Question

What challenges must be overcome to establish an international e-commerce operation? Minimum 650 words.

Answer 1

Challenge No. 1: Unreliable and expensive high speed internet
Access to reliable low-cost internet can be a challenge for African consumers. Therefore, e-commerce developers will have to use other widely used technologies (for example, wireless and mobile networks) to serve the market. And with 1.42 billion mobile phones sold worldwide in 2015, the fact is that they have become an integral part of everyday life for most consumers.

But in Africa, mobile phones are more important. In 2016 alone, it is expected that there will be 101.34 million mobile payment users. In this way, businesses need to adapt to the market and make their products easier to buy through mobile devices and focus less on attracting desktop PC users.

Challenge No. 2: Payment Method Limited
Customers in Africa usually use the money on shipping or mobile payments to buy goods as opposed to debit or debit cards. This is because many Africans do not have a bank account or do not trust a credit or debit card and rely on their mobile phones for financial transactions.

If e-commerce business offers more payment options that users can easily and securely use, it can increase the cash flow for the business. In addition, giving customers the opportunity to pay in their preferred way only increases the likelihood that they will buy from you and become repeat customers in the future.

Since mobile money is probably the most popular form of payment for goods and money transfers in Africa, you need to integrate it with mobile payment methods and digital currency providers, including

M-Pesa;
Tico;
Airtel;
EZY Pesa; And
Vodacom.

This does not mean that you restrict all credit and debit card payments. Credit card companies are starting a big push in Africa. But without a doubt you have to allow local customers to pay with the widely used mobile money service.

However, combining it with many payment options can be tedious. You can use the secure services of PCI-certified payment service providers (PSP) to meet the diverse payment needs of this emerging market. PSPs are now associated with payment and payer methods, making them an easy-to-use "middle" option.

Challenge No. 3: Cross-border payments
Although Africa is considered a market, it has many different countries - each with its own currency. To be successful across Europe, your customers must be able to securely cross-border payments in various currencies and do so freely.

Also, working with GPS, which offers processing and payment in different currencies, can provide a simple solution for accepting cross-border payments. In addition, working with PSP can help reduce the cost of currency conversion.

Challenge No. 4: Poor transport infrastructure and supply chain
If you are unable to send your product to your customers in Africa, you will lose your job. There are a number of obstacles to this: bad roads, lack of logistics and poor inventory management to name a few.

You can start overcoming these obstacles by building a network of local employees to manage logistics on the spot. For example, a company called Konga uses motorcycles and other payment options to overcome the logical barrier to distribution in Lagos.

To overcome the challenge of non-existent transport infrastructure, Konga invests in motorcycles with reliable riders transporting products in Lagos. Kona customers also have the option to pay for their products in cash on delivery or by card using a wireless terminal in the mobile network.

Retailers also need to consider the supply of drones as the road infrastructure is poor in other parts of Africa. Amazon.com is already experimenting with this issue.

This type of network, combined with strict inventory management and staff education, can give you a good start in avoiding distribution problems and high inventory costs. There are also local counselors available to guide you through the steps of dealing with a logistical headache when it occurs.

Challenge No. 5: Domestic competition and consumer confidence development
Existing domestic competition can be a challenge for new entrants to the market. Brand loyalty is strong in Africa, so you need to focus heavily on building trust and delivering a safe and secure customer experience.