How to ecommerce expand into new geographies in Africa

1. DON’T SELL ONLINE IN
AFRICA
UNLESS…

2. PEOPLE NEED YOU

3. PEOPLE LOVE YOU

4. YOU WANT TO LOSE YOUR MONEY

5. US (You & me)
Good News & Cross Border eCommerce
What Country
Risks & Tips
Case Study: Cool Stuff
Our Vision

6. TEST:
1. Offline before online
2. Find Price Point > Target market
1. Rival the French Revolution
Be Excellent at Execution
2. Think Prius
Be Hybrid
THE EXPERTS SAY:
MY TWO CENTS:

7. GDP growth: Global vs sub-Saharan Africa
PWC RETAIL AFRICA REPORT

8. (Annual average prices, 2007=100)
PWC RETAIL AFRICA REPORT
COMMODITIES AT USD-INDEXED PRICES

9. REALLY SMART PEOPLE SAY:
African e-commerce market:
US$ 8 billion in 2013
US$ 50 billion in 2018*
Population: will surpass the 1.5
billion by 2026
2 billion 15 years later**
Mature internet users
Improving payment solutions
Affordability of data
Improved Platforms
Economies of Scale
GEARING

10. Cross border B2C ecommerce market
Global consumer goods trade
Source: Ali Research

11. Cross-border E-commerce History (China)
MY THOUGHTS: DEVELOPMENT OF SECTOR DRIVES GROWTH
INFORMATION TO TRANSACTION

12. CROSS-BORDER ECOMMERCE: SOUTH AFRICA
INTERESTING:
30% of Nigerian consumers purchase from SA.
Top locations for goods export for South Africa are;
China (8.3%), US (8.1%), India (7.8%) and the UK (7.2%)
27.1% US (3RD most visited: Amazon.com)
14.6% Europe
84.3% SA 200 Billion USD Imports
into China by 2020
86 Billion in 2016**
International CrossBorder
Trade 1 Trillion USD by
2020
43% YoY growth rate

13. Source: Accenture Cross-border e-Commerce 2015
2014 – 2020 Growth Expectancy

14. In 2015 B2C was
only 15.7% of this.
Cross-border E-commerce Turnover
(2015-2020)
Source: Ali Research

15. What Products: There’s a place for (almost) everyone.
Source: Tmall Global / AliResearch

16. What Metrics?
ADVANTAGES
Scalable product range
Long-term profitability
Competitors Barrier to Entry
Team Resilience
Robust Demand
Low price/Better quality
Unique/Exclusive Product
Marketing Spend
Inquires/Referrals
Well-known Brand
SEO or Userbase
Niche
Digital Product
High Profit Margin
PRODUCT
MARKETING
© 2017 Jonathan David Novotny
EFFICIENCIES
INTANGIBLE

17. What Metrics?
RISKS
Legal Challenges
Delays
Opportunity Cost
Local Competition
Direct Foreign Competition
Informal Markets
Model Incompatibilities
Expat Costs
Theft & Corruption
Warranty Challenges
Language & Culture
Distrust
COMPETITION
OPERATIONS
© 2017 Jonathan David Novotny
INTANGIBLE
TRADITIONAL

18. Market Readiness?
FILTERS
GDP per Capita
Education Level
ITU Broadband Dispersion
Market Saturation
Market Size
ARDI (African Retail Development Index)
ONLINE TRAVEL BOOKINGS
TIP: Amadeus CC vs. Bank Transfer
PARCELS PER COUNTRY
Crossborder Trade Study
Mature Internet Users
% Market > 1000 USD
Banking Sophistication
RETAIL
ADDITIONAL
© 2017 Jonathan David Novotny
AWESOME
TRADITIONAL

19. Market Size & Saturation

20. How Big is eCommerce in Emerging African
Nations?
oDigital: Domains, Digital, Apps,
oInternational Imports: eBay, Amazon, Alibaba
oOrdering Sites: Larger orders made via websites
oPeripheral Movements: Classified & Realestate Listing Sites
oBill Payment: Mozambican’s pay for products & services in SA
oFlight Tickets:
oDomestic Facebook: Selling Groups, Pages, Page Services/Whatsapp
oInternational Facebook: Cross-border Orders via FB Pages & Ads
oDomestic E-Commerce Players: Compra.co.mz , Jumia

21. CASE STUDY: BEFORWARD MOZAMBIQUE
Perceptions:
Don’t trust online retail
You can’t sell expensive things online.
Want to touch and
Will never send their money

27. Add-on Services

28. BEFORWARD: ZAMBIA

36. UPSELL OPTIONS

38. GEO EXPANSION : SAME MODEL

39. CASE STUDY: BEFORWARD.JP

40. CASE STUDY: REVIEW
Website & Personalization
Simple Communications - Whatsapp
Simple Payment – Bank Transfer
Offline Marketing – Massive Billboard Campaigns + Tire Covers
• 20 Different Massive Companies could have done this from Japan –
Kept on developing, personalizing & investing.
• Zambia: Partnerships & Rollup Banners in Telco Offices – Order in-store
• Why cheaper? 100% upfront payment.

41. WHATS COOL:
• Didn’t need investment
• Are not a digital company
• Are not losing money
• Probably, were always profitable
• Active Worldwide
• Persistence: Solving increasingly more pieces of the problem –
Complete Solution.
• Completely localized/agile

42. THE LESSON:
Consumers are willing to
trade comfort for
lower price.
If you make them feel as comfortable. ;-)

43. HOW WE MITIGATE:

44. What Compra.co.mz Does?
Who?
Online retailer looking to simplify business in Africa.
What?
Allow Retailers and Brands to Sell Online effectively and simply
• Domestic retailers
• Cross-border retailers
Why?
Love creating solutions and simplicity.

45. HOW WE MITIGATE RISKS:
• Use local suppliers
• Use Third-party suppliers (which are either expensive, unreliable or
terrible.)
• Vehicle isn’t working today
• Not answering calls
• Business shut down
• 3PLs don’t have an automated calculator – Get individual quotes.
• Market Sophistication:
• SEO – Jumia & OLX (World-class competitors & previous market entrants)
• Super powerful

46. HUMANS ARE NOT RATIONAL BEINGS:
Complex Tech
Retail or
Mozambican Network
Marketing experience
Capital raising
Zero suppliers
Payments: No local currency payments
No Experience:

47. TIPS & OPPORTUNITIES:
Angola: Know a General
Malawi: Sell Nshima (pap) really cheaply
Somalia: World’s first Online AK47 marketplace

48. THANK YOU
JON@COMPRA.CO.MZ
WWW.COMPRA.CO.MZ
YOU ARE AMAZING!