Over the years, technological advancements have inspired and spurred a great deal of innovative solutions and transformative changes in business models and designs. This evolution has led to the creation of intricate ecosystems aimed at expanding market outreach to targeted audiences. Amongst these, the emergence of e-commerce – a virtual and dynamic marketplace, empowering consumers with purchasing capabilities, prominently stands out. This ecosystem plays a crucial part in orchestrating the modern shopping experience. The retail space in the first half of the 20th century was characterized by stores and proximity-based commerce. However, the widespread adoption and accessibility of the internet, coupled with technological breakthroughs in payment systems and solutions, gave rise to e-commerce platforms, fundamentally restructuring the retail space.
E-commerce is a concept under constant scrutiny in many parts of the world. Both academic and non-academic quarters have launched an avalanche of studies around the adoption, utilization, and future opportunities of e-commerce in simplifying and enhancing the customer experience. However, whilst customer experience has been enhanced thanks to e-commerce, the innovators/producers behind these systems tell a story that is riddled with hardships, losses, and cut-throat competition. The rise of Amazon (considered Earth’s biggest store) as a leading e-commerce retailer in the United States of America can be attributed to its founders’ consistent investment in technology and the zeal to streamline consumer purchases. And yet, as Scott Galloway highlights in his comprehensive analysis of Amazon in his book, The Four, Amazon took 7 years before it could breakeven and make a profit, hence highlighting the challenging operating environment that e-commerce players participate in. To contextualize this in the African market, Jumia Foods, a popular brand operating in seven African markets, recently announced the closure of its delivery service due to challenging business conditions. According to sources, this move, whilst centred sorely in the food delivery business, underscores Jumia’s financial challenges, accumulating a KES 11.6 billion (USD 87.8 million) loss by 2021, nearly nine years since its establishment. This therefore begs the question; what are the success trajectories of e-commerce giants like Amazon and how do they differ with players in the African market?
According to Global e-commerce sales, Asia Pacific region leads in e-commerce adoption, followed by North America and Western Europe, accounting for 63%, 19% and 13% of the total global sales respectively. Middle East and Africa contribute a disappointing 1.1%, with greater participation from countries such as Nigeria, South Africa, Kenya, and Egypt. Interestingly, findings from World Remit demonstrate that during peak seasons such as Christmas festivities, e-commerce sales in 2023 in the United Kingdom, the United States and Australia, averaged $1,042, $1,205, and $1,188 respectively. The economies of scale in these developed markets offer an attractive value proposition to producers/innovators of e-commerce systems, compared to those in developing counties.
Best Practices
In the 1990s, e-commerce was an unfathomable concept, viewed as a model destined to fail for businesses globally. Yet, it was those who recognized the shifts in consumption, demographics, technology, and consumer taste, who witnesses and participated in the transformation and evolution of the retail sector. This therefore suggests that businesses seeking to leverage e-commerce systems need to assess their internal preparedness and supply chain systems before rolling out. This exercise normally involves the customer and all those in the production and distribution process. Importantly, staff and stakeholder training and customer sensitization drives go a long way in streamlining e-commerce rollout and enables end-to-end visibility of all value chains that will be affected by the introduction of e-commerce. As business ecosystems evolve, the incorporation of artificial intelligence cannot be understated. An enterprise that offers digital solutions that eases the selection process for customers automatically captures the market share and stays ahead of the competition.
From the government front, policy certainty on tax treatment is crucial for fostering a conducive environment – the absence of this and ambiguous tax regulations can impede business operations and investment. Over and above this, expanding internet and telecommunication is important in order to aloe e-commerce providers to expand their market outreach and avoid crowding each other out in urban areas. This can be achieved through collaborative efforts between the public and private sectors.
E-commerce has not only redefined how consumers shop but has also compelled businesses to recalibrate their strategies. And because we live in a culture of consumption, the natural trajectory of retail is ostensibly up. From personalized shopping experiences, feasible delivery solutions and data driven insights, the e-commerce ecosystem outrightly defines the need for a symbiotic relationship between businesses and consumers, fostering a realm of tailor-made services and endless transactions. But the success of this will only be made possible through adoption of convenient, diverse, and accessible strategies. With this in mind, regulatory systems (legal frameworks) and enforcement of consumer protection in matters cybersecurity should be efficiently addressed to accommodate requirements in the development of e-commerce ecosystems.
