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Less Than A Third Of Africa’s E-Commerce Startups Are Profitable

Posted on Dec 8th, 2017
Tech

Less Than A Third Of Africa's E-Commerce Startups Are ProfitableThe Afri-Shopping: Exploring the African E-commerce Startup Ecosystem Report 2017 released by Disrupt Africa shows that only less than 30% of African e-commerce startups are profitable.

The report looked at 264 e-commerce startups operating across 23 African markets, as collected and analysed by Disrupt Africa between 2015 and 2017.

According to a Bizcommunity article, the report found that there is a discrepancy between entrepreneur “eagerness to launch e-commerce ventures, and the slow path to profitability for companies active in this space.”

While the African e-commerce space is growing at an exceptional pace, with the number of startups entering the market growing year-on-year to reach a total of 264 ventures operating continent-wide, fewer than 30% of startups surveyed in the researching of the report said they were profitable, while funding for e-commerce startups has also proven inconsistent as investors are scared off by the long wait for returns.

According to the report, there has been a decline in funding for e-commerce startups in 2016, and the funding available is not well distributed, with 90% of funds raised going to startups in just five countries.

Nigeria – Africa’s E-commerce King
With 40% of Africa’s e-commerce ventures located in the country, Nigeria is where most of the continent’s e-commerce startups are located, followed by South Africa  and Kenya who also have developed e-commerce markets.

See also: African E-Commerce Giant Jumia Introduces Jumia Bot, Nigeria’s First E-commerce Bot

“It is evidently extremely fashionable to launch e-commerce startups in Africa, with platforms emerging in a variety of niches across the continent. The opportunities in the online retail space are obviously massive, but these companies face huge challenges too,” said Disrupt Africa co-founder Tom Jackson comments in a Bizcommunity article.

“This report lays those challenges bare, both by using data collected over a number of years and from speaking to various startups. We think it provides entrepreneurs and investors alike with the full picture of what is an exciting but challenging part of the African tech scene.”

“The extent of Nigeria’s dominance of the African e-commerce landscape is one of the most exciting findings of this report – for the first time we have clear evidence of the outstanding trajectory of the country’s e-commerce space as being driven by entrepreneurs. While South Africa and Kenya have typically stolen the limelight hitherto in conversations about tech entrepreneurship, this research makes it clear Nigeria is on the brink of huge e-commerce success – and will become the first African country to truly take retail online at a similar scale to Western markets,” said Gabriella Mulligan, co-founder of Disrupt Africa.