The Lion King | 7
Cover Story
I
s there a chance that someday, the
shopping malls will go empty and be
converted to big warehouses serving
online super malls? This seems to be a
trend that is gradually emerging global-
ly as increased internet penetration and
improvements in technology change
the way people shop for items.
A recent report by “Business Insider” an
American based online Financial and
Technology news portal reveals a steep
drop in brick and mortar in-store sales,
which has been growing at a nega-
tive rate since 2010. At the same time,
online sales have been accelerating as
shoppers turn to online malls like Ama-
zon and Alibaba for their shopping.
A comparative analysis of online and
offline sales patterns shows that about
40% of media, sporting and hobby
goods are currently purchased online.
This is expected to grow to an average
of about 65% by 2020. Also about 30%
of electronic purchases are currently
done online but this will grow to an
average of 50% by 2020.
The Business Insider data reveals that an
average of 69% of American consumers
purchased consumer electronics online
in 2013, 67% purchased books, while
63% purchased clothing and apparel.
Traditional retailers are
closing shop
The move online by American retailers
is already having a negative impact on
the big traditional retailers in America.
Many are closing retail outlets as they
witness less number of people visiting
their brick and mortar shops.
For example, Barnes and Noble, the
largest book seller in the US plans to
close a minimum of 226 of its book-
stores between 2011 and 2021. Staples,
another major retailer in the US will close
225 retail outlets by 2015; Gap, a major
fashion retailer closed 189 retail shops
between 2012 and 2013 while Aber-
combie and Fitch is closing 180 retail
outlets by 2015.
Also in China
China is another country witnessing a
significant boom in online trade. Online
retail sales, according to China’s Minis-
try of Commerce rose 41.2% in 2013 to
$296.6 billion higher than the estimated
$262.5 billion worth of e-commerce
sales made by American companies in
the same year, an indication that the
Chinese e-commerce market has over-
taken that of America. KPMG, a global
consulting and audit firm, forecasts that
the e-commerce market in China will
reach $540 billion by 2015, almost dou-
ble its current level.
The growth in China is driven by the
increasing number of Chinese going on-
line to shop. According to an article in
Forbes Magazine, the number of online
shopping customers in China rose from
242 million in 2012 to 302 million in 2013
with the magazine forecasting that the
number of Chinese shopping online will
increase to about 700 million in the long
run, which will see online shopping rising
to about $687 billion assuming expend-
iture per head remains the same as in
2013.
And in Africa
Africans are also catching up fast on
the e-Commerce trend as internet pen-
etration and mobile devices ownership
increases on the continent. A report,
“Lions Go Digital” prepared by the
Mckinsey Global Institute (MGI), puts
internet penetration on the continent
at 16% with 167 million internet users
in 2013, with an average of 67 million
smart phones and an estimated $18
billion in internet contribution to the
African economy.
However, the report also shows the
huge potential of the internet economy
in Africa driven mainly by e-commerce.
The report estimates that internet
penetration will reach 50% of Africans
by 2025, with an estimated 600 million
internet users, using an estimated 360
million smart phones and generating
e-Commerce sales worth $75 billion
annually.
The clear big picture that is fast emerg-
ing is that there is no promising future for
big shopping malls and a huge future
for click and buy or e-commerce. Two
of the biggest growth markets in Africa
for e-commerce are Nigeria and South
Africa.
Black Friday sales in Ni-
geria shows e-Commerce
appetite
A taste of how the increasing appe-
tite for online shopping by Africans is
shaping out was witnessed recently in
the Nigeria version of “Black Friday”
sales when two of Nigeria’s e-com-
merce giants, Jumia and Konga offered
their version of “Black Friday” discounts
online.
Jumia recorded over 1.5 million visits
on Black Friday, which was twice its
average of 700,000 weekly visitors on its
site and up 10 times over similar Black
Friday sales recorded in 2013. Interest-
ingly, over 50% of visitors who accessed
the site did so through an Andriod or
iOS mobile devise. The top three selling
items were low priced smart phones, a
clear indication of the increasing reli-
ance of many Africans on budget smart
phones to access the internet and
interact on social media, with online
shopping increasingly becoming one
of the reasons to buy a smart phone in
Africa.
Konga, the rival online platform, also
had a similar sales boom on “Black Fri-
day.” A statement from the company
states that Konga recorded about N600
million ($3.5m) in sales on Black Friday,
a record breaking 1440% year on year
increase in online revenue.
During the Black Friday sale period, Kon-
ga states that it recorded 670 per cent
increase in new orders from shoppers
across every state in Nigeria reaching
Poor internet
connection
4
Limited
consumer
awareness
3
2
Low banking
penetration
Poor logistics
in rural areas
1
OBSTACLES TO
e-COMMERCE
GROWTH IN
AFRICA
