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Facebook threatens Jumia's dominance in Africa

Facebook threatens Jumia's dominance in Africa

Results from a Black Friday Straw Poll conducted by GeoPoll last month have highlighted Facebook groups as a key player in Africa's ultra-competitive space.

The findings, released this week, show that informal transactions through Facebook groups are threatening the success of African e-commerce giants like Jumia.

Njeri Wangari-Wanjohi, Marketing Manager at GeoPoll says Facebook emerged among the most popular options among the 2,031 poll respondents in Nigeria, South Africa, and Kenya - even as Jumia remains the most preferred e-commerce vendor for 56% of respondents who indicated that they have shopped on Jumia before.

"Interestingly, a significant number of online shoppers utilise Facebook groups. At 32%, Facebook is the second leading online retailer in the leading e-commerce regions. Through informal entrepreneurs who utilise this leading social media channel to either sell through their groups or similar interest groups, Facebook is proving to be a formidable albeit odd player in this space."

Wangari-Wanjohi believes the ubiquity of mobile phones bodes well for the Sub-Saharan region which also presents an opportunity because it is home to some of the least internet connected nations in the world.

"Beyond the low internet penetration levels in some countries and the high data costs, e-commerce is portraying an opportunity for online retailers to reach the youthful African consumer population. Despite the numerous challenges that this nascent industry has faced in the region, there is a silver lining thanks to the expected rise in the use of technology in the content. Global e-commerce concepts such as the Black Friday sales are also picking pace in creating awareness among the target market as brick & mortar stores join in seeking a piece of this pie."

Trust in e-commerce remains low

The poll also found that 74% of the 2031 unique respondents indicated they have purchased an item online before and of this number, 22% buy something only once a month.

"Amidst the slow growth, online retail outlets still grapple with their biggest challenge yet: trust. Among the 26% (531) of respondents who indicated they had never purchased any items online, the top reasons cited were that they did not trust the site (29%), and they did not know how the sites worked (20%). This trend was also observed at the individual country level. The low trust levels towards online retails can be demonstrated by the most preferred payment options. For respondents of our straw poll, when they shop online, a majority prefer to pay in cash upon delivery at 50%. Mobile money comes in a far second at 21% and debit cards a distant third at 14%. In Kenya and Nigeria, 52% and 51% respectively, of respondents indicated they preferred cash on delivery," adds Wangari-Wanjohi.

GeoPoll says only 49% of the respondents had participated in the Black Friday sale month which most online retailers ran from 13 November to 13 December 2017.

The GeoPoll findings also established that clothing and footwear was more popular among online shoppers in South Africa, even though the most sought-after items during this sales promotion were electronics and accessories at 34%, household appliances (21%), and clothing and footwear (19%) in all three markets.

In Kenya, electronics and accessories ranked the highest at 46%. In Nigeria, the most sought-after item was electronics and accessories at 29%.

Claude Schuck, regional manager for Africa at Veeam believes e-commerce will only grow in popularity going forward and that retailers need to plan accordingly to avoid downtime among other challenges.

"South Africans are more comfortable in going the online route for their purchases, especially when it comes to themed days like Black Friday and Cyber Monday. There has to be a realisation from retailers, especially those with brick-and-mortar stores, that there will be a significant increase in demand that needs to be planned for appropriately,"

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