As African Shoppers Brace for COVID-19, E-Commerce Startups See Opportunities to Assist in Containment Efforts

In an unprecedented assault on the global economy, the COVID-19 outbreak has sent shockwaves around the world which have been especially felt by retailers of all sizes. As more places succumb to the need for social isolation in order to curb the spread of the virus, retailers have had to adapt to the changes in consumer habits in order to offset the threat to their survivability.

For many, this meant putting resources into online platforms in order to reach their customers. While global e-commerce sales may not have necessarily seen a significant uptick in sales across all sectors, several industries have experienced substantial growth in consumer traffic, particularly those selling household goods, groceries, and health products. Online demand for hardware and electronics have also surged as a result of more employees working from home who require certain equipment to be able to do so.

Interestingly, a key takeaway from the growth of e-commerce platforms as a result of the COVID-19 pandemic is not simply the fact these platforms have grown as a result of measures to keep social interaction at a minimum in order to contain the spread, but also the fact that they have become key tools that support public health efforts – particularly because the needs of consumers remain relevant regardless of the outbreak.

With 3,766 cases and 95 reported deaths according to WHO statistics, Africa is the region with the least number of collective cases in the world. Nonetheless, governments throughout the continent are preparing to curb the spread of the disease by implementing measures such as mitigating gatherings and implementing physical distancing measures on top of providing the necessary infrastructure to keep people away from public places.

The Last Frontier

The private sector, which includes several ecommerce startups and fintech companies, are also playing a pivotal part in helping minimize the spread of COVID-19 in Africa by leveraging digital solutions as an auxiliary public health tool. They do so by providing ways for shoppers to get what they need without the need to go to physical stores or use physical cash for payments, thereby lessening the likelihood of infection.

In Kenya, key government bodies such as the Central Bank and the office of President Uhuru Kenyatta have urged the largest telecommunications company Safaricom to waive fees on East Africa’s leading digital payment platform M-Pesa as a way of encouraging more people to use electronic payment methods rather than physical currency. This is significant given that Kenya has one of the highest rates of digital payment adoption in the world with 32 million people subscribed to mobile money accounts out of a total population of 53 million.

Bazebo, a Uganda-based e-commerce startup that has become a significant player in the country’s e-commerce industry, is also among the many private sector stakeholders that have contributed to providing a platform that meets its customers’ needs. In fact, the platform goes further by incentivizing shoppers to use its platform to buy goods that would otherwise be unavailable in physical stores.

“We understand the urgency of making sure people are out of public places as much as possible,” said CEO Moses Ihoza. “In our effort to contribute towards incentivizing shoppers to remain inside as much as possible, we have tried to keep our catalog of products as varied as possible to meet the needs of our shoppers.”

The figures speak for themselves. According to Bazebo’s figures, online sales of goods have increased by 200% since March with growth rates expected to remain on an upward trajectory until infections start to decline.

“Bazebo has definitely seen more traffic since infection rates have started increasing in the continent,” added Mr. Ihoza. “Nonetheless, while e-commerce platforms like Bazebo offer a good alternative for shoppers in the short run, there are definitely challenges ahead.”

The Calm Before the Storm

While e-commerce platforms are experiencing newfound growth as consumers shift from physical retail to online shopping as a way of obtaining their needs, this may come with several complications in the long run. As a result of factory closures and logistical disruptions in China and other places around the world, economies will have to grapple with the looming effects of COVID-19 on the global supply chain which would not only affect prices of goods and services but also their availability.

For many countries in Africa, the declining demand for raw materials and commodities in markets such as China, India, and the United States amid the OECD’s projected 2.4% decline in global GDP growth has several implications. First, this could entail greater difficulties for African producers in accessing industrial components which would make it difficult for them to produce enough finished goods to meet customer demand. Secondly, this could also indicate that as economies in the continent slow down due to the slump in global trade and hampered investor confidence, shoppers will be less likely to purchase goods, other than essentials, from e-commerce platforms as uncertainty grows over their employment and income.

“While sales are still strong for the time being, we are aware of the impending economic impacts that threaten not only our business but also the ability of our customers to access the goods they are looking for,” said. Mr. Ihoza. “Like many online retailers around the world, Bazebo is preparing for the impact by strategizing ways to promote online retail sales and keep goods accessible in spite of the difficult circumstances.”

Indeed, the pandemic has brought a considerable amount of social, economic, and medical uncertainty on a global scale. While e-commerce and digital payment platforms have proven to be safer and more compatible alternatives to physical retail during these times of social isolation, it may be a matter of time before supply chain constraints limit their ability to cater to the needs of consumers. In the meantime, however, these platforms, whether willfully or by sheer coincidence, have contributed towards efforts in containing the virus.

Written by John Mendiola from MohrWolfe