Logistics challenges facing eCommerce in Africa

By Josephine Wawira

According to Euromonitor, the world’s fastest growing economies by 2030 will be in Africa. This consequently makes the continent the next big e-commerce market. And as this positive narrative continues to place Africa as a top investment destination, the need for advanced logistics systems has become inevitable. The growth of e-commerce will significantly depend on the quality and efficiency of logistics networks; from intra and cross trade to financial transactions in payment of goods and services.

When writing the African e-commerce story, I often leap at the chance to explore only the enviable milestones the continent has made. Nevertheless, there still exist formidable challenges especially in logistics, a vital constituent of the industry. The African Development Bank, in its 2019 African Economic Outlook, notes that “trade costs due to poorly functioning logistics markets may be a greater barrier to trade than tariffs and nontariff

barriers”. This side of the story must also be told; if we are to find sustainable solutions to what could be the gateway to growing Africa’s e-commerce by leaps and bounds.

Unsatisfactory National Address Systems and Transport Infrastructure

One of the biggest logistics’ hurdles holding back the industry is the lack of proper national address systems in most African countries. This, coupled by poor road networks, make it even harder to conveniently deliver products to customers. Consequently, companies have had to rely on fairly descriptive addresses and landmarks provided by the customers during the initial stages of the online purchase process. The delivery persons are also required to keep in constant contact with clients when delivering products, to receive further directions while en-route.

While generally Africa’s infrastructure lags behind that of its counterparts including America and Europe, it is worth of note that each country has its own value proposition. In 2018, the World Bank’s Logistics Performance Index placed South Africa, Kenya, Rwanda, and Côte d’Ivoire as the top 4 best performing countries in Africa, while Somalia, Sierra Leone, Eritrea and Zimbabwe were at the bottom 4.

In most African countries, the result of the poor road infrastructure is heavy traffic jams that lead to delayed deliveries, canceled orders for the ondemand services and subsequently loss of revenue. Alternative modes of transport have therefore come into play in some markets like Kenya and Nigeria, with the use of easy to navigate motorcycles, popularly known as Bodabodas. With about 1.2 million motorcycles in the passenger transport business, Kenyan ecommerce companies have strived to tap into this market by using Bodabodas to swiftly deliver products especially within busy cities.

“There are huge opportunities for logistics to grow e-commerce, but few established players exist in the

market,” notes Apoorva Kumar, Jumia’s SVP of Logistics. Present in 14 African countries,Jumia is one of the ecommerce players building logistics and fulfilment infrastructures to ease delivery of products to consumers using both vehicles and bodabodas.

Providentially, technology has been a boon to the logistics industry. In Nigeria and Kenya, Jumia is running a well-established system using Machine Learning, relying on GPS enabled delivery apps. The coordinates collected in the first delivery are then registered and used in making a logistics network for future conveyance.

In Rwanda, companies like Zipline are leading the way in commercial

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drone deliveries. While initially focused on delivering blood to remote health centers that are otherwise difficult to reach fast due to Rwanda’s hilly terrain; it is expected that Zipline’s drones will in future be used in other sectors including e-commerce. Back in Kenya, Astral Aerial Solutions is using drones for among other services, last mile deliveries. The company aims to, in its words, “open up Kenya’s hard to reach regions to new and exciting

business opportunities”.

The possibilities for a better future in logistics, in my view, are endless! And as Apoorva reiterates, companies cannot solely build a successful logistics system. “It requires integrating various systems and partners to create a big enough network to serve the growing needs of the e-commerce consumers,” he says, calling for both private and public partnerships to this endeavor.

What Then, Does the Future Hold?

Data by logistics consulting firm Knight Frank, shows that the cost of transportation represents 50% to 75% of the retail price of the goods. This alone, underpins the demand for long-term strategies to the logistics challenges in Africa.

From delayed deliveries between local destinations to sluggish growth of cross-border trade, the effects are being felt across the board. Modern online retailing is headed towards pre-orders, requiring mature infrastructure for both small and medium businesses. This will help meet the packaging, storage, distribution, freight and last-miledelivery requirements. Though challenging, Africa is a land full of commercial opportunities; causing a scramble for a piece of the pie among international investors.

Therefore, for e-commerce companies in Africa to achieve sustainable bottom-line growth, there needs to occur more techempowered handshakes between multiple service providers across markets. Governments have the responsibility to create onewindow-policies that empower digital payment solutions as well as logistics infrastructure including road networks, air cargo handling systems and warehouses among others.

Similarly, e-commerce and logistics powerhouses like Jumia should commit to empower more upcoming entrepreneurs. They must also use their leading positions to continue paving the way for economic integration in Africa.

Use of Innovative Technology in Designing Diverse Tourism Products

“this is only possible by bringing

Abyssinia Business Nework March 2020 መጋቢት ወር 2012 34 Investment in new technology provides the tourism sector with opportunities for novelty, aimed at providing a platform for designing new and tangible tourism products. Emphasis goes to integrating innovative initiatives into tourism management; instrumental in enhancing full tourist satisfaction, based on destination value and quality of service. In a statement by UNWTO about positioning tourism in the global innovation agenda, Secretary General Zurab Pololikashvili noted that “this

is only possible by bringing the private and public sectors together in a meaningful way and providing opportunities to share ideas”.

From governments to tourism entrepreneurs, investors and innovators, all stakeholders have a role and an opportunity to use technology with an aim to grow the sector. Kenya is for instance endowed with numerous tourism products. Traditional beach tourism, exotic safaris and the budding MICE business tourism etcetera, the package is diverse while still possessing room for enhancement. Tourism contributed 3.7% to the country’s GDP in 2017 and expected the private and public sectors together in a meaningful way and providing opportunities to share ideas”. to reach about 8.9% by end of 2018. I believe that strategic use of technology will go a long way in enabling the realization of this forecast. A case in point is the use of location apps to innovatively make destinations accessible, incorporating online food ordering and efficient delivery systems for the catering service providers. Not to forget the use of technologically cognizant OTAs (Online Travel Agents) by hoteliers and airlines to increase online visibility, provision of quick, comparative and seamless ticketing, booking, checkin and check-out processes.

By Josephine Wawira getting Image

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Innovative Technology”

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There exists numerous areas in the entire value chain where innovative technologies can and are already impacting the demand, and now is the opportune time for tourism stakeholders to invest in innovative solutions in order to reap big from the tourism gold mine.

The main objective is designing and implementing initiatives that support the growth of the tourism industry. Consider options such as the use of big data and digital services to market the diversity of the tourism products like promoting a destination’s culture, traditions, and history. This will ensure long term sustainability and profitability of the sector.

The use of technology to design diverse and innovative tourism products will no doubt play an imperative role in positioning Kenya as a leader in tourism not only in Africa but worldwide. International arrivals to the country will as a result keep growing to surpass the 1.4 million in 2017, and tourism expenditures will exceed the 1.2 billion US Dollars earned in 2017.