The novel coronavirus disease (COVID-19) pandemic is changing the way the world does business. While it was on a steady incline before, the e-commerce market in Africa is now witnessing a huge upsurge in growth from buyers shifting to online shopping. Many digital platforms are experiencing accelerated activity including an increase in consumer adoption.
On 8 May 2020, The United Nations Development Programme (UNDP) Accelerator Lab, in partnership with Jumia Food Uganda, a leading online shopping platform, launched an e-commerce platform to help micro, small and medium enterprises (MSMEs) remain afloat in the wake of the restrictive measures imposed to control the spread of coronavirus. Since the new integration of informal businesses into the e-commerce platform, the results witnessed have created great optimism for both vendors and consumers.
There is no doubt that e-commerce is emerging as a tool with significant roles to play in the prosperity and recovery of businesses in Uganda. Considering that 98% of Uganda’s businesses run informally, e-commerce will offer a critical income stream for those impacted during the lockdown and beyond.
Since its launch, UNDP Uganda’s Accelerator Lab has spearheaded research by engaging vendors and surveying market leaders to better understand daily operations of businesses in the informal sector. From the findings gathered thus far, these important actors collectively understand that technology has been paramount to the survival of their jobs in the wake of COVID-19 and has paved a way for them to embrace e-commerce more than ever. So far, seven markets in Uganda have been onboarded with over 1,200 vendors registered to sell their assorted produce online. Early indicators show that integrating informal businesses into e-commerce can be one of the ways to accelerate achievement of the Sustainable Development Goals (SDGs).
Vendor registration surges in a rush to get online
It is evident that there is a growing interest from informal market vendors to join the e-commerce platform. The raw data indicates a significant growth in numbers of unique vendors as well as sales. In addition, vendors have been able to reach a larger customer base than they ordinarily would have. “My sales have increased ever since I joined the Jumia Food platform,” says Justine Nalubwama, a Jumia Food vendor. “These guys keep coming here to get chicken for the online customers like every hour! Sometimes when my stock gets finished, I get from my neighbors who are not on the platform so that I don’t disappoint the online customers.”
Shifting from the traditional market to the e-commerce model
As we diffuse technology into informal businesses, we are learning that we must find ways to emulate the behaviors of a traditional market onto the e-commerce platform. Markets are generally busiest during peak hours, which makes it more difficult for vendors to multi-task and attend to online purchases while also attending to physical clients. We have to also consider factors such as fresh produce, which is cheaper late in the day when vendors try to dispose perishable products. The delivery of fresh produce also happens at specific times in a day or week and hence produce may not meet the increased demand by the vendors.
“For sure I have not found any challenge with the platform as my money comes in immediately. The only challenge is on my side where I sometimes fail to meet the demand. The orders come in every now and then but by evening, I have run out of produce, yet the farmers supply us only in the morning and on particular days,” says Richard Sekitooleko, a vendor.
Additionally, markets in Uganda use weighing tools such as buckets or various size identifiers locally known as akataasa, endobo or ddebe for fresh produce. Early insights suggest that e-commerce platforms need to work with vendor/trader associations to standardize measurements as well as bar coding products to facilitate traceability. The Minister of Trade, Industry and Cooperatives, Hon. Amelia Kyambadde, has offered her ministry’s support through training and sensitization of the informal market vendors on the value of standardizing their products.
Customer perceptions and behaviors
Consumers are thrilled about the incredible opportunities that e-commerce presents. They can now buy a massive range of goods from numerous categories with a single click. “Initially, I used to use Jumia platform to order for gadgets like phone, and kitchenware,” said Ruth, a previous Jumia user. “But when they introduced the groceries segment, I was the happiest person as I dread going to the crowded.... And when we were in total lockdown due to COVID-19, this e-commerce platform came in handy for me.”
On the flip side, as we promote e-commerce to mean an easy method of purchasing during these unprecedented times, some citizens remain more traditional and perhaps skeptical about e-commerce. Understandably, some still prefer to go to the market physically where they can bargain for the best price. Some customers also may prefer markets outside the specified platform delivery zones.
The question we should continue to ponder is: ‘How can factors like market prices or the quality of goods be considered so that a range of price options is available across markets?’ This would provide the flexibility to give the online vendor an opportunity to relieve the typical bargaining which most Ugandan customers are accustomed too. The pricing models based on the market and grade of commodities offer an opportunity to widen the choice for the customers in the different income brackets.
To learn more about Accelerator Labs, visit www.ug.undp.org
By Berna Mugema, Deborah Naatujuna and Hadijah Nabbale (Accelerator Lab Uganda)