Your SlideShare is downloading. ×
0
AFRICAN LIONS GO DIGITAL:
THE INTERNET’S
TRANSFORMATIVE
POTENTIAL IN AFRICA
RETAIL IN AFRICA
•

In these small storefronts and open-air stalls, presentation isn't always key.
Cereal boxes might be c...
RETAIL GETTING IN SHAPE IN AFRICA

• Africa is a continent best known for its resources. Oil is abundant in
places like Ni...
RETAIL PLAYER ENTERING AFRICA
• The American retail behemoth Wal-Mart acquired a 51 percent stake in
South African wholesa...
INTERNET IMPACT ON ASPIRING
COUNTRIES
The Internet today connects about two billion people worldwide. Half of these are in...
THE INTERNET IN AFRICA TODAY
•
•
•
•
•

16% INTERNET PENETRATION.
167 MILLION INTERNET USERS.
67 MILLION SMARTPHONES.
MORE...
OPPORTUNITIES FOR INTERNET–DRIVEN
GROWTH & PRODUCTIVITY IN SIX SECTORS.
• RETAIL
• AGRICULTURE
• HEALTH
• FINANCIAL SERVIC...
RETAIL- ECOMMERCE
• The formal retail sector is relatively underdeveloped across most of the
continent, outside of South A...
CHALLENGES IN ECOMMERCE RETAIL IN
AFRICA
•

•

•

Logistics and delivery infrastructure. While some major urban centres ar...
ANTICIPATION BY 2025 FOR AFRICAN ECOMMERCE
By 2025, e-commerce could account for 10 percent of retail sales in
Africa’s la...
THANK YOU
African lions go digital
Upcoming SlideShare
Loading in...5
×

African lions go digital

166

Published on

Published in: Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
166
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
5
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Transcript of "African lions go digital"

  1. 1. AFRICAN LIONS GO DIGITAL: THE INTERNET’S TRANSFORMATIVE POTENTIAL IN AFRICA
  2. 2. RETAIL IN AFRICA • In these small storefronts and open-air stalls, presentation isn't always key. Cereal boxes might be covered in dust. You can't find the same article of clothing in multiple sizes. Glassware isn't sold in complete sets. Produce is not chilled and Prices are negotiable. • Retailers like these serve their purpose well; they are flexible, practical and cost-effective. But as spending power increases in most of Africa's fastgrowing economies, Western-influenced shopping preferences are beginning to take hold. For better or for worse, a growing number of consumers across the continent are gravitating toward a new kind of consumerism -- one that prioritizes presentation, branding and consistency. • In other words, opportunity is knocking for big-box stores, massive groceries and multi-story malls. The return on investment could be huge; global consulting firm McKinsey & Co estimates that by 2030, Africa's top 18 cities will have total spending power of $1.3 trillion. For Western retailers, this could be the beginning of a new golden age in Africa. Ibt times
  3. 3. RETAIL GETTING IN SHAPE IN AFRICA • Africa is a continent best known for its resources. Oil is abundant in places like Nigeria and Angola; natural gas is booming in Tanzania and Mozambique; minerals enrich the earth in Botswana, the Democratic Republic of the Congo and South Africa. The growth these commodities have spurred is incredible; the IMF estimates that GDP growth in sub-Saharan Africa will hit an average 6.1 percent next year, far exceeding the expected global average rate of 4 percent. • The trend is most evident in fast-growing business hubs like Accra, Ghana; Lagos, Nigeria and Nairobi, Kenya. These densely populated and relatively high-income areas are full of consumers with limited shopping options -- and outside investors have noticed. • There is a sizeable part of the population that has the means to buy from formal shops, but don’t have the options available. There is plenty of interest in Africa.
  4. 4. RETAIL PLAYER ENTERING AFRICA • The American retail behemoth Wal-Mart acquired a 51 percent stake in South African wholesaler Massmart last year, which it is using as a springboard for expansion into the sub-Saharan market. Massmart will test the waters by opening a single store in West Africa by the end of 2013, and has plans to open 90 stores across the continent in the next three years. • The French retail giant Carrefour has partnered with the French distributor which specializes in African sales and distribution, and plans to open stores in eight countries across the continent by 2015. • South Africa's Shoprite ,a food retailer, has allocated more then $200 million to build stores in Nigeria. • Atterbury Group, a property holdings and investment group in Pretoria, bought majority shares in Accra Mall, Ghana's biggest retail center, last year and has plans to open up an even bigger mall in the same city.
  5. 5. INTERNET IMPACT ON ASPIRING COUNTRIES The Internet today connects about two billion people worldwide. Half of these are in the “aspiring” world—countries that are climbing the developmental ladder quickly, with diverse populations and inarguable economic potentialities. • The Internet is growing at a tremendous rate in aspiring countries, but with very different growth paths. Internet penetration has grown at 25 percent per year for the past 5 years in the 30 aspiring countries, compared with 5 percent per year in developed countries. Many Internet users in aspiring countries are gaining access to the Internet solely through mobile phones. Mobile subscriptions in aspiring countries have increased from 53 percent of worldwide mobile subscriptions in 2005 to 73 percent in 2010. • The impact of the Internet in aspiring countries has been significant, but there is still tremendous potential if these countries reach developed world levels. The Internet contributes an average 1.9 percent of GDP in aspiring countries—$366 billion in 2010. By comparison, the Internet in developed countries contributes an average 3.4 percent of GDP. Today, consumer surplus is between $9 and $26 per user per month in the nine aspiring countries, much lower than the $18 to $28 per user per month we have seen in developed economies. • Individuals in aspiring countries have utilized the Internet in significant and dynamic ways. Individuals have often been the first to benefit from the Internet in aspiring countries, mostly through free services such as e-mail, social networks, and search engines. The younger half of the population drives the adoption of online services, and the level of their engagement with certain online activities, such as social networking, often exceeds that of their developed country counterparts. • Entrepreneurs in aspiring countries have thrived despite Internet ecosystem constraints. Entrepreneurs in aspiring countries are often effectively social entrepreneurs, as they help to build a robust Internet ecosystem. Entrepreneurs have had to innovate, creating new business models that enable users to overcome local constraints, such as offering payment for online purchases upon physical delivery or using mobile accounts instead of credit cards.
  6. 6. THE INTERNET IN AFRICA TODAY • • • • • 16% INTERNET PENETRATION. 167 MILLION INTERNET USERS. 67 MILLION SMARTPHONES. MORE THAN 50% OF URBAN RESIDENT ARE ONLINE. 18 BILLION DOLLARS INTERNET CONTRIBUTION TO GDP. POTENTIAL BY 2025 • • • • • • 50 % INTERNET PENETRATION. 600 MILLION INTERNET USERS. 360 MILLION SMARTPHONES. 75 BILLION DOLLARS IN ANNUAL ECOMMERCE SALES. 300 BILLION DOLLARS INTERNET CONTRIBUTION TO GDP. 300 BILLION DOLLARS PRODUCTIVITY GAIN IN KEY SECTORS.
  7. 7. OPPORTUNITIES FOR INTERNET–DRIVEN GROWTH & PRODUCTIVITY IN SIX SECTORS. • RETAIL • AGRICULTURE • HEALTH • FINANCIAL SERVICES • EDUCATION • GOVERMENT
  8. 8. RETAIL- ECOMMERCE • The formal retail sector is relatively underdeveloped across most of the continent, outside of South Africa. But the advent of e-commerce is opening up a new shopping experience for the growing middle class. • It promises to deliver access to a far wider selection of goods, with better quality, convenience, and lower prices. • The Internet will make it possible for customers to take control of their shopping experience, from search through to delivery and payment. This could create far greater impact in the lives of African consumers than it has in the developed world, which was already well covered by modern retail. • E-commerce is still relatively new on the continent; less than 15 percent of urban Internet users shop online. However, a number of online operations are already innovating to address challenges with logistics and payments.
  9. 9. CHALLENGES IN ECOMMERCE RETAIL IN AFRICA • • • Logistics and delivery infrastructure. While some major urban centres are well-served by logistics companies, many Africans live in informal or rural settlements that lack clear addresses. (Even in urban centres, existing logistics solutions may not be cost-effective, leading retailers to develop their own services.) Some of those attempting to serve informal or rural communities have developed models that including delivering to the closest identifiable address, with delivery time and place arranged by phone. They also allow customers to pick up products at their warehouses. In addition, players have created their own delivery functions to guarantee delivery service levels. A poorly developed payments industry and low banking penetration. The lack of financial infrastructure makes cashless payments difficult to establish at scale, though mobile banking could provide a solution to this challenge (as discussed earlier in this chapter). To solve this problem, many e-tailers are using cash on delivery and mobile money payments. Some players allow customers to deposit cash at bank branches or pay at an agent or store counter. Payment issues are a major hurdle, as current solutions (especially cash on delivery) generate significant cost increases. Limited consumer awareness. Although e-commerce is resonating with many middle-class consumers, others lack awareness of online shopping and may be hesitant to trust e-tailers with payments. To build awareness of their online channels, e-tailers such as Zando and Jumia have created a physical presence at markets and malls, offering free Wi-Fi in return for customer data and establishing a physical sales force armed with tablets that will walk consumers through the online experience, even identifying items to order later by text message or phone.
  10. 10. ANTICIPATION BY 2025 FOR AFRICAN ECOMMERCE By 2025, e-commerce could account for 10 percent of retail sales in Africa’s largest economies. This would translate into some $75 billion in annual online sales and advertising revenue. At the same time, the Internet will enable substantial productivity and efficiency gains in the retail sector, through cost savings, strengthened supply chains, and digitized payment collection. The potential technology-related productivity gains in the retail sector could be worth $16 billion to $23 billion annually by 2025.
  11. 11. THANK YOU
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×