The challenges of bringing e-commerce to Africa: an interview with Chris Folayan, Founder and CEO of Mall for Africa
Mall for Africa makes it possible for Africans to shop directly from international online retailers - companies that, otherwise, would be inaccessible to the African population. Now serving seventeen African countries – from its home in Nigeria to Ghana, Kenya, South Africa, Egypt and a dozen others, its patented app, platform, and payment system give users access to hundreds of US and UK e-commerce retailers and more than 8.5 billion products combined. Started in Nigeria in 2010, the company is now one of Africa’s most successful and profitable e-commerce businesses.
The original proposition of Mall for Africa was for Nigerian customers to overcome the barrier of access and available payment solutions so that they could make purchase on e-commerce platforms – such as ebay in the US. In the early days a key part of the offer was to set up a digital wallet for customers – accepting cash in Nigeria and making it available for online payments. The next barrier to be overcome would be the restrictions from the international retailer of shipping to Nigeria: this was simply not possible. By setting up arrangements in the US with a 3rd party logistics vendor Mall for Africa was able to propose a local shipping address for consignees. Having “solved” or at least overcome the key barriers stopping Nigerians from conducting business on online stores in the US, the platform grew steadily, eventually expanding both its coverage of marketplaces and African countries served.
Customers buying online through Mall for Africa have the choice to ship their parcels directly with DHL or choose a lower cost freight option, where their purchases are combined with their of other customers and shipped in around 2 weeks to an African facility, where the consignment is broken down and deliveries organised locally through DHL.
African customers buy at net prices: the Mall for Africa App explains to them the total delivered cost including import duties and taxes. The shopping experience even allows customer to build a combined basket of purchases from multiple online stories and have them delivered to Africa as one shipment, with one payment. The service is efficient enough – and most times the prices low enough in the US – that the prices available through Mall for Africa can be lower than those offered by the few platforms which are now selling direct into Nigeria.
DHL and Mall for Africa are strategic partners in the launch of “Marketplace Africa” – a platform which seeks to market high quality Africa produced goods to the world. Launched in 2018, the site relies on DHL’s export connections to link selected artisans from across Africa directly with consumers around the world. The site offers clothing items, jewellery, bags, body care articles and gifts. Each artisan takes care to drop off ordered items at a DHL express centre, which takes care of the international transportation. To ensure that the platform develops a positive brand image the Marketplace Africa team are highly selective about the artisans they work with: not only the goods produced but the degree of business maturity, such as production and inventory planning, demonstrated.
Interview with Chris Folayan Founder and CEO of Mall for Africa
Chris Folayan is an entrepreneur and business strategist, as well as being the Founder and CEO of Mall for Africa. Based variously between the US, Europe and Africa, we interviewed him on 3rd April 2020.
ecomconnect: What was your motivation behind starting “Marketplace Africa”?
Chris Folayan: With the success of Mall for Africa I had the opportunity to speak at business forums across Africa and explain my experience, and offer an opinion about the future of e-commerce in Africa. Inevitably, I was asked by local producers to help them: bring them technology and support to access e-commerce. So we set up “Marketplace Africa” a couple of years ago and, with the support of DHL, propose a simple solution for small companies to get their products onto our platform and sold in local, regional and international markets.
Sellers receive a message – which can be a simple text message with a code – informing them to bring a purchased product to the nearest DHL Express Centre, where they receive assistance with packaging and labelling and the goods. The consignment takes place without need to pay transportation costs up front: when the goods are delivered payment is released.
I’m proud that we have made this happen – but to date it is largely a philanthropic exercise and we need to consider how the platform can best be supported in the future.
e: What have been the challenges to making this work?
C: Even skilled local producers lack some of the basics skills needed for e-commerce. Skills such as taking good photos or writing attractive descriptions. We struggled a lot with this, and in the end had to pay for photographers and individuals to help writing texts. The best that I could find in many villages were English language teachers: we had to give them tips on how to write marketing copy and team them up with the producers to work on writing product descriptions.
But this commitment to providing education is hard work, time consuming and expensive for us as a business: there are limits to what we can do. So we are obliged to “cherry pick” the most capable and business savvy local producers.
Additionally, and just as fundamentally, notions of product quality are not sufficiently understood. We have categories of goods – such as shoes – where local standards would not be acceptable in international markets. With no easily accessible standards at hand we innovated our own “African Made Product Standards” (AMPS). It’s another area where we have had to go beyond what would be considered the responsibilities of a marketplace in developed countries: we have had to train local firms and put in place control mechanisms.
e: What is your hope for e-commerce in Africa? Will it help Africa to “leapfrog” a stage of development in retail markets and bring affordable goods to the continent’s population?
C: I am very confident that e-commerce has a major role to play in the economic growth of Africa, and some of this is already happening. But we still have a lot to do. Everyone likes to point out the challenges of infrastructure in Africa: such as expanding digital connectivity and improving transportation networks. These are important to address, but in the main there are already work-arounds. For instance, there is a tremendous amount of entrepreneurialism in local delivery networks: in general you can make deliveries in Africa.
More frustrating – because the solutions really should be within our grasp – is the difficulty of online payments. This is really holding up e-commerce and causing some of its biggest players in Africa a major headache. Cash on delivery is simply never going to allow the potential of this business to happen: it’s too risky, costly and fails to support cross-border deliveries. Africa is a leader in mobile payments and countries such as Kenya have done an outstanding job of improving financial inclusion in this way. We need to use this African competence to support easy and widespread access to e-commerce, ensuring that it can be inclusive even for poor or remote communities.
We need to pull together an African consortium of politicians, central bankers, technology experts, telecommunication company CEOs, lawyers and business people and make small cross border payments work efficiently.
e: Beyond online small payments what kinds of innovation would support the accelerated uptake of e-commerce across Africa?
C: Africa could really benefit from innovation in B2B e-commerce: marketplaces for small, medium and even large firms to efficiently procure goods and services within the continent. As popular as Alibaba is for some firms in Africa – this cannot be the only solution. Africa is missing an effective wholesale and intermediate goods sector, which could increase competitiveness of business across the continent. This could and should go along with ambitions for the “African Continental Free Trade Area”.
e: With the current crisis caused by COVID-19 and the likely economic crisis to follow what should be the attitude of small firms toward e-commerce? What should they be doing?
C: The first thing is, of course, to work on resilience in the short term – and there are no simple recipes for this. Several African countries are at a standstill for non-critical e-commerce deliveries.
Beyond the immediate crisis, small firms need to be investing in their understanding, education and preparedness to be better skilled and capable for digital. E-commerce is sure to grow in importance: we may even see a boom soon after restrictions are lifted. I genuinely believe increased demand for e-commerce will come from just about everywhere – and that this will offer opportunity whether you are in Ghana, Rwanda or Zambia. This is the moment – if you have time – to improve the planning and documenting of your inventory, to learn about digital tools for communication and promotion and plan how you might capture the wave. You can never plan hard enough to be successful. So plan to be successful as hard as you can by learning all you can about e-commerce. The infrastructure you need, how to take pictures of products, product descriptions, keywords, meta-data, target audience, your niche market countries and the list goes on and on. Prepare now and get ready for amazing success as e-commerce is sure gain market share after the Covid-19 crisis.
If you want to get inspired by other amazing entrepreneurs, log in ecomConnect, the online community for e-commerce entrepreneurs. You will have access to a worldwide network of entrepreneurs, MSMEs, start-ups and business experts and plenty of free online resources, such as online courses, tools, webinars, success stories and latest articles on e-commerce. Join ecomConnect!