Social commerce in Africa: The $27.97 billion Opportunity 📱

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Image from The Flip Africa

Today, a lot of buying and selling is done over social media platforms like Facebook, Instagram, Twitter, and WhatsApp. In emerging markets, this brand of e-commerce (called social commerce) has grown over the years.

Facebook and Instagram are used for online shopping more than e-commerce marketplaces by Africans, per a 2019 GeoPoll survey, and social commerce accounts for the majority of e-commerce activity on the continent, according to GSMA and UNECA. Beyond just shopping on social media, buying decisions are also influenced by online social communities.

An underlying reason for this growth is that these channels don’t require much digital expertise and are easily accessible for less tech-savvy vendors in Africa.

Small-to-medium formal businesses also set up stores on social platforms to promote and sell to all sorts of buyers, where they already spend several hours per day.

Image from Later.com

By the numbers

  • 3.6 billion: The number of people that use social networking sites globally
  • 34%: The share of Africa’s population using the internet as of 2018.
  • 233 million: Total Facebook subscribers in Africa as of December 2020.
  • 18%: Average increase in the number of online shoppers in Africa between 2014 to 2018, against 12% globally
  • 92%: SMEs in Kenya that used social commerce as of June 2020.
  • 87%: E-commerce shoppers that strongly agreed that social media influenced their purchase decisions in a 2018 report.

The opportunity: Social commerce does a great job blending content sharing, messaging, and selling into one, helping businesses shorten the sales cycle. But most of the processes through which transactions happen — from product discovery and selection to order placements and payments — are crude and inefficient. Put simply, social networks aren’t built to support end-to-end online shopping experiences, meaning users need third-party support for the logistics and payments side of things.

6 Startups to watch and why

Image from daba

Many African startups currently offer solutions that help improve social commerce processes for vendors. Below are a few;

Catlog

The Nigeria-based startup offers vendors a simple way to create an online store on its platform, add their products, and create a custom link they can share on social media with deals finalized on WhatsApp.

ANKA

Ivorian SaaS player provides merchants with an omnichannel dashboard through which they can monitor their sales and inventory across all several channels — Afrikrea, social media, and websites — and manages payments and logistics for vendors.

Chooya

Which brands itself as the “TikTok for e-commerce”, digitizes word-of-mouth marketing, allowing consumers to recommend sellers and get rewarded for it.

Tendo

Offers the average individual an opportunity to tap into Africa’s e-commerce boom by selling online with zero upfront inventory. Ghanaian sellers on the platform are able to source products and resell items using social commerce tools such as WhatsApp, arrange delivery, and get paid, all through the app.

Rabawa

Enables Nigerian entrepreneurs to leverage social media for curating, promoting, and selling their products. Its social sharing integrations include WhatsApp, Facebook, Twitter, and Instagram, allowing vendors to earn from their social networks such as friends and family.

Tushop

Works with “community leaders” to make access to groceries more affordable and more convenient for Kenyans through community group buying. The leaders register with the startup, collate orders from their neighbours and manage door-to-door deliveries all through its platform.

Elloe AI

Is a Kenya-based AI-powered, conversational commerce platform that allows small businesses to manage customer interaction and sell products online across various messaging platforms such as Facebook Messenger and WhatsApp.

Image from the Wfanet.org

The challenge: Limited access to the internet presents potential challenges to the ability of startups in the social commerce space to scale. In addition, selling products via social media platforms alone has its disadvantages, such as when Facebook, Instagram, and WhatsApp experienced lengthy outages last October.

The future: Social commerce continues to blur the lines between social interaction and online selling while accounting for an increasing share of e-commerce sales. We expect to see more growth in the collective social commerce sub-sector in emerging markets as more people come online. More so, Africans are more likely to patronize people they interact with on social media. As a result, social commerce on the continent has a very promising future.