Ecommerce Business in Africa

E-commerce is often presented as the way of the future. It is a fairly recent sales method that is essentially based on the internet and continues to grow. In Africa, online retail has grown exponentially in recent years. The internet offers many new development opportunities. An online store can reach thousands of people who will (probably) buy the products.

Several factors contribute to this growth: the youth of the African population, the increase in internet penetration due to the wide expansion of smartphones and mobile devices, the rise of e-commerce and digital businesses.

The e-commerce market has continued to grow in Africa. Also benefited by the latest Covid-19 pandemic. In addition, with the development of online tools, creating an e-commerce site has become accessible to everyone.

What is Ecommerce?

E-commerce or electronic commerce is the exchange (purchase and sale) of goods, services and information, especially via the Internet. It is a dematerialized activity that consists of selling products and services to customers from a dedicated internet platform. Via digital services, often via structures such as sites or on “social media”, from their computer and/or other contact points including smartphones.

The different forms of e-commerce

The world of e-commerce is very large and includes different models. There are different types of stores on the internet that cater to different types of goals

We will describe the different forms of e-commerce, which are already present, in 2 classifications:

Of course, the form you choose is not the only criterion that will determine your ecommerce business project.

1. Classification according to the commercial profile of e-commerce professionals and customers

Each transaction is aimed at a specific type of customer. This allows us to distinguish the following types of e-commerce:

• B2B (Business-to-Business): B2B is a form of trade between professionals. These are companies whose end customers are other companies or organizations. It is sometimes found under the term “business-to-business trade”. B2B e-commerce involves the sale and marketing of products or services between companies via the Internet through an online sales portal. For example, this could relate to business transactions between a manufacturer and a wholesaler or a wholesaler and a retailer such as a hardware store that focuses on interior designers.

• B2C (Business-to-Consumer): This type of commerce involves goods or services designed for the general public (individuals). The customer is the final consumer of the product or service sold. Here, companies sell products or services directly to end users. This is, for example, when you buy shoes from an online shoe store to wear them yourself.

• C2B (Consumer-to-Business): so from the consumer to the entrepreneur. These are portals where consumers offer a product or service that companies can purchase. These are the classic freelance job portals. This is also the model used in crowdfunding or crowdfunding projects. In C2B, individuals make their products or services available to commercial buyers at their price through special tools or software.

• C2C (Consumer-to-Consumer): C2C is all exchange of goods and services that is carried out directly between two or more consumers. It brings together companies that facilitate the sale of products between consumers. The most telling examples are eBay, Leboncoin or another portal for the sale of second-hand items between private individuals. Websites specializing in C2C are remunerated with commissions on transactions, allowing control over exchanges, be it the quality of products and services or the guarantee of payment. The principle is simple: as a private individual you have an object for sale. All you need to do is place an ad on specialized sites so that another particular buyer can contact you and buy your product.

• B2A (Business to Administration): so between business and administration. This form of e-commerce concerns all trade relations between companies and governments. This usually involves the exchange of legal or administrative documents: the processing of requests from citizens. Various tools and forms can be downloaded directly online. The payment of taxes and duties by companies also takes place via the internet. It is indeed a commercial exchange between a company and an administration. From a business perspective, B2A is a special case of the B2B model.

• C2A (Consumer to Administration): C2A uses exactly the same idea as in the previous point C2B. Except that here the company is replaced by the administration. In other words, individuals sell products or solutions online directly to governments. This may include training consultancy solutions, the development of web pages or their content, payments for government costs such as health services and social security or taxes.

2. Classifications by Business Model

We can also differentiate the type of e-commerce based on the revenue generated or the way the exchange takes place between the buyer and seller:

• Online store with own products: this is the first thing that comes to mind when you think of e-commerce. The same features as a physical store but in an online version. A merchant buys goods in large quantities and resells them.

• Dropshipping: for the customer it seems to be normal e-commerce. The difference lies in the fact that it is an intermediary who ships the product and not the seller. The principle is simple: a customer places the order on the intermediary’s platform. The latter then ensures that the order is placed with its supplier who is responsible for delivering the product to the address specified by the customer.

• Affiliate e-commerce: Affiliate companies go even further than dropshipping. This is to include items from other retailers in the list of your products through affiliate links. In this case, not only does the store not ship the product, but the sale also does not take place on its platform. The customer is redirected to the site of the brand or supplier where he can make his purchase directly to another store. Which then pays the affiliate a commission once the sale is closed. Affiliation with Amazon is the most common.

• Private labeling: a private label company works with a manufacturer to create a product with their brand. The company checks the attributes of the item. In particular the material, the function and the packaging. The product may be unique from other products on the market.

• White label: In the case of white label, a company buys a range of ready-made products from a manufacturer and then applies its own brand and then sells them.

• Membership or subscription service: This type of e-commerce tries to get its customers to make recurring purchases in exchange for recurring payments: usually weekly, monthly, or yearly.

• Marketplace: Marketplace is defined as a website where independent sellers, professionals or individuals have the opportunity to sell their products or services online for, in most cases, a commission collected by the site on each sale. It is a multi-store store. Amazon is an example of a marketplace par excellence: various companies put their products for sale on the platform in exchange for a commission that is paid to Amazon.

• Services: An e-commerce does not necessarily sell products. Training, advice, coaching and generally exchanged for money at any time. It is a good viable option to start without taking any risk.

If you read the above, you may think that creating an e-commerce is easy. However, we must be aware of the difficulties that e-commerce can bring.

It is therefore necessary to analyze the challenges that can be faced when starting an online adventure.