Africa's e-commerce industry is set to explode
Hello Pretty is an alternative to e-commerce giant Etsy
What do a bamboo watch, a gin and tonic lollipop and a pug-shaped cushion have in common?
They’re all part of Africa’s growing e-commerce industry, which is estimated to boom in the next year.
Experts predict online shopping across the continent will be worth $50 billion in 2018, up from $8 billion in 2013. As Internet coverage expands, e-commerce could account for 10% of retail sales in Africa’s largest economies by 2025.
Cape Town-based Hello Pretty, a start up describing itself as ‘South Africa’s largest digital marketplace’, is already making headway in the industry.
Set up by Sam Marx and Scott Hadfield in 2012, Hello Pretty is an online platform for South Africans to buy and sell handmade crafts. In just one year, the site’s revenue and users have tripled, and now features almost 24,000 products.
“Most people in 2012 didn’t even know what an online shop was,” said Marx. “Now sellers and buyers are getting more familiar with online shopping. Our growth has been astronomical, our timing was just good.”
South Africa’s answer to Etsy
The e-commerce giant Etsy has been through turbulent times, with plunging shares and new competition with the launch of Amazon’s online store Handmade. In South Africa, Marx and Hadfield say Hello Pretty is the most viable alternative to international e-commerce platforms because it is more in tune with local needs.
“It’s hard to use Etsy because it doesn’t support the African rand,” explains Marx. “Everything is put into American dollars, which is a huge headache because of the exchange controls.”
Paypal, the online payment system used for Etsy transactions, is also “really an issue here”, with strict rules that require sellers to withdraw cash from their Paypal account after every transaction. “If you make fifty sales on Etsy you have to make fifty withdrawals on Paypal,” says Hadfield. Then it has to run through one of the major banks, which charges exorbitant fees, he explained.
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With Hello Pretty, Marx and Hadfield handle all payments directly, depositing funds into seller accounts without needing to resort to Paypal as an intermediary.
Deidre Luzmore also set up an online platform, known as Mzansi Store, to encourage South African craft sellers to go digital. She agrees that new models of e-commerce are needed to kickstart the industry.
“I interviewed crafters at markets and less than five percent had Etsy stores,” she adds. “Whether it’s displaying their items in dollars, or not knowing how to ship to the U.S., we need to help them overcome that. There is definitely still a gap in the market.”
Room for growth
Marx and Hadfield are a two-strong team, responding personally to every email and payment transaction for 25,000 Hello Pretty users.
“The guys who want to make a big business – I want to explain to them how to do it,” says Marx. “We already give advice around pricing, photos and store policies. It wasn’t the plan from the beginning, but it’s definitely required.”
Despite the huge workload, they plan to expand the platform this year, with a focus on giving customized advice to retailers on building a brand online.
“I would love to see African creativity at the forefront,” adds Luzmore. “Manufacturing is the next big industry for Africa. With the rise of mobile technology, I think it’s going to be a very exciting and innovative industry in five years’ time.”