Social media platforms like Instagram and Facebook have become the main channels for online shopping in most African countries. Businesses are leveraging these platforms to reach a broad audience and engage with customers directly, while regular eCommerce channels are declining year by year.
Nevertheless, the largest regular e-commerce platform is claiming that the growth is back. Gross merchandise value (GMV) showed growth in the first quarter of 2024, which should indicate a recovery of the market. But it seems to be a matter of whether the glass is half-full or half-empty.
Indeed, the number of orders increased by 1.9% may look somehow promising at first sight. However, the number of active customers decreased by 5% and this is a red flag. Despite a bit more money was spent on shopping but by remarkably fewer people. It leads to the question of what is happening in the market. Are customers tired of the same old or are we shifting the paradigm? Given that this is not a one-time occurrence but a previous year’s trend, it rather indicates the reality, that people are turning away from traditional e-commerce.
So, what could be the phenomenon that causes communication channels to dominate e-commerce? I believe the part of the answer lies within the question – it is the communication itself.
Communication is key in any part of Africa. Is it a general mentality that differs from European, US, etc shoppers, or it is a previous experience that forces people to play safe, it’s not even relevant, but people in Africa do want to communicate. Make sure the seller is genuine, ask questions about the product, confirm the order, delivery, etc. Thus, typical e-commerce sites imported business models that cut off customers from these basics have proven to be a real long shot.
And not only the communication aspect but there are a few more critical factors to consider – first, the African market is highly price-sensitive. Due to limited resources and access barriers (e.g. foreign payments), most sellers act as retailers or dropshippers, competing with their own suppliers who sell directly too. In this price-sensitive environment, the lowest sales price is often the key determinant of success. To maintain market position, retailers can only add small margins anyway, but this is offset by platform fees of up to 15% of the sales price, even on products sold at a loss. This makes it extremely difficult for common online sellers to undercut the sellers, who have better supply deals. As a result, most sellers must find more affordable tools and social media appears adequate for the basics.
Problems will arise when sellers intend to run a bit bigger business than just selling a couple of personal item-like products on their social media channel. Social media platforms are not tailored for professional business dealings. They lack essential tools for managing orders, handling payments, arranging delivery etc. Tools inefficiency is making vendors lose tons of their deals every day.
Running businesses at a professional level in social media has turned out to be significantly challenging without a professional tool set. The Shopnest multichannel business management tool’s rapidly growing sellers database in Nigeria confirms the vacuum of such efficiency boosters in the market. Vendors want to be in charge of their deals but they just need some technical solutions to help manage their flow and keep things in order.
We are confident that solutions not alternating, but strengthening the existing collaborations and interactions are the ones that will thrive in Africa’s commercial landscape. The current signs of the rise of social commerce in the top African countries are just the beginning. The paradigm is shifting since African entrepreneurs need a different approach
Conclusions:
It’s not just up to buyers to shift e-commerce to social media. It’s rather up to sellers, due to the lack of suitable tools in the market to meet their needs. E-commerce in Africa has a significantly strong social element inside. Regular e-commerce business models, imported from US or EU countries successful in other parts of the world, might not necessarily apply to the African market.
Since there is no support for these small businesses and local communities it all together makes vendors abandon the platforms. Given that there are not too many market-friendly alternatives available sellers are forced to set up their businesses on social media platforms. However, since social media channels are not efficient for professional-level business transactions, there is a need for efficiency tools like Shopnest, which are poised to fill the gaps by bringing in these missing features that social media platforms don’t provide. This all has led to a surge in social commerce, which is thriving and shining brighter than ever before in these days.