A focus on the low- to middle-income sector in Africa will support the growth of e-commerce in Africa, says former Amazon executive Jason Murray, who joins business to consumer (B2C) online retailer Copia as a board member.
“While most e-commerce players have been largely focussed on replicating Amazon’s model in emerging markets, this isn’t always going to fit the context,” says Murray, who had been at Amazon for 19 years.
For Murray, smaller, more rural businesses and individual business owners have been largely left out of the e-commerce boom in Africa, unable to access or afford high ticket items available via other online platforms.
“Copia has tailored its offering to meet the specific needs of small, rural businesses and individuals, who require competitive prices on a broad selection of products that they can access offline if needed,” he says.
Launched in Kenya in 2013, Copia B2C business model focusses on middle to low-income business owners in rural Kenya and Uganda. The company uses an agent banking model to reach its target consumers. To date it has 30,000 agents signed up to the platform.
Agents act as sales and distribution points for the e-commerce platform. This means that customers can search, buy and request items, make returns and submit complaints via their local agent if they do not have access to the internet. Individual orders can be linked to customers mobile devices, which means that Copia can follow up with delivery updates, new products and special offers direct to the customer.
The company also uses its own logistics network and promises delivery in one to two days. According to Tim Steel, CEO of Copia based in Nairobi, 97% of all deliveries are made on time.
“The agents we use are often individuals who already have established businesses and are known to the people in their area,” Steel tells The Africa Report. “This way, we get access to our target consumer base, and they have trust in the system because they are transacting with someone they have a personal relationship with.”
Murray hopes to bring his expertise around software development, supply chain management and inventory planning to Copia as it continues to grow in Kenya, Uganda and East Africa more broadly. “With growth comes additional challenges, and I hope I can help Copia tackle any issues given my previous experience,” he says.
The number of e-commerce companies in Africa has mushroomed in the last decade with both local and international startups looking to benefit from the burgeoning middle class, growing use of e-payment platforms and internet access across the continent.
According to the International Finance Corporation, the African e-commerce market was estimated to be $20bn, up 42% compared to 2019, accounting for 12% of the global average. While official figures have yet to be released, it is widely believed that e-commerce volumes have had an additional boost following several stay-at-home and lockdown measures put in place by regional and national governments in Africa to prevent the spread of Covid-19. Data form McKinsey shows that 30% of consumers surveyed said they plan to increase their use of online and mobile banking tools in Africa as business moves online.
And given the sector’s strong growth prospects, African e-commerce – and the fintech sector more broadly – has continued to successfully raise funds from equity investors looking to profit from Africa’s demographic dividend.
In January this year, Copia raised $50m in Series C funding and Ivorian company ANKA, backed by Alibaba co-founder Joe Tsai, raised $6.2m in Series A funding. At the beginning of March, Kenya-based food distribution company Wasoko raised $125m in Series B funding while wholesale e-commerce platform Powered By People secured $5m in seed funding in the same month.
As for Copia, Steel says that there are several ways that the company can accelerate growth across the continent. “There may be partnerships and acquisitions we can make, more fundraising opportunities and further down the line an IPO.
“But for now, our focus will be on customer acquisition and retention,” he says.
Source: The Africa Report, Published on 29th March – https://www.theafricareport.com/186946/copia-bets-growth-on-low-to-middle-income-sector-and-ex-amazon-hire/