On Thursday, 8th December 2017, online news site, Disrupt Africa, released a report titled the Afri-Shopping: Exploring the African E-commerce Startup Ecosystem Report 2017. The report analyses 12 key sub-sectors across a variety of African tech ecosystems, as well as funding trends. It also includes results of a survey of African e-commerce startups.
“This report lays those challenges bare, both by using data collected over a number of years and from speaking to various startups. We think it provides entrepreneurs and investors alike with the full picture of what is an exciting but challenging part of the African tech scene,” said Disrupt Africa co-founder Tom Jackson.
According to the report, less than 30 percent of African e-commerce startups are profitable, as ventures tackle issues such as lack of funding, shortage of trust and logistical difficulties. The report finds that the African space is growing at an exceptional pace, with the number of startups entering the market growing year-on-year to reach a total of 264 ventures operating continent-wide.
“It is evidently extremely fashionable to launch e-commerce startups in Africa, with platforms emerging in a variety of niches across the continent. The opportunities in the online retail space are obviously massive, but these companies face huge challenges too,” said Tom.
Yet fewer than 30 percent of startups surveyed said they were profitable, while funding for e-commerce startups has also proven inconsistent as investors are scared off by the long wait for returns.
The report further revealed that funding declined sharply in 2016. Although there are signs that investors interest are picking up again in 2017 but the funding available is not well distributed as 90 percent of funds raised goes to startups in just five countries.
From the report, Nigeria emerged as a stand-out leader on the continent, with about 40 percent of Africa’s e-commerce ventures located in the country. Start-ups in South Africa compete with their Nigerian rivals for fundraising capabilities while Kenya has also developed an e-commerce market.
“The extent of Nigeria’s dominance of the African e-commerce landscape is one of the most exciting findings of this report – for the first time we have clear evidence of the outstanding trajectory of the country’s e-commerce space as being driven by entrepreneurs. While South Africa and Kenya have typically stolen the limelight hitherto in conversations about tech entrepreneurship, this research makes it clear Nigeria is on the brink of huge e-commerce success – and will become the first African country to truly take retail online at a similar scale to Western markets,” said Gabriella Mulligan, co-founder of Disrupt Africa.