Africa’s eCommerce economy was valued at USD 16.5 B in 2017, and this worth could surpass USD 75 B by 2025. Between 2014 and 2018, online shoppers on the continent averaged a growth rate of 18 percent, higher than the 12 percent global average.
However, while forecasts render a bullish narrative, African eCommerce is yet to realize its short-term potential due to several unique shortcomings—experts believe that the ideal ingredients started coming together only in the last 2 years.
Much of this drawback has to do with challenges around costs, trust, logistics, payment solutions, internet penetration, and regulation, most especially in the largely underserved region of Francophone Africa. While Anglophone counterparts are on track to break even, the French-speaking markets remain in the relegation.
Case in point, in Ivory Coast—the largest Francophone African economy—eCommerce, with an estimated worth of USD 46 M and an increasing population, is yet disconcerted by excessive transfer fees, restrictions from global online paytechs, and lack of local delivery options. Among other headaches, these persist throughout the region.
To address these pain points, Racine Sarr, Amadi Cissé, and Chimere Diouf founded Senegal’s Shopmeaway in June 2015 to help Francophone Africans purchase from cross-border e-tailers such as Amazon, Zara, and H&M—all of whom do not deliver to the region. Though based in Dakar, the eCommerce startup has offices in the United States, France, and China.
In an exclusive interchange with WeeTracker, Shopmeaway chief executive, Racine Sarr, shares uncommon insights into the complexion of Francophone Africa’s eCommerce industry, its prospects in a reimagined landscape, and the company’s contributions to disrupting the status quo.
This interview has been edited and condensed for length and clarity.
First off, what exactly does Shopmeaway do and how is the model relevant to the market in which it operates?
Racine: In generality, we help local small businesses import better. There are many of them in different sectors of the Senegalese economy and Francophone Africa at large. We can be compared to Nigeria’s Mall for Africa, but with a play in logistics.
At some point, these small businesses, whether they are in retail, agriculture, or industry, need to import one merchandise or the other. Sometimes, importation is part of their regular enterprise processes.
Here, there is a reasonable count of entrepreneurs who does not know much about the dynamics of the global market. They have no choice but to rely on friends and families to help them ship goods from overseas, which brings about increased margins.
To lend a hand in solving this problem, we liaise between these SMEs and international suppliers–particularly those in the United States and Europe. At times, we also assist them with sourcing. Businesses can connect with suppliers and forwarders directly on our platform.
The forwarders, in question, receive merchandise weekly; they use our mobile application to arrange and consolidate orders for a given destination. Upon arrival, we go further to deliver these goods to the doors of our customers.
What is the setup of eCommerce in Francophone Africa at present? Can you shed light on what is, is not, and [what] needs to be changed?
Racine: JUMIA is well established and leading the markets in this region, especially in Ivory Coast. We do not yet have local challengers like Konga, at least not as big.
More importantly, the zone’s eCommerce market is still [very] much fragmented. There are lots of sellers on social media, like Facebook and Instagram, who have not yet been formally aggregated with reliable payment and logistic solutions.
Nevertheless, our aim is to disrupt this normal. With our value proposition, customers can have access to [these] quality solutions at a better price, about 40 percent less than the usual costs for some 5 more days of waiting for delivery.
The eCommerce landscape here needs more attention, and players like us are trying to fill in the gaps. Being that the big actors have not lived up to the narrative they have served, there is equal work and opportunity for upstarts to make a difference.
How else does Shopmeaway come in? Plus, where and how does fintech come into play?
Racine: Our platform aggregates all the service providers across the supply chain, from overseas suppliers to last-mile, consumer-serving enterprises. Given our mandate, this play mostly attracts SMEs that are looking to transform their operations using materials from abroad.
Secondly, we [actually] help them sell more seamlessly and profitably. They can sell their merchandise via our platform, ultimately benefiting from a structure that provides, as earlier mentioned, efficient payments and logistics.
So far, the fintech part has been working fairly. To make eCommerce work, actors need to [also] aggregate fintech players because some of them may deliver payment collection solutions to only Senegal and Ivory Coast, ignoring the other several markets in the region that need the same.
Some gateways aggregate fintechs, so the entire Francophone African hemisphere can be served. In our context, we have a pair of partners, each operating out of Ivory Coast and Senegal.
With these platforms, we currently cover the entire Francophone West Africa, including Guinea. Meanwhile, we are on the lookout for how to replicate these partnerships to cater to the French-speaking parts of Central Africa, particularly Gabon and DR Congo.
Apparently, there is much to do but there is less venture financing available. How do players in the region get around the scarcity?
Racine: For some not-so-obvious reasons, Francophone African tech has been out of the scope of VCs for the longest time possible. As a result, we have had to adapt to that by becoming [very lean in terms of resources.
At this stage, we (Shopmeaway) have been able to generate net revenue of a couple of million dollars, even if the business has received only USD 400 K in venture funding so far. While it is tough to explain how startups cope with the VC dearth, I have to say we have no other choice but to find a way to get by with what’s available.
The situation does impact growth and market expansion capabilities, yes. However, it is a reality that prepared the region’s tech startups well for the ongoing funding winter/downturn. Now, investors are searching for businesses that can prove not only traction but also profitability.
In the last 2 years, the digital economy has been increasingly attracting funds, which is encouraging. It is a general hope and prayer that 2023 will finally bring about a rise in funding for Francophone African startups.
Speaking of 2023, what are your expectations for Francophone African eCommerce considering the industry’s tide change?
Racine: We know, of course, that inflation rates, which have not been friendly for a while, will only continue to get worse given the nature of the local economy.
With eCommerce, though, we can reduce the prices, majorly via cutting out intermediaries and cutting down warehousing costs. That way, we can help both businesses and consumers weather the uncertain storm.
I expect better collaborations between actors and governments, chiefly to position eCommerce as a viable way through which the region can combat rising inflation. Overall, I expect more support from stakeholders and regulators.