If you can make it in Africa as an entrepreneur, more so in the E-Commerce Sector, you can make it anywhere in the world. Allow that statement to sink in.
FAILED STARTUPS IN AFRICA
You might be asking yourself, why do startups in Africa fail? Well, before we get into that, here are 9 notable startups that have failed in the recent past:
- HouseMe – South African Property Technology Startup (2015-2021)
- MallForAfrica – Nigerian E-Commerce Startup (2011-2021)
- Wabona – South African Video-On-Demand Startup (2012-2015)
- BKam – Egyptian Price Comparison startup (2012-2016)
- Efriti – Nigerian E-Commerce for second hand clothes (2015-2017)
- Afrostream – Cameroonian Video-On-Demand Startup (2014-2017)
- Kune Food – Kenyan Food Delivery Startup (2020-2022)
- Wala – South African Crypto
- OLX – Ghana and Kenya classified forum
A report by Dr. John Kumah, Deputy Finance Ghana indicates that 74% of startups usually fail.
THE E-COMMERCE SITUATION IN AFRICA
You can never mention E-commerce in Africa without mentioning Jumia Africa. Jumia mainly operates in 11 African countries namely Algeria, Egypt, Ghana, Ivory Coast, Kenya, Morocco, Nigeria, Senegal, South Africa, Tunisia and Uganda.
Over the last decade, whenever a startup fails in Africa, these 4 reasons are usually at the top of the list:
- Lack of extensive market Research
- No market for the product
- Poor Marketing
- Running out of money or investors
But is this usually the case?
When it comes to e-commerce, I think most entrepreneurs don’t really know anything about Africa. All the start-ups that have gone down, MallForAfrica, Efritin, Sky.Garden and many more never really understood Africa. Africa is not ripe for E-Commerce Yet. Yes, I said it.
One of the biggest success stories for E-commerce given is that of Jumia. The company has been termed as the ‘African Amazon’. Before even going for the IPO that has performed poorly, Jumia raised a lot of money in its expansion drive. The company is yet to get to profitability.
“In the third quarter of 2022 Jumia posted a loss of $43.2.”
https://s23.q4cdn.com/836376591/files/doc_financials/2022/q3/JMIA-Q3-22-ER-17.11.22-vF.pdf
The biggest mistake that E-Commerce Entrepreneurs make when setting shop in Africa is lifting the model directly as it is in the west and trying to implement it.
Western-style B2C e-commerce will never work in Africa.
Africa operates in a different way. Trust is a major issue especially when it comes to doing business in Africa. Because of the economic situation and regulations or lack of them, there is a window that is usually exploited. The fact of the matter is there are less people who shop online in Africa than in western countries. Most shoppers in Africa want to see, feel and in other cases test what they are buying. Rarely will someone trust that a shirt or dress bought online without testing will fit them. There have also been several cases of selling sub-standard or fake items with claims being unresolved.
If an e-commerce wanted to really understand the market better before setting shop, they would look for the local shopkeepers. Let small businesses do the selling, for these ‘command’ a lot of business in Africa. Learn the lay of the land. Build African solutions for African problems.
Otherwise, e-commerce sites will never see light in Africa.
