simply means “easier to customize”. Many ecommerce solutions aren’t flexible enough for African merchants, some products offer too much functionality, others too little.
The “headless” strategy Kloud Commerce offers is just right for all merchants because the front end; pictures on the website/what they show to customers are separate from the backend; all the financing, invoicing, and payment functions.
This allows merchants the flexibility to build virtual stores and customer purchasing experiences that are as unique as their products.
We believe Kloud Commerce (formerly PayPecker) has built a solution that will enable e-commerce on the continent on a scale never seen before by providing a platform that circumvents many of the challenges faced by African merchants and customers all at the same time.
Kloud Commerce’s software allows a merchant to set up an e-commerce store, with embedded logistics, payments, other financial services such as working capital loans marketing, marketing, and invoicing in just a few clicks.
Furthermore, uniquely designed for African entrepreneurs and customers, a typical shopping experience on Kloud Commerce uses 50% of the data that would be used during ashopping trip of the same activity level and duration on a site like Shopify.
This allows merchants often operating on thin margins as well as customers with much less disposable income than their Western counterparts to enjoy seamless shopping experiences online despite the high data costs on the continent. It also allows entrepreneurs and merchants to focus on what they do best; selling, without having to worry about invoicing, working capital, setting up separate marketing infrastructure, logistics, or payment issues.
The informal sector remains the major source of employment and the backbone of economic activity across Africa, accounting for 80.8% of employment in Sub-Saharan Africa. Read more here.
Onboarding more online sellers via the Kloud Commerce platform provides access to working capital finance, easy-to-use marketing tools, increased profitability through outsourced logistics, and increased visibility that will lead to increased sales for entrepreneurs. Many online sellers in Africa are women. So, from a gender lens perspective, we felt that this would be an extremely powerful way to empower African women and help them scale their businesses quickly.
Figure 2: The informal economy, % of GDP
He has successfully recruited Frank Atashili, ex-Interswitch and ex-Visa as Co-Founder & CPO, who helped build out West Africa’s first Mastercard presence; David Umoh, Co – Founder & CTO, who helped build all his commerce platforms. Other trusted colleagues of Dr. Olumide includes Mustapha Abokede, ex-KPMG, COO Kloud Commerce, and “Gondy” or Godswill Okwara, ex-Flutterwave who serves as the Director of their flagship product, OminiComSwitch Technology (formerly PayPecker Omni).
We are excited about supporting Kloud Commerce on this journey and look forward to watching Dr. Olumide build a platform that will help to enhance economic growth in Africa and beyond giving even the smallest of entrepreneurs’ access to markets across the world.