Can improving user experience help Africa’s e-commerce industry grow?

Image source: Africa business pages

In Africa where physical infrastructure challenges hinder traditional retail, e-commerce has emerged as a powerful driver of economic development. Online marketplaces, from global giants to local startups, are expanding rapidly to cater to diverse consumer needs.

According to a report by the United Nations Conference on Trade and Development (UNCTAD), the e-commerce sector in Africa has witnessed exponential growth, with an annual expansion rate of 21.7% since 2000. This growth is projected to continue as recent statistics from Agusto & Co revealed that the continent’s e-commerce market could reach a value of $75 billion by 2025.

At the heart of this transformation lies the rise of digital payment solutions, which have played a pivotal role in enabling and sustaining Africa’s e-commerce boom.

By offering mobile banking and microfinance services, online transactions have become seamless for consumers and businesses.

In spite of this growth, challenges still persist. E-commerce businesses in Africa often contend with complex and evolving regulatory environments. Regulations can vary from one country to another and may affect payment processing and cross-border transactions.

Across different African countries, preferred payment methods vary significantly. For instance, while mobile money is widespread in East Africa, West Africa may have a stronger preference for card payments or cash-on-delivery. This variability can create challenges for e-commerce businesses looking to operate across multiple African markets. “Fragmented markets make it difficult for companies to thrive because the country-specific e-commerce landscape can make things difficult,” said Taiwo Adeeko, global head of operations at Payaza Africa Limited at a recent TechCabal Live on Friday, October 8, 2023.

Facilitating interoperability of digital payment systems and collaboration between fintechs, governments, and traditional banks is an important step in reconciling this challenge.

Complex or unreliable payment processes are a leading cause of cart abandonment in e-commerce as complicated checkout processes result in 18% of customers abandoning their carts. A seamless checkout and payment experience reduces friction in the purchase journey, increasing the likelihood of customers completing their transactions. Optimising the checkout process converts potential customers into satisfied and loyal buyers in the e-commerce industry.

Additionally, infrastructure and connectivity issues still hinder access in some regions, which in turn hamper the ability to process online payments smoothly. Slow or unreliable internet connections can result in transaction failures or lead to a frustrating user experience. In a continent with a 66% unbanked population, there should be more payment infrastructure across the continent that doesn’t require the processes of a traditional bank account as advised by Felix Manford, CEO and co-founder, Tendo.

The synergy of services like mobile money and mobile wallet services provided by Payaza and the likes has become instrumental in providing a secure and efficient way to store and transfer money. This has allowed a vast number of previously unbanked individuals to participate in e-commerce transactions.

Trust is paramount in e-commerce. Shoppers need to be confident that their payment information is secure as potential customers are often hesitant to make online payments due to concerns about the authenticity of sellers, product quality, and delivery reliability. “In terms of establishing trust, there has to be an inherent desire to understand customer points with payments,” said Evelyn Wangari, director, financial services East Africa, Copia Global. A seamless payment experience, backed by robust security measures, bolsters trust and encourages more people to shop online.

The e-commerce success story in Africa is inextricably linked to the ability to create a secure, efficient, and accessible payment ecosystem. As Evelyn Wangari said, “Payment fuels the e-commerce engine which then leads to embedding financial services. The opportunity for convergence is now.”

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This article is part of the TechCabal Live series brought to you by TechCabal in partnership with Payaza. Payaza is a payment service provider that enables online and offline businesses/merchants to process payments and transactions across Africa.