E-Commerce in Africa
The African E-Commerce market has grown rapidly in recent years. This trend is predicted to continue. Several factors contribute to this impressive growth.
The African continent has the youngest and second largest population in the world. This offers good potential for growth in the digital sector as well. Smartphones and other mobile devices are spreading rapidly. This also increases internet penetration. In addition, digital payment options are becoming more widespread.
Besides the B2C segment, the B2B segment in E-Commerce is also growing strongly. African B2B platforms are mostly industry and country specific. The most successful sectors in the African E-Commerce space include machinery & tools, automotive, medical equipment, industrial equipment, office supplies and food.
In African business centres, annual E-Commerce growth is expected to be between 20% – 30%.
- In 2019, the revenue generated by E-Commerce in South Africa alone was estimated at US$ 3.6 billion.
- In 2019, the E-Commerce potential of the African continent was estimated at US $ 19.9 billion. The consulting firm “McKinsey” expects further growth to US $ 75 billion by 2025.
- In 2019, there were more than 525 million internet users in Africa. This is more than in North America and the Middle East combined.
- In 2019, there were already more than 469 million active users of so-called “mobile financial services” (i.e. banking via mobile phone) in sub-Saharan Africa.
- In 2020, there were 850 million smartphone connections in Africa. By 2025, this number is expected to rise to 1.05 billion.
Forms of B2B E-Commerce:
1. B2B2C
The wholesaler or manufacturer reaches the end consumer by either partnering with a B2B company or selling directly to the consumer. In B2B2C E-Commerce, these transitions take place online, often through virtual storefronts, an E-Commerce website or apps.
In many B2B2C E-Commerce models, the buyer knows that they are receiving products from a company that is separate from the company from which they purchased them. For example, the buyer may purchase a product from an affiliate blogger, but the product is branded and shipped by the manufacturer.
2. Wholesale
Companies buy goods in bulk at a lower price and then sell them at retail value. The goods are usually bought directly from the manufacturer or trader. Wholesale is a popular form of B2B trade.
B2B wholesale models exist in many industries, such as retail, hospitality, construction and medicine. Traditionally, B2B wholesale transactions have been conducted over the phone, by email or through order forms. With wholesale E-Commerce, everything is done digitally through a B2B E-Commerce platform. The platform allows the wholesaler to display products more easily and creates a seamless buying experience.
3. Manufacturers
Manufacturers produce finished goods on a large scale using parts and raw materials in combination with manual labour and machinery. In the B2B segment, the finished goods are sold to other manufacturers or wholesalers.
A good example of manufacturers in the B2B segment is the automotive industry. The manufacturer makes individual car parts and sells these parts to an automotive company, which assembles the whole car from the parts and sells it to the consumer.
Just like wholesalers conduct their business online, so do manufacturers in B2B E-Commerce.
4. Distributors
A distributor is a person who works with manufacturers to increase the visibility of the goods they produce, with the aim of increasing sales. In E-Commerce, the logistics of the sale take place online, usually through an E-Commerce platform.
Many manufacturers work with distributors, and the digitisation of these businesses creates a greater opportunity for growth. Just like in other B2B models, distributors work to shorten the lead time from sale to delivery and create a customer experience that exceeds customer expectations.
Conclusion – B2B E-Commerce in Africa
High-value specialised products, such as medical equipment, are currently the most commonly traded B2B goods online within Africa and are easier to trade across borders. Higher profit margins can absorb currency fluctuations and make it easier to secure specialised freight solutions or courier services.
For low-priced goods, it can be difficult to bear the often significant intra-African freight costs and delays. For businesses, it has often been easier and faster to import goods in large quantities from outside Africa.
For these reasons, we have launched a new B2B E-Commerce platform for Africa, Enterprise Africa. The platform specialises in marketing high-quality products to African businesses and selling them at wholesale prices.
With 20 years of experience in African markets, our team understands the needs of international businesses in Africa. Any risk factors are minimised by us to give you an optimal and risk-free entry into African markets.
Become a seller now and list your products on Africa’s B2B E-Commerce platform!
We bring brands to Africa!