London — This week I have been given access to a retail and online sales survey of six Sub-Saharan African countries' mobile handset and tablet sales. For the first time the scale of the "punch to the gut" Covid-19 has dealt to sales revenue has been estimated across the industry for six fairly representative markets. Russell Southwood spoke to Roger Carbonell, General Manager, Aquidneck Consulting about the impact and some other really useful insights out of the research.
Aquidneck tracks mobile phone and tablet sales across six countries: Cameroon, Cote d'Ivoire, Ghana, Kenya, Nigeria and Uganda. Subject to client interest, it may soon also expand to Senegal and would also like to do Tanzania. Its clients include mobile operators and handset and tablet vendors. They use it to track overall sales in the market and to see how quickly the transition to 4G is happening.
Its methodology for data collection is two-fold: firstly, it uses data from the EPOS systems in larger phone retailers, and secondly, it does manual audits of small outlets. In Nigeria, it is collecting data from 500 outlets.
For the coming quarter, the lockdown has meant they have had to adapt their methodology as the market changed:"For example, there was a decline of 50% in handset sales in Nigeria. No sales were allowed in-store but they were allowed online. Indeed online sales were allowed in most of the countries we survey, with the handset being delivered by motorcycle to the door." So it has factored in online sales both directly by retail platforms and by aggregator platforms like Jumia where individual merchants sell on its platform.
The survey is for Q1, 2020, in other words, January-March, before the lockdown began in the countries surveyed, except in Cameroon which instituted its lockdown on 17 March.
Impact of Covid-19 lockdowns - estimates of impact
Across the six countries, standard online and "buy online & collect" (BOPUS) both grew in double digits compared to the same quarter last year. On average online sales have a +31% higher price point: last year Q1 the average handset price was US$51 and this year it was US$67. According to Carbonell: Many first-time online users have built trust".
The impact of Covid-19 related lockdowns and curfews had a massive impact on device sales with an average decline of -12% in units and -11% in value MoM with dire prospects for Q2. The graphic below shows the date of the Covid-19 lockdowns for the six countries surveyed.
The overall scenario is expected to stabilize from the third quarter of the year as the COVID-19 situation hopefully improves and new devices pick up the pace and smartphones decline in price once supply chains return to normal.
Several interesting key insights emerged from my conversation with Carbonell that come from his survey work in these countries, before, during and after lockdown:
e-commerce vs physical sales
The biggest online sales aggregator platform (with individual merchants) in Nigeria suffered a problem with payment delays. Individual merchants found themselves waiting for up to 7 days for payment after they had sold a phone to a customer.
On a wider front, there is still a mistrust of individual merchants on the aggregator platform. There are a wide range of prices on the platform but as Carbonell asks:"How can someone sell a new handset for N20,000 cheaper than the lowest price available elsewhere?" Of course, the truth is that it is not the phone advertised: it's either a refurbished phone or a fake. In these circumstances, many customers still prefer "bricks and mortar" outlets because they can see the phone for themselves before it arrives. Also they sell recognized retail brands and are often the advertised dealer for several known brands.
"There's another merchant aggregator in South Africa and it charges merchants money to become "recommended retailers". That money is used to carry out checks and merchants have to prove that they have things like enough cashflow and warehouse facilities."
"The online platforms for better-known 'bricks and mortar' outlets in Nigeria tend to sell with prices that are in the middle of the market. Also they sell phones that are not that cheap, generally it tends to be above US$100 on average. So this is displaced demand from the middle class who couldn't wait. For example, the Tecno Camon 15 has just launched."
Smartphones vs featurephones and why featurephones will continue to grow
There has been a stronger decline in smartphone sales because they have less suppliers in the market and there have been supply chain issues. By contrast, featurephones have more suppliers and they tend to have active subsidiaries rather than just sales channels in more countries.
If a company has a subsidiary in say Nigeria, it will prioritize sales there as it is a larger market. The lockdown has also meant that for some companies key staff members are stuck in China or elsewhere and the in-country merchants are not used to doing online agreements.
For every one smartphone sold, three featurephones are sold:"Featurephones won't disappear any time soon." They have much better battery life and in places like Uganda that have only 20% of the population with access to electricity, this matters:"People can get access to electricity but they don't want to be charging their phone every day."
The other common reaction to smartphones amongst buyers is that they think you will spend more on data. Now strictly speaking this is not true but actual consumer behavior means that they use more data consuming apps than they would do on a featurephone.
Speed of upgrading to 4G
Carbonell describes the transition from featurephones to smartphones as "glacial":"It's something like 1-2% a year." However, he points out that MNOs in Cotre d'Ivoire and Kenya are trying to change this slow pace.
They are promoting low cost handsets and the idea is to get people to increase their use of data: these phones include Orange-promoted Rise 32 (cash price: US$35)and Safaricom's Neon Ray phone (US$38-39). Also in both countries the Governments are keen to promote low cost data use among their citizens.
The survey provides a glimpse into the little covered world of tablet sales. Of course, there are definitional issues over what is a tablet as smartphones get larger and lines blur. Carbonell has fallen back on how manufacturers describe the product: if they call it a tablet, then it's a tablet.
Aquidnek estimates that the annual sales of tablets across the six countries it tracks are around 200,000 for all six countries, with 60% of those sales coming from Nigeria. So for the balance of the countries tracked, this would be an average of 16,000 sales annually. Carbonell believes that there is not enough disposable income in the mass market to support higher levels of tablet sales.
The presentation on which this article is based looks at each of the six countries surveyed in greater detail. To get a copy of the presentation of this data, send an email requesting it to Roger Carbonell, Aquidneck: email@example.com