Africa: Sub-Saharan Africa's Different Way of Doing E-Commerce - Facebook Pitches in With Marketplace in a 37-Country Roll-Out

London — Outside of South Africa, Sub-Saharan Africa's e-commerce sector can sometimes seem like a mirage: now you see it, now you don't. The Covid-19 pandemic has tilted the table a little towards adoption but the jury's still out as to whether it will last. Russell Southwood looks at the latest Facebook Marketplace roll-out announcement in the broader context of the overall market.

E-commerce in Sub-Saharan Africa is messy and not a big shiny creature like Amazon. You can talk about Jumia being a unicorn but that's 'money in' and it doesn't really capture the dynamics of the market.

People pay cash at the front door and even before Marketplace went live, Africans in many countries were using Facebook and WhatsApp to buy and sell things. A seller puts an advert up on a platform, a buyer sends a WhatsApp message or rings. They agree to meet and exchange cash for the purchased item. It's kind of clunky but it clearly works.

What Facebook Marketplace does is try and organize it to make it easier for the buyer. People can find what they're looking for by filtering their results by location, category and price, making finding exactly what you want near you easier. The big win for Facebook is that it potentially gets more small and medium-scale sellers advertising because it gets the 'critical mass' of buyers, something that's much harder if you're an individual seller.

Initially Marketplace was rolled out in the big African online markets - South Africa, Nigeria and Kenya - with a side bet in Ethiopia. This week it has rolled it out into another 37 countries: Benin, Botswana, Burkina Faso, Burundi, Cape Verde, Central African Republic, Comoros, Democratic Republic of the Congo, Djibouti, Eritrea, Eswatini, Equatorial Guinea, Guinea, Guinea-Bissau, Gabon, Gambia, Ghana, Liberia, Lesotho, Malawi, Mali, Mauritania, Mauritius, Namibia, Niger, Republic of the Congo, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, South Sudan, Tanzania, Togo, Uganda, Western Sahara and Zimbabwe.

Meanwhile back on 10 August, Jumia announced its second quarter 2021 results. Having cut back on advertising for a period, it is now adopting "a 'full funnel' approach particularly on Facebook that goes beyond direct- response ads and includes more brand awareness campaigns with more engaging video content targeted towards relevant audiences." So Facebook is both a competitor on marketplace activity but also a winner on advertising spend from both Marketplace and Jumia.

Jumia has launched a new grocery channel that had almost 100,000 products by the end of June 2021:" Through our on-demand platform, Jumia Food, consumers can make ad-hoc purchases of grocery and FMCG items from convenience outlets and supermarkets for delivery within one hour. We are also piloting the use of dark stores or micro fulfillment centers located in high population density areas for the fulfillment of grocery orders." A lot of that is in the future tense so beloved by VC-driven start-ups and of course, it's too early for Jumia Food customer numbers.

Trying to make itself useful to donors, it has added an agricultural and farming products category in Cote d'Ivoire and reports that that agricultural sprayer pumps and poultry feeders are among the best selling categories. As with Jumia Food, this feels like something that hasn't yet arrived but sounds good.

Annual active customers have edged up from 6.8 million in the same quarter last year to 7 million in the quarter ending 2021. However, each of those customers in either quarter is only making an average of 1 or slightly more than one order. So for example, 7 million customers generated 7.6 million orders but the revenues fell from US$251 million to US$223.5 million in the quarter ending 2021.

The strategy of improving margins by getting customer to use its own payments platform - Jumia Pay - has gone from 23.5% of Gross Merchandise Value to 25.3% in the quarter being reported. It's an increase but it will take a long time to radically shift the needle at this rate.

Since a significant part of Jumia's revenues comes from sellers on its platform, it has surely has to wonder whether Facebook Marketplace will only make its road to profitability just that little bit harder.

In Brief

Following the departure of Hisham Hendi from his post as the Managing Director, Sitho Mdlalose is now taking up the position at Vodacom Tanzania.

Mauritania: Chinguetel has joined Moov Mauritel and Mattel in launching 4G services in the capital city Nouakchott, as well as six regional centres: Nouadhibou, Zouerate, Atar, Akjoujt, Rosso and Kaedi.

Liquid Intelligent Technologies has launched a direct connection to the USA through a POP in Miami via a South Atlantic subsea cable. As part of Liquid's East-West route between the US and Asia via Africa, the new POP is connected to their 100,000km of fibre across 11 countries on the continent and another 14 countries via the Operators Alliance Programme and Liquid Satellite Services.

African payments company pawaPay, has secured a $9m Seed raise. The round was co-led by MSA and UK-based investment fund 88mph, with participation from Vunani Capital, Kepple Ventures and Zagadat Capital. The capital will be deployed to scale pawaPay's operational presence, find more talent to join the team, and expand into new markets on the continent.

Storms is excited to announce our partnership with KaiOS Technologies to bring the instantly playable version of mobile hit games - "Fruit Ninja" and "Jetpack Joyride" - to over 150 million KaiOS-powered smart feature phones globally, offering iconic and exciting gaming experiences for new internet users for all ages

Angola: Unitel has launched a mobile money service Unitel Money. The new mobile digital wallet platform - developed in partnership with Huawei - allows users to send/receive/deposit money and make instant payments, with around 1,000 agents throughout the country facilitating withdrawals/deposits. Unitel is aiming for three million mobile money users in the short term, and five million users in four years. It faces competition, however, from the existing e-Kwanza service backed by BAI bank, the MCX Express service operated by EMIS, and the new AkiPaga platform being pilot-launched by Kwattel this month.

The Rwanda Utilities Regulatory Authority (RURA) has warned local cellco MTN that sanctions will be taken unless it improves its quality of service (QoS). The watchdog has issued an enforcement notice ordering the operator to 'solve all network connection issues related to poor calls connections (first attempts failures), drop calls and silent/garbled-speech calls'. MTN must improve its voice services in the capital, Kigali, by 29 October and in the rest of the country by 30 November. A report from New Times says that MTN subscribers have also been complaining of poor quality data connections, and while RURA's notice covers only voice calls, the regulator says that it does monitor both voice and data QoS.

South Africa's Competition Commission (CompCom) has given its unconditional approval to the merger of ISPs Afrihost and Cool Ideas, stating that the proposed transaction is 'unlikely to result in a substantial prevention or lessening of competition in any relevant markets', MyBroadband writes. The merger was first announced in June 2021; under the terms of the deal, fibre-only provider Cool Ideas will continue to operate as a stand-alone brand, with all original Cool Ideas shareholders - including founders Andre Jooste and Paul Butschi - retaining stakes in the enlarged company. Afrihost also owns a majority stake in another South African ISP, Axxess.

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