A resurgence on the cards?

E-Commerce Shows Some Good Form In Africa After Previous False Starts

By  |  October 5, 2021

For much of the early 2010s (think between 2010-2016), e-commerce was to African tech what fintech is today. Suffice it to say e-commerce was pretty much the hottest tech sector on the continent in terms of capital pull, acquisitions, and even the more intangible aspects such as buzz and fanfare.

Unfazed by the existence of daunting hurdles in the form of the lack of robust underlying logistics/payments infrastructure and cultural buying habits that point to apathy for online shopping, e-commerce startups sprung up in several countries in those days.

Armed with venture capital, decent operational capacity, and functional (though not always optimal) technology, e-commerce companies set about moving a portion of Africa’s consumer spending – estimated to be USD 1.93 Tn as of 2021 – onto online rails.

Across Nigeria, South Africa, Kenya, Ghana, Egypt, and others, the likes of Jumia, Takealot, Konga, Kilimall, etc, are among the few much-changed survivors in the now-quiet race for African e-commerce, which ultimately proved a difficult terrain bedevilled by infrastructural and operational difficulties – leading to the demise of several startups. Despite a billion-plus dollars spent over the years to give e-commerce a footing on the continent, digital commerce still hovers around 1 percent of retail commerce in Africa, according to a Mastercard report, compared with 14 percent and above in market leaders such as the US and China.

However, even as e-commerce is clearly no longer the coolest thing in African tech like it once was, the sector is beginning to show some good form that might suggest that the seeds sowed a decade ago (which some might say was a tad bit too early for Africa) seem to be starting to germinate.

According to a just-released report from AppsFlyer, one of the world’s leading online marketing measurement firms, analysis of key global trends across e-commerce applications show a 55 percent increase in retail spending in mobile apps as e-commerce growth continues across Sub-Sarahan Africa.

The 2021 edition of the State of eCommerce App Marketing report outlined key global trends to guide marketers in building a mobile-first experience that will drive engagement and sales for the upcoming holiday season.

Having analysed over 750 million app installs across 7250 apps, and 3 billion remarketing conversions across EMEA, the report found that the African mobile app market continues to show strong growth with more people accessing goods and services online than ever before.

This year, retail apps are already approaching peak usage levels from the 2020 holiday season, so the e-commerce industry is entering the last quarter of 2021 with an elevated baseline. With e-commerce installs increasing 55 percent on Android and 32 percent on iOS in 2021, and consumer spend climbing 55 percent overall, the Q4 holiday season is expected to be record-breaking.

“With the holiday shopping season around the corner, retail brands should be prioritising mobile, and mobile apps, as part of their strategy,” said Daniel Junowicz, RVP EMEA & Strategic Projects, at AppsFlyer, AppsFlyer.

“Marketers should look at optimising the overall user experience, including the transition from mobile web to app. In addition, deep linking can be used to ensure customers reach their intended destination within a mobile app smoothly and contextually. If last year is anything to go by, marketers that get their mobile app strategy right will see significant revenue and acquisition growth.”

Key Africa Insights:

  • ecommerce installs remained steady throughout 2020 but have already risen by 16 percent in 2021 (Q1 vs Q2)
  • iOS is showing particularly strong growth, with a 33 percent increase in the same time frame. By comparison, retail app installs on Android haven’t changed.
  • Non-organic installs dropped 26 percent at the start of the pandemic: Marketers throughout the region were cautious when it came to spending budget at the start of the pandemic. Non-organic installs dropped by 26 percent between Q1 2020 (pre-pandemic) and Q2 2020 (as the pandemic hit). However, this level of cautiousness was short-lived, with non-organic installs rising by 18 percent in Q3. They’ve remained steady ever since.
  • Remarketing: The 2020 holiday season saw heavy usage of remarketing as marketers looked to capitalise on key shopping periods. Between Q3 and Q4 2020 there was a 22 percent lift in remarketing conversion rates. This reached nearly 40 percent when comparing October to November.
  • In many iOS dominant regions, remarketing took a hit following the loss of Identifier for Advertisers (IDFA) as part of Apple’s update to iOS 14, but given Android’s dominance in Sub-Saharan Africa this hasn’t been felt. 
  • In-app purchases increase 55 percent over 2020: Consumer spend fell by 50 percent at the start of the pandemic – between March and April – likely due to economic uncertainty as a result of lockdowns. However, as it became clear that consumers would need to adapt to digital methods of shopping in the absence of physical stores, spending quickly recovered. Indeed, between April and May 2020 there was a 256 percent rise in overall spending in retail apps! Overall there was a 55 percent increase in consumer spending in apps in 2020.
  • Unsurprisingly, spending in 2020 peaked in November, coinciding with Black Friday and the lead-up to Christmas. As a result, between Q3 and Q4 there was a 60 percent uplift. This increase in spend has carried through to 2021. If we compare H1 2020 with H1 2021 we see a 65 percent increase in spending. 

Featured Image Courtesy: Progress

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