My notes from Oliver Rippel’s NetProphet talk on “The current state & future of e-commerce in Africa”

These are my notes from Oliver Rippel‘s talk at NetProphet 2011. Oliver is the CEO of MIH, a group company overseeing African and Middle East online properties like Mocality and kalahari.net.

The state of e-commerce in Africa

  • As soon as e-commerce becomes more than 1% of retail sales, that’s when it becomes mainstream
  • US not the most successful e-commerce market – Korea is, with 9% of retail sales online. US is at 4%
  • E-commerce in Africa is still nascent:
    • Egypt – 22% Internet penetration, less than 0.01% online retail penetration
    • Nigeria – 29% Internet penetration, less than 0.01% online retail penetration
    • South Africa
      • 6 million Internet users, 12% penetration
      • 0.4% online retail penetration
      • 16.7% credit card penetration
      • 14 e-commerce sites in Top 100 SA sites

Positive e-commerce macro-indicators in Africa

  • Big average projected real GDP growth
  • There is a growing middle class of 320m Africans
  • High mobile penetration (World average: 60%; South Africa: 92%)
  • The promise of accessible and affordable broadband Internet is there

Lessons for building a winning e-commerce business in Africa

MIH’s focus is on the full e-commerce value chain The brands cover the whole purchase cycle: awareness, interest, decision, action, post sale, resale

  • Embrace mobile
  • Leverage offline
    • Go where the users are – online marketing on its own simply won’t work
    • Go to shopping malls and put up posters – whatever works
  • Cash is king
    • 50m million banks accounts in Africa, 95% of transactions are cash-based
    • The only mobile payment system that is scaling is M-Pesa in Kenya: P2P payments
    • They are converting a cash economy into a digital economy, so that can now also be used for e-commerce
  • Build trust
    • Open marketplace model is inadequate in low trust early stage environment – unlike eBay
    • Instead, MIH uses controlled marketplaces that reduce barriers for buyers by building a trusted brand