Marketplaces, the next frontier that will unlock the digital revolution in Africa
A friend of mine, Mwesigwa Daniel telegrams me the other day and asks why I don’t blog much about Tech in Africa. I didn’t have an answer for him despite having done this for close to a decade now. But having thought about it, I believe I no longer write more frequently because I am now spending more time observing, talking to people and listening. I am learning a lot this way than punching away at my keyboard heedlessly positing about whatever comes in my head. I guess I am getting wiser?
Last week I visited allan.rwakatungu of Xente over a casual conversation about their product, user experience, product strategy and growth. We talked a lot about bringing on the cashless economy using mobile apps such as his startup’s. Xente is a two-sided digital marketplace that makes it convenient for mobile users to pay for mostly digital goods and services using electronic means. While they have made significant strides along closing a funding round, moving to other markets and having significant user growth, such Fintech products are not without challenges which we discussed about in great length in my previous post.
The other previous week, I met with Carol from Jumia over their annual mobile report that they are going to publish some time in March or April. Jumia has managed to become the most visited website in Uganda beating newspaper websites which have for long dominated the top charts. This is of course if you only consider local sites. I thought this was a lot of progress considering e-commerce is a completely new emerging industry which has been struggling to change user behaviour. Jumia is reportedly preparing for a possible New York listing in the first quarter of 2019 which could value the firm at about $1 billion according to Reuters. Jumia’s marketplace involves a curation of local merchants selling physical goods selling to users all over the country via Jumia’s platform. Jumia takes care of the logistics and shipping and optionally warehousing for merchants. The online retailer has been increasing on its number of warehouses in Kampala.
Now it hasn’t been really rosy for all the other e-commerce players on the continent. OLX, Gloo, Dealdey, and Efritin Nigerian-based retailers have all closed shop in the last few years. The reasons for closure are numerous, but weetracker lists purchasing complications and logistic loopholes as some of them;
“Lack of adequate market research, distrust for e-commerce websites, customer acquisition costs, purchasing complications and logistic loopholes could be the team of reasons fostering e-commerce shutdown in Nigeria.”
Meanwhile Amazon has slowly but surely started to put its feet into the African Continent. With the recent collabo with Western Union, big A is opening up small shops in Kenya giving shoppers an option of paying with cash.
However, just because marketplaces selling physical goods are struggling doesn’t mean the other kinds of marketplaces are struggling.
Ride sharing marketplaces are so far the blockbuster success stories on the continent. The amazing thing is that home-grown ride hailing startups are actually giving silicon-valley bigshots a run for their money. A great example is Uganda’s SafeBoda, a ride sharing app that matches Boda Boda (aka motorbike taxi) riders with passengers. Safeboda has close to 10,000 riders so far with a massive presence in Kampala and Nairobi and they have successfully managed to raise at least $1 million in funding. Global giants Uber, Taxify too having presence is most African cities offering customized transportation services to users.
Beyond transportation, e-commerce and Finance, several marketplaces are mushrooming across various verticals like education, healthcare, logistics, agriculture among others. Yoza, an Uber for laundry is making a comeback after having had a rough time at managerial level.There are few or no success stories yet because the plumbing necessary for these marketplaces to succeed such as electronic payment options for instance is still being worked on. As you know payments is so far one the most funded verticals of startups in the continent. Flutterwave, Paystack, Africa’s Talking, Cellulant, Eversend and several others are winning over $ 1 million tickets from VCs which is a good thing. Once the payment infrastructure is sorted out, the bedrock upon which digital marketplaces will thrive will be well laid.
2020 going forward could be the decade that digital marketplaces of all kinds start to take off on the continent the way they have in other markets. The right time to start though is NOW.