• Thursday, March 28, 2024
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DHL new e-commerce platform set to ignite competition

DHL

Logistics giant, DHL has made an entry into the continent’s e-commerce space with the launch of a new e-commerce app called DHL Africa e-Shop. According to DHL, the new platform is aimed at improving the online shopping experience for Africa-based consumers and enable global retailers to sell goods to Africa consumer markets.

Hennie Heymans, CEO of DHL Express Sub Saharan Africa, noted that the DHL Africa eShop app offers African consumers much greater access to international retailers on an easy-to-use platform.

“DHL Africa eShop provides convenience, speed and access for online customers in Africa. As the global leader in express logistics, DHL is well positioned to connect African consumers with exciting global brands. This is yet another opportunity for DHL to reaffirm its commitment to supporting the growth of e-commerce in the region,” he said.

Could this be a threat to Jumia and the likes?

Currently, despite the growing demand by consumers on the continent, many U.S and UK-based retailers do not offer to ship to African countries, largely due to the perceived logistics challenges which results in high delivery costs and fraud concerns.

Knowing the knack Nigerians have for foreign designers and products the entrance of DHL-backed e-commerce platform could portend a threat to already existing players in the e-commerce ecosystem.

A report by McKinsey Global Institute titled “Lions on the move: Growth in Africa Consumer sector” the demand for world-class online shopping opportunities is growing exponentially in Africa’s leading economies, as urbanisation and incomes continue to rise.

According to McKinsey, consumer spending across the continent amounted to $1.4 trillion in 2015, with three countries South Africa, Nigeria, and Egypt contributing more than half of that total. It also projected that consumer spending on the continent will climb $2.1 trillion by 2025.

E-commerce platforms on the continent have had their own share of economic challenges and decrepit infrastructure, which has forced some such as Dealdey to shut down operations while investors pull out on some platforms, acquisition of distressed Konga by another e-commerce platform Yudala and last week listing of e-commerce giant, Jumia on the floor of the NYSE, the first by any startup from Africa, offers a ray of hope for other platforms

However, there are obstacles that have hindered the growth of e-commerce on the continent part of which is the trust issue as there is little trust towards online businesses on the continent. The lack of trust could be traced back to various internet scams and the uncertainty of ever seeing whatever is ordered online which is linked to logistics and infrastructure challenges. The new DHL Africa eShop is expected to bring a unique value propositions-on a transaction cost basis (i.e. the cost of delivery) given it is in partnership with one of the biggest names in global logistics, DHL.

Also at the moment, payment by cash on delivery is the most common payment method on the African market; 90 percent of online purchases are paid by cash. This payment model is to reassure the customers that they will receive their orders.

Financial inclusion is another major challenge on the continent as many Africans still don’t have access to bank accounts.

That situation does not help the progress of e-commerce, considering that most online retail stores and services require a bank account or a payment service that is linked to one.

No doubt the potential for remarkable and long-lasting e-commerce growth is within Africa’s grasps, however, this depends on how fast the continent tackles low hanging challenges that have hindered growth in the e-commerce space.

 

OLUFIKAYO OWOEYE