DHL is the latest company to try to offer a window for retailers to sell into African markets. The logistics company has partnered with MallforAfrica to launch its Africa eShop app in 11 countries, providing a platform for more than 200 US and UK-based retailers.
DHL will provide the delivery and logistics capabilities for Africa eShop. MallforAfrica will provide its existing retail platform, Link Commerce, to support the new service (Link Commerce already has 250 partner retailers plugged into its platform). Partner brands for Africa eShop include Amazon, Nordstrom, Sephora, Neiman Marcus and Macy’s. The new app will support local digital payment options such as M-Pesa. Country coverage is Botswana, Ghana, Kenya, Nigeria, Malawi, Mauritius, Rwanda, Senegal, Sierra Leone, South Africa and Uganda.
DHL and MallforAfrica already partner together on MarketPlaceAfrica, an online retail platform to allow African brands to sell to consumers outside Africa.
With Jumia’s IPO looming and a projected valuation of $1.2bn, online retail is a hot topic in African markets. However, the cost and complexity of distribution remains a massive barrier to profitability. Jumia, despite its considerable success acquiring 4m customers, is not profitable. Perhaps more relevantly, two previous attempts to launch services similar to Africa eShop have failed.
In June 2018, CFAO’s online retail platform Africashop closed down after two years of operation. It had operated in two countries out of a planned 10. Like Africa eShop, Africashop operated as a gateway for African consumers to access brands from outside Africa – in this case mostly European brands such as H&M, Zara and La Redoute. A key sticking point: prices were 1.3-1.5 times higher than French retail prices.
Before that the Bolloré / Casino joint venture CDiscount had also failed in Africa. CDiscount launched in 2014, and was rolled out into Burkina Faso, Cameroon, Senegal and Côte d’Ivoire. Having closed down the Burkina Faso, Cameroon, Senegal operations, in February 2017 CDiscount also closed in Côte d’Ivoire. It is notable that sales never exceeded $1m annually in any of its countries of operation.
In both cases, Trendtype believes that the key to profitability and viability (or lack of it) was having a network of physical delivery points to reduce the cost and complexity of delivery for the final mile. DHL does have that network through its Service Point network, in which independent retailers act as agents. However, we still question demand levels: online retail penetration is still low in all of Africa eShop’s target markets; and the prospect of prices 1.2x to 1.5x higher than retail prices in the US and UK will limit the target audience.
