E-Commerce in Africa: DHL does logistics and online retail [5 reading tips]

Internationalisierung, Afrika, Logistik — Photo by Tobias Tullius on Unsplash (Edited by dotSource)

Being able to buy a product any time, anywhere is a reality in many countries today. This is ensured by constant technological progress and improving infrastructure. 71 per cent of European online shoppers are now shopping across borders. But there are still regions where cross-border e-commerce is a huge challenge.

Africa is a good example. Although the region is still struggling with many obstacles, it holds great potential for online retail. We all know: »First come, first serve.« So does DHL and it’s recognised such potential and taken on this niche market early on.

E-Commerce in Africa on the rise

Despite a poor and inefficient logistics system, little access to broadband Internet, and a high poverty rate, smartphone use in Africa is ever increasing. According to a study by GSMA, the total number of smartphone connections at the end of 2017 was 250 million, which corresponds to one-third of the total connection base. The acceptance rate will double by 2025, which will sooner or later close the gap with developed countries.

Few consumers own desktop computers or laptops. Because of this, Africa is primarily a mobile e-commerce market. Mobile devices, in combination with mobile payment systems, have opened up new shopping opportunities in hard-to-reach places or places without physical business.

E-Commerce in Africa faces challenges

One of the most important factors for successfully entering international markets is knowing the most popular payment method and making it available accordingly. These wishes are often, also in Europe, very difficult to fulfil, since users of different origins also have various preferences.

A large part of the African population has no traditional bank account and cash on delivery is still the dominant payment method. But nearly 280 million Africans use mobile wallets. That’s three times the number of Africans with bank accounts. Mobile payments represent an enormous growth opportunity for the continent.

Logistics is, as a topic, as big as a construction project.

In most African countries there is no standard for street addresses. The deliverer and customer often have to stay in constant contact with on the phone on the day of delivery. In addition, there is a lack of paved roads. These two circumstances make the last mile extremely expensive and keep global logistics companies away from most African countries. Instead, bicyclists or drivers on motorbikes cover deliveries.

E-Commerce in Africa: DHL is starting and e-commerce app

Under the premise that DHL already has an established logistics network in Africa, the group recently launched an e-commerce app called DHL Africa eShop in eleven African markets: South Africa, Nigeria, Kenya, Mauritius, Ghana, Senegal, Rwanda, Malawi, Botswana, Sierra Leone, and Uganda.

Products from more than 200 US and UK stores are sold through the platform.

DHL Africa eShop is operated through the e-commerce platform Link Commerce, part of the startup MallforAfrica.com. MallforAfrica.com CEO Chris Folayan said:

That’s what our service does. It takes care of that whole ecosystem to enable global e-commerce to exist, no matter what country you’re in.

This collaboration will allow DHL to access the local infrastructure as well as payments, procurement and delivery – essentials for successful international retail. In this context, the app offers, for example, local fintech options such as Paga from Nigeria and M-Pesa from Kenya.

Hennie Heymans, DHL Express CEO for Sub-Saharan Africa, describes the goal of this app as follows:

[The App] provides convenience, speed, and access to connect African consumers with exciting brands.

E-Commerce in Africa: Are logistics the new retail?

The leap from DHL into e-commerce territory, beyond logistical work, is remarkable. During an international expansion, retailers and manufacturers expect major logistical barriers. An expert like DHL can help companies overcome them by making it much easier to deliver products, significantly reducing costs, and ultimately encouraging foreign companies to sell in Africa. For Macy’s, Sephora, and Ralph Lauren, this has already been achieved in the case of DHL Africa eShop.

In addition, this partnership could strengthen DHL’s position direct competitor Jumia, which offers its own fulfilment services in Africa, and bring more movement into the young African online commerce. Apart from that, none of the global e-commerce giants has yet set their sights on this region.

Alibaba has talked about the expansion of Africa but is not quite ready for it at the moment. Amazon offers limited e-commerce sales on the continent while eBay has partnered with MallforAfrica.com in 2017 to enable Africans to sell home-made goods through the US-based platform.