Why the Economy of Africa needs a Decentralised e-commerce Platform
“We’ve been very frustrated with the state of open-source e-commerce” we knew it could be done better.”- Roy Rubin, Co-Founder/CEO, Magento
Just like Roy Robin said, the constant need to make anything better is the beginning of any remarkable process. In the world today we see that there happens to be a lot of advancement in so many ways, now with the advent of digital currencies, the potentials of scalability of this space have been multiplied.
In Africa, it has been predicted the annual growth in e-commerce activities is expected to increase by approximately 40 per cent. This is not to neglect the fact that there would be so many challenges to tackle.
Africa as a green land for e-commerce
In the world, it is estimated that about 45% of people have a connection to the internet. With Africa as a continent with a population of over a billion people, this total estimated percentage drops to about 26.5%.
However, this has begun to take a turn for the better as most African countries have been seen to experience the penetration of smartphones and urbanization in an exponential scale.
Growth in e-commerce platforms
The growth of the local market in Africa has been seen to be accompanied by growth in e-commerce platforms.
Development of these platforms over time has experienced a lot of boost by foreign investment. In 2014, for example, American hedge fund Tiger Global Management invested about R1.35 billion in South African online shopping giant, take a lot. Also, the German e-commerce investment company, Rocket Internet, invested about R 1.73 billion in Nigerian online retailer, Jumia. These e-commerce platforms aren’t the only ones that have seen substantial growth over the years.
Challenges facing e-commerce in Africa
Among the numerous challenges, Africa currently has to deal with are the high cost of delivery, poor infrastructure, highly fragmented market, just to mention a few.
The high cost of delivery
A South African e-commerce award survey of 90,000 South Africans online shoppers conducted in 2015 reflected that the high cost of delivery was the second most likely reason for a customer to abandon his/her purchase. This ranked second to a long time of delivery.
The high cost of delivery in Africa in particular to countries like South Africa and Kenya, this is because the formal retail industry is well developed and can compete with online retailers.
With solutions such as a Decentralised market with payments being made in digital currencies, it could be said that Blockchain has been able to make contend with this challenge to a considerable level as the platform would ensure that there is no exploitation in cost of shipping attached to the goods being listed on the platform.
Issues of trust and security
Cases of scams aren’t so uncommon with the region, hence the issue of gaining trust could be a daunting task, therefore, ensuring that the online security of the users of the platform should be of utmost importance.
A Decentralised market place presents an avenue where the merchants leverage on the reputation of a cryptocurrency startup with a stainless record, with the system having a design that prevents fraudulent individuals from being able to have their way in the system.
Supply chain issues
In West African countries such as Nigeria where most of the goods placed online for sale are imported goods, there is the risk of e-commerce companies running dead inventories and financial loss as they would have to struggle with bringing in goods to meet up with the demand on ground.
To solve this problem a decentralised market with different individuals who already have their products at hand waiting for a ready buyer would address this challenge effortlessly as the demand would hardly surpass supply.
Highly fragmented market
The huge political, cultural and economic diversity could also be a major challenge that faces the African. This creates a language barrier as well as the cross border payment issue between both parties involved
To adequately tackle this challenge a cryptocurrency based e-commerce platform that would allow the seamless flow of transaction without the regular issues of cross border payments would adequately salvage this situation.
How the use of Phore Decentralised marketplace can be leveraged.
The Decentralised marketplace feature of Phore allows people within different geographical jurisdictions transact effortlessly without the need of being worried about issues such as cross border payment issues as Digital currency PHR would be used for these transactions. Similarly, there would be no issues with the supply chain as the decentralised platform allows for individual sellers accepted to sell to available buyers. The possibilities this system has afforded the world of e-commerce is limitless.
