Africa looks to generate US$900bn through cross-border e-commerce

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Prosper Ndlovu

Africa is expected to generate up to US$900 billion through cross-border retail trading by 2020, spurred by robust growth in e-commerce volumes in the continent, according to a latest dhl report.  

Africa’s cross-border retail volumes are predicted to increase at an annual average rate of above 20 percent in the five-year period to 2020, said the report, as more businesses embrace e-commerce, which continues to provide significant growth opportunities for retailers and manufacturers with an international online product offering.

“Cross-border retail volumes are predicted to increase at an annual average rate of 25 percent between 2015 and 2020 (from US$300 billion to US$900 billion) – twice the pace of domestic e-commerce growth,” said DHL in its recently released 2017 report.

DHL Express Sub-Saharan Africa’s deputy head of sales, Steve Burd, said the above projections highlight a “boundless opportunity” for African businesses looking to take a piece of the cross-border e-commerce pie. As the market leader in express logistics, he said DHL Express works with thousands of e-commerce customers around the world, with a lot of them at start-up phase.

“We are, therefore, well aware of the perceived hurdles involved when considering to trade across borders,” he said.

DHL has pointed to five common areas, which domestic e-commerce customers consider to be a challenge when deciding where to trade internationally. These are the cost of express shipping, return rates, basket values, customer business performance and unfamiliarity with customs procedures. Regarding the cost of express shipping, Burd said there was no risk at offering customers an express delivery option.

“Customers want choice, not only in their product selection but also when and how they receive it. In our experience, customers are willing to pay a fair price for a faster, more efficient service.”

He said his organisation has noted that return rates were actually much lower on international shipping. 

As such, Burd said businesses can always embrace this option on a trial basis and measure the benefits against losses and adjust their strategies accordingly.

He said DHL in its operations has found that basket values often increase with the introduction of express shipping and that customers tend to buy more to justify the premium shipping costs.

According to DHL, evidence shows that international customers spend significantly more than local ones hence the need for businesses to increase their online presence and monitor traffic patterns.

“So even if international traffic to your website is small, it can be worth a lot for limited effort. There are free online tools available, which will give you an indication of your international traffic on your website,” said Burd.

“This will provide an idea of which countries to focus your efforts on. There is no risk in opening doors to the international market – only the risk of getting left behind.”

The leading global logistics firm has encouraged businesses in Africa to familiarise themselves with customs procedures and processes.

 

“If your paperwork has been done correctly, there shouldn’t be any customs delays or worries. Collaborating with an experienced partner that has extensive knowledge and know-how of customs procedures on the African continent will assist the business’ e-commerce offering to evolve,” DHL said.

 

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