The resent research shows that Disrupt Africa based in Nigeria has come out as the leader in e-commerce and is home to 405 of Africa’s e-commerce ventures. The Nigerian dominance of the African e-commerce landscape is one of the most exciting findings from the reports according to Gabriella Mulligan, co-founder of Disrupt Africa. For the first time, the report has given the true picture of the outstanding trajectory of the county’s e-commerce space as being driven by the entrepreneurs.
The fact that both South Africa and Kenya have stolen the show on the tech entrepreneurship, the research is showing that Nigeria is on the move of posing a challenge to the two countries and it will become the first African country to seriously take retail online at a similar scale to European markets. The company realized that the funding for e-commerce startups has proven inconsistent across the continent as investors are put off by the long wait for returns.
Despite this, the company says the African e-commerce space is growing at an exceptional pace, with the number of start-ups entering the market growing year-on-year to reach a total of 264 ventures operating continent-wide. According to Disrupt Africa’s statement, less than 30% of African e-commerce start-ups are profitable, as ventures tackle issues such as lack of funding, shortage of trust and logistical difficulties. Funding for e-commerce start-ups declined sharply in 2016 though there are signs that investor interest is picking up again in 2017, the funding available is not well distributed, with 90% of funds raised going to start-ups in just five countries.
South Africa which is offering stiff competition to the Nigerian and Kenyan e-commerce rivals have at the same time developed e-commerce markets. Some of the challenges are market-specific while others are specific to start-ups across various industries, irrespective whether they are active in the e-Commerce or other markets according to Dobek Pater, Managing Director at Africa Analysis. Limited access to funding is a challenge as it would allow start-ups to survive the first few years of operation until such time as they have good cash flow and/or have become profitable and sustainable.