History is playing it differently for Africa

Drones are the future of African e-commerce, but not in the near future. E-commerce players want necessary regulations and economically viable technology ready.

Logistics Update Africa: The domination of informal retail due to underdeveloped infrastructure, the difficult cargo movements because of tough geographical terrains and the appetite to shop due to increasing income is a perfect recipe for drones of e-commerce businesses to hover over Africa, but still, the continent desperately needs economically viable technology and regulations in place to make it happen.

Historically, the African continent was forced to struggle with inadequate infrastructure which inhibited growth, eroded trust and crippled an already challenging business environment. For consumers in Africa, it’s even more difficult to find goods and to shop than anywhere else in the world.

E-commerce on a drone

The new digital infrastructure has paved the way for better access to goods and services more efficiently. Though e-commerce currently represents only less than one percent of all the transactions in Africa – a contrast from 12 percent in the USA or 20 percent in China – yet the share is rapidly rising.

With the buzz created for drones, the natural question is if Africa’s e-commerce scene is ready for cargo bombardment via drones.

Jumia is an e-commerce retail platform and logistics service that connects sellers with consumers. It currently has a presence in 11 African countries.

Anne-Marie Green, marketing manager of South Africa’s online marketplace and auction site Bidorbuy echoed similar sentiments. “At the moment, drones do not play an important role in the fulfillment side of e-commerce and is not likely to change in the near future. It will be also necessary to iron out the laws and regulations around the new delivery system before it will, of course, enter the system.”

Kumar informs that some drone pilots are already in progress. “But today the cost of technology is not viable for our business. I expect to see more economically viable drones coming in the next decade,” he adds.

Astral Aerial, which signed a memorandum of understanding (MoU) with Yamaha Motors for Fazer R G2 drone is very keen on implementing it for last-mile deliveries as well as for other applications in Kenya.

Kenya-based Astral Aerial Solutions offers drone services in the logistics, aerial photography, aerial surveillance reconnaissance, inspections among other industries.

Until then, it’s important to track the growth of e-commerce as the internet continues to propel demand.

The big Africa market

With more than 400 million internet users, Africa has the second-largest internet-user base on the earth immediately after China. Growing mobile and internet penetration will have a revolutionary effect on how the continent will be shopping in the near future.

Jumia Egypt’s Kumar informs that 92 percent of Jumia shoppers recommend the platform to friends and family, while Green attributed the growth of online shopping to more South Africans having smartphones.

Overcoming basic challenges

Being optimistic about the African market and its potential to have drones taking over the retail business, both e-commerce giants also shared their pessimism about the hurdles on the way. Along with aid & relief and oil & gas, e-commerce has the potential to imbibe drones into the geography of Africa.

Due to border management in many countries of Africa, most of the e-commerce players tend to have one centralised warehouse in the capital of each country and distribute products from there. Cargoes can reach places near these cities efficiently, while there are still regions in Africa where even the e-commerce giants have not been able to reach.

Infrastructure, manpower shortage, tough geographical terrain, customer trust, capital shortage with third-party partners, and security issues are some of the logistics problems faced by e-commerce players in Africa till now.

For Bidorbuy, its sellers and buyers depended almost exclusively on the South African Post Office for the delivery of products ordered online on the website.

Optimism high for drones

As e-commerce growth continues in an upward spiral, the optimism for the use of drones is restrained, but high.

“You are never going to have the density of physical retail in Africa that you have in the US because history is playing it differently. Africa will gradually have more stores, but these aren’t going to be the main way to access goods,” feels Kumar.

Gadhia comments, “In Africa, e-commerce has been a major driver of air cargo transportation. Drone technology will leverage the already created e-commerce eco-system, where the technology will be implemented into an already existing and tested market. This sector has given drone technology a head-start in Africa and will play a key role in enabling the uptake of the technology.” By 2029, Green does not doubt that drone delivery is an innovation that will “surely head to our part of the world.”

“It is only a matter of time when the drones will enter the e-commerce landscape too,” she affirms.

This story was originally published in Logistics Update Africa’s November – December 2019 issue.