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Not commonly prevalent in the news, Rocket Internet’s venture Jumia (formerly known as Africa Internet Group) has managed to stay under the radar while slowly dominating one of the largest developing internet markets in the world.

Only after speaking with a team of Jumia Vendor Success Senior Managers was I able to realize the massive potential of the continent’s top ecommerce player, and how it is not so different from Southeast Asia.

“Like every other region, Africa has its own challenges but the internet users [in Africa] are more than that of the US, UK and actually, both of them combined,” said Gaurav Jain, Head of Vendor Success, Jumia Group. “The number is behind only India and China.”

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Source: Statista, Africa has over 360 million internet users

During a knowledge sharing session held at aCommerce fulfillment center in Bangkok, ecommerceIQ spoke with the Jumia team to understand the unique properties of their ecommerce ecosystem, and uncover why the company was more similar to Go-Jek than the commonly perceived Lazada of Africa.

Africa’s ecommerce behemoth: The sum of all parts

To understand the extent and ambition of Jumia’s business goals in Africa, it’s important to know that Africa is a continent broken up into 54 countries and according to the company, consists of 1.3 billion consumers and 17 million SMEs/merchants.

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Jumia, started in 2012, was initially an e-tailer selling only electronics and fashion items when it moved into a marketplace model in 2015. It has since become the largest internet player in Africa and first unicorn leading in six regions: Egypt, Ivory Coast, Nigeria, Kenya, South Africa, and Morocco.

The company not only operates in 23 countries, but has effectively squeezed out the ecommerce players that came before them, namely Kilimall and Konga.

It’s safe to say that Jumia Group is no longer a simple, horizontal marketplace and is responsible for pumping out ventures Rocket Internet is famous for copying and pasting in developing markets: Jumia Food (foodpanda), Jumia House (Lamudi), Jumia Car (Carmudi), Jumia Jobs, Jumia Deals, etc.

But launching online services in a region where ecommerce is only 0.5% of total retail sales is not cheap.

The company posted a Sh14.9 billion ($148 million) loss before tax and other costs in December 2017 compared to Sh11.3 billion the year before.

While it doesn’t paint the entire picture, severe losses was one of multiple factors that spurred the company to create the Jumia One app combining its top services in one place. The app launched in Nigeria earlier in March and allows customers to shop online, order food, buy airline tickets and pay cable and electricity bills.

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“People like to shop on the mobile app. They prefer to have ecommerce handy so they can place an order on the go. The Jumia One app is growing, 42% to 56% in terms of mobile share.”

Other factors for launching Jumia One included:

  • It makes more sense to invest heavily into a single platform versus managing and marketing multiple brands
  • Consumers don’t have enough storage on their mobile phones to download multiple apps as mentioned by a user
  • Mobile penetration in Africa is expected to reach 50 percent in leading countries over the next five years – meaning over 300 million smartphones will be added to the market
  • The app is another revenue stream as Jumia marketplace merchants can buy advertising space for their products
  • It also allows the company to cement themselves as a strong payments player, vital for mass adoption as demonstrated by Alibaba’s Alipay

The company will dabble in micro-financing to merchants given its rich data. A win-win to give merchants more capital to invest in their online businesses and drive more traffic back to its platform.

“We know the patterns, the revenue, the number of orders. We lend out money so they can manage their shops,” comments Gaurav. “It’s a growth opportunity to accelerate their growth as fast as possible.”

“They can use mobile money, not only cash.”

The all-in-one app draws parallel to one of Southeast Asia’s unicorns. Jumia is becoming the superapp in Africa – a Go-Jek for 1.3 billion customers.

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What are then the challenges holding back Africa’s enormous potential? The typical it turns out.

Challenges in Africa mirror Southeast Asia’s own struggles

Africa’s obstacles preventing exponential growth of ecommerce are the same that plague Southeast Asia’s internet economy.

  1. People still want to visit offline stores for the look and feel to buy products
  2. Lack of trust by both customer and merchants who don’t believe in digital transactions
  3. Fragmented markets, different languages, customs
  4. Cash based society
  5. Underdeveloped infrastructure
  6. Shortage of digital talent and training/education

“They need to know that ecommerce is not a Ponzi scheme. Trust is a large issue. We show them how their products will sell, we show them the importance of visibility and assortment until they have confidence in us and they grow their business so it’s mutually beneficial,” says Gaurav.

“Sellers with offline shops aren’t used to waiting for payment. Cash flow is a problem with our vendors,” says Damola Ajayi, Head of Vendor Success, Jumia (Nigeria), when asked about his challenges. “We guarantee a 7 day payment cycle from day of shipment and even daily for our gold vendors.”

The company paved the way for other ecommerce players to come in, but currently there is no standout competitor apart from the expansion efforts of Chinese companies and the country’s predisposition for offline retail.

Creating the next 500 millionaires in Africa

What was most impressive about Jumia wasn’t its ‘superapp’ or the sheer size of the African market, it was the dedication and enthusiasm exuberated by each Jumia employee I met.

ecommerceIQ, Jumia

They understood the massive challenges ahead and were candid about how to tackle them.

Lack of vendor trust, digital skills or education?

  • Launch training 2 to 3 times a month to advise on marketing, pricing, and inventory management
  • Maintain a ‘fair’ playing field by enabling local businesses to offer COD (cash on delivery), whereas cross-border merchants don’t have this option
  • Spend heavily on marketing for its high performing vendors
  • Share insightful data with vendors on a weekly basis about top selling products across multiple categories, propose assortment and price forecasts

Lack of talent?

  • “The company brought in expats who managed senior roles and groomed locals to move up,” says Damola. “This was necessary for our early growth.”

Lack of cashless adoption?

  • Add convenience through JumiaPay allowing payment by debit card or bank accounts
  • Offering cash on delivery

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“We are able to cover the entire vendor journey,” comments Gaurav. “We offer services at every point the customer needs.”

So how are these band-aid solutions working out? At the knowledge sharing session, top performing Jumia vendors shared their experiences with me:

“If you dedicate yourself to Jumia in top product categories, mobile phones, there is no need for you to go offline. You can grow 70% [in sales] if you know what you’re doing.”

“Target the demands of the market and Jumia helps you focus. They will give you foresight.”

“We started with Jumia since 2013, we were selling a small number of products. During Black Friday, we sold 1,000 phones but for “Mobile Week” in March, we sold 15,000 Xiaomi phones, and broke the record for the Middle East.”

The company, while struggling with the perils of other companies prioritizing high growth over all else, is taking baby steps to expose its merchants to the world’s possibilities.

“We [Jumia] want to enable African customers to enjoy best products from the world at their doorstep,” shares Gaurav.

What can I say? The more the merrier.

 

Editorial comment: a quote was adjusted April 22 8:51am

Compared to the other Southeast Asian countries, not much is known about Myanmar’s market potential.

Despite being late in joining the world wide web, the country’s internet penetration grew 97% in one year, reaching 26% of the population, roughly 14 million users.

eIQ speaks with Win Nander Thyke, founder and CEO of rgo47 — one of the leading online retail companies in the country — to shed light on the country’s retail potential, evolving Burmese shopping behavior, and why she believes strongly in the market’s future.

Realizing Myanmar’s new consumer

Rgo47, initially Royal Golden Owls (RGO), was introduced in 2013 during Myanmar’s inaugural hosting of the biennial Southeast Asian Games (SEA Games).

By leveraging her family’s fashion business, RGO was responsible for producing the official merchandise for the SEA Games such as t-shirts and fashion accessories to be displayed and sold at the two-week event.

Myanmar ecommerce market

Official SEA GAmes Myanmar banner with RGO as a sponsor.

It was the right opportunity to send a positive image of Myanmar and reach a large audience with her new apparel brand as one of the official event sponsors and operators.

And it was during this time the company first observed a shift in consumer behavior that signaled the beginning of online retail potential in the country.

“People would email us or contact our Facebook page to ask if we were able to deliver the SEA Games souvenirs to their homes,” said Win. “At the time, we didn’t have the resources to do so and didn’t think that our Myanmar people would be interested to shop this way that early.”

Fair to say so considering only 1% of its population was connected to the internet only a few years back.

RGO, now rebranded to rgo47, decided to launch its online channel in April 2014 — the year that marked the country’s “Mobile Revolution” when mobile penetration jumped to 83% in only five short years.

Through its ecommerce channels to this day, the company continues to sell its most popular category: fashion apparel that includes everyday apparel, sportswear, shoes, and bags as well as its most recent category additions: cosmetics, kitchen appliances, and electronic and home office goods.

A uniquely Facebook-first market  

Given Myanmar’s reputation for being a Facebook-first country, the company set up a Facebook page and website as its first online channels.

“Facebook is very integral to the Burmese daily life that it’s almost useless for us to have a website,” said Win “I’d say 80% of our transactions come from Facebook.”

Myanmar ecommerce market

rgo47’s main Facebook page

According to Win, a native Burmese herself, a majority of consumers in the country require a personal touch, which usually means human interaction while placing their orders.

To cater to this need, the company employs 42 telesales personnel – out of 122 employees – to communicate with customers through phones and chat applications including Facebook Messenger, and the country’s favorite, Viber.

Win is trying to lessen its reliance on a labour intensive transaction process and anticipates a change in consumer behavior. The company released its mobile application earlier this May, already generating 11,000 (iOS) and 72,000 (Android) downloads.

However, even with this initiative, Win admits that shoppers still prefer the company’s Facebook page, pretty evident as the rgo47 page holds the largest audience in the country.

Myanmar ecommerce market

The company has the largest Facebook audience in Myanmar, leaving behind even earlier player Rocket Internet’s Shop.com.mm and Kaymu

Evolving Burmese online shopping behavior

A preference for Facebook is not to say that the Burmese are resistant to change.

While cash-on-delivery (COD) was the most preferred payment method based on rgo47 records last year, the company saw a shift to more than 50% of its orders now being processed via other channels such as bank transfer and Wave Money – Myanmar’s top mobile financial service providers.

Although a step in the right direction, Win believes the country’s lack of ATMs can cause customers to travel long distances in order to complete a payment and has unfortunately resulted in many canceled orders.

Aside from low payments infrastructure, the country’s addressing system also presents the last mile challenge. While most of its customers reside in big cities such as Yangon and Mandalay, the company has seen an increase of orders coming from rural areas where the drop off locations are difficult to find.

“Outside of Yangon, it is really hard to find the address for customers. That’s why most ecommerce companies in Myanmar still need to give every customer a call to confirm their orders and exact location,” explained Win.

While Myanmar’s ecommerce challenges are not uncommon, Win says customers are loyal, especially after companies have proven their reliability.

More than 30% of rgo47’s monthly transactions come from returning customers.

Win believes that the reason they have such a high retention rate is because her company constantly seeks ways to cater to customer needs.

“Customer satisfaction is the only metric that really counts for us,” said Win.

Customer-obsession seems to be working as the company is currently experiencing two-folds growth in its annual number of transactions and expects volumes to increase as more Burmese pick up online shopping habits.

Possibilities for the future

Despite the hardships that come with nascent markets like Myanmar, Win feels optimistic about the possibilities yet to be explored in ecommerce and its potential impact on communities.

A big determinant of ecommerce success in the country rgo47 believes is working together with experienced ecommerce firms from other markets to learn and apply their best practices.

Win also encourages foreign players to get their hands dirty and enter the market while it’s still early to reap the most benefits.

“The Myanmar people are smart and very curious about new tech experiences,” says Win.

“Many companies hesitate to enter Myanmar because they think the people or the market is not ready but if you’re waiting until they’re ready, it means you’re already too late.”

Credit cards. Not a thing in emerging Southeast Asia.

Fintech is quickly becoming the next big thing in Southeast Asia. According to recent data from Tech in Asia, the number of venture capital deals in fintech has outpaced ecommerce for the last two quarters – something that hasn’t gone unnoticed by the big players.

Alibaba is on a mission to bring in Alipay and Ant Financial into Southeast Asia through its $1 billion Lazada acquisition. Indonesia’s Go-Jek recently launched Go-Pay and Grab is said to be raising a massive $1.5 billion round to fuel its nascent payment platform.

Despite an increasing influx of money into the payments ecosystem in Southeast Asia, cash-on-delivery (COD) remains the most popular payment method in emerging Southeast Asian markets. Aggregated data shared by aCommerce indicates that the share of COD orders has increased over the last 12 months.

Of course, the data is limited to the orders processed by the regional ecommerce enabler and skewed by individual client preferences, but given their size and reach, offers a good representation of the market.

What then could explain the increase in COD share in markets like Indonesia, Thailand and the Philippines? One hypothesis could be that as ecommerce continues to gain widespread adoption, new users are the late majority and laggards. These groups are less likely to have access to credit cards and some won’t even have bank accounts. This means COD will still be essential for continued ecommerce growth in emerging Southeast Asia.

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Up until this point, we’ve covered driving traffic to your online store, where to best sell your products and the type of content that increases conversions. Now we will be sharing a few tricks to make it easy for store visitors to complete their purchase, something commonly overlooked. From the checkout process to receiving the package, in this article we discuss how to decrease cart abandon rates and last mile best practices.

55% of consumers surveyed by PwC in Southeast Asia report they are shopping online monthly or more frequently, and returning customers are one of the easiest ways to grow ecommerce business. Creating a stress-free checkout process and delivering pretty package on time are vital factors to gain customer loyalty.

Once the shopper is happy with their product selection and ready to checkout, ensure the final steps in their online journey, the last mile, are hassle free. Businesses can do this by:

  • Providing easy checkout process and being transparent about any extra costs
  • Offering a ‘cash on delivery’ payment method
  • Creating the best image of your brand with smooth delivery of the product

 

Optimize your store’s checkout process

Abandoned shopping carts are the worst nightmare of online sellers as they present lost revenue. And it’s usually because every fourth customer is frustrated when there is too much information to fill upon checking out.

An overly complicated checkout form can scare off over 60% of potential buyers therefore the shorter the checkout form and the less clicks your customer has to make, the more likely that she or he will finish the purchase.

For example, Estée Lauder’s checkout form of its Thailand webstore is rather long. It requires, first, user registration and, second, to fill in a separate line each item of the address, eg. house number, alley, road, district, county, instead of using a text field for the user to enter everything at one go. This probably makes it easier for the brand to process data in the backend, but doesn’t make for a great user experience.

last mile delivery

last mile delivery

Checkout form of the Estée Lauder online store in Thailand is quite lengthy.

To checkout from Kiehl’s Indonesia webstore customer first has the pleasant task to choose free samples. But after that she or he is directed to sign in or register an account, then has to look again for the shopping cart and gets to fill the checkout form only after a few more clicks.

In both cases, customer at some point may feel impatient or confused and such experience may reduce conversion rates.

To best capture your shopper’s purchase, offer a guest checkout option and create a simple, one-page checkout form asking the buyer to fill only the necessary information – name, address, phone number and payment details. Do you really need to know your customer’s birthday adding one more line to fill during the checkout?

Be sure to offer various payment options based on the preferences of your target audience and show that you are serious about the security of the payment displaying secure payment gateway branding such as SSL (Secure Sockets Layer) certificates.

With a total of 5 clicks from landing to checkout to submitting your order, Maybelline Thailand is a good example of how to simplify the checkout process. While it requires a registration, it is very simple and quick, and the checkout form is just one-page.

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Maybelline Thailand store has created simple one-page checkout.

To avoid abandoned carts, brands should be transparent about the costs that the buyer might incur in addition to the product price. Around every fourth customer drops the purchase because of unexpected shipping costs and 45% of customers tend to add products to their cart without intent to buy in order to check the final price.

Show all the additional costs that the customer might have to pay or highlight free shipping with minimum purchase value – around 24% are more likely to spend more to be eligible for free delivery.

Prioritize cash on delivery as payment method

In Southeast Asia, cash is the preferred payment method for the majority of customers – in Thailand 83% of them would prefer to pay with cash on delivery, in Malaysia – 82%, in Singapore – 72%. Less than 10% of the population in Thailand, Indonesia and Vietnam and less than 20% in Philippines and Malaysia use banking cards to pay for their purchases.

Offering cash as a payment method will increase the number of customers who want to purchase goods online as the conversion rate on cash on delivery is higher than bank transfer and bank service combined. This is due to low credit card penetration rates and high mistrust issues with entering payment information online across the Southeast Asian markets.

In Thailand, other payment methods which customers without bank accounts can use include payments over the counter in convenience stores 7-Eleven and other shops or cash deposit in a bank or ATM. However, by offering these payment methods, a merchant pushes the customer to decide twice on buying the product – first time on the webstore and second time when the person has to go to either the counter or the bank to actually make the payment. Thus, giving customers another opportunity to reconsider and cancel the purchase.

Make the delivery of the product stress-free

Delivery times, customer service, the aesthetic appeal of the packaging and even the etiquette of the messenger is a business’s final chance to leave its consumers satisfied. Yet, some brands fail to align their global image with the “last mile” delivery.

When a customer makes a purchase, she or he, of course, is interested in the particular product and will presumably make a purchase if your site is optimized but that doesn’t mean the box in which the product is sent should be neglected. The goal is to make the shopper feel like their online purchase was worth it.

In a recent study, Dotcom Distribution found that 40% of consumers are likely to make repeat purchases from an online merchant that delivers products in gift-like or premium packaging. If the delivery came in a unique package, consumers are also more likely to share it via social media. Instant free marketing!

Here are a few things to consider for special packaging:

  • Use a branded box, not just the standard brown box from the logistics provider
  • Use branded or coloured tissue paper, not hard paper to wrap product
  • Consider branded or coloured tape instead of clear tape
  • Include small gift samples to increase cross-selling
  • Protect the branded box by putting it in a standard brown box

It is extremely vital to premium brands like Bobbi Brown, Kiehl’s, Estée Lauder and MAC to provide proper packaging to protect their brand image and justify higher product costs. In Thailand, they are trailblazers as to how their products are represented when delivered.

last mile delivery

last mile delivery

Premium brands Bobbi Brown, Kiehl’s and MAC have invested in a gift-like packaging. Source: ecommerceIQ

Yet, the arrival of French brand’s L’Occitane package provided somewhat disappointment.

last mile delivery

Franch brand L’Occitane delivers products bought on its online store in standard packaging.

There comes a high cost to providing this special packaging in the right size. As it can be seen in the table below, just having a brand’s logo on the box and using a branded tissue paper can increase the packaging costs 3 to 5 times, while having the full premium branded packaging means even bigger expense.

last mile delivery

“If you have an average basket size of over 1000 THB, it makes sense to have a branded box. Even if not the case, brands should see the packaging as an extension of its marketing and pick a style that aligns with the brand’s global image, as it is the customer’s final touchpoint,” says  Phensiri Sathianvongnusar, aCommerce Thailand COO.

Take into account that shipping costs are calculated by volume metrics, not by weight. This is why it’s important to have a couple box options that are efficient for the physical average basket size of your product.

When you’ve invested your time and resources to get potential customers to visit your online store, don’t sabotage your efforts by complicating the checkout process and ignoring careless fulfillment. Provide an enjoyable purchase process experience, surprise them in a positive way with gift-like packaging, and you will win their hearts.

Southeast Asia’s ecommerce boom in the recent years has fostered the establishment of fulfillment companies who can advise your brand on the best practices. See who they are for Thailand and Indonesia.

Stay tuned for next week’s beautyIQ piece in the series!

BY AIJA KRUTAINE AND ANUTRA CHATIKAVANIJ



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