According to Geopoll, a polling company, Facebook group is growing massively, threatening companies like Jumia and Konga on ecommerce. The informal groups in Facebook are now ecosystems of digital commerce as users use them to shop without going to the traditional ecommerce companies.
According to the Black Friday Straw Poll, which ran in December 2017 among 2,031 respondents in Nigeria, South Africa, and Kenya, Jumia still remains the most preferred e-commerce vendor. Fifty-six percent of our poll respondents have shopped on Jumia before.
Interestingly, a significant number of online shoppers utilize Facebook groups. At 32%, Facebook is the second leading online retailer in the leading e-commerce regions. Through informal entrepreneurs who utilize this leading social media channel to either sell through their groups or similar interest groups, Facebook is proving to be a formidable albeit odd player in this space. (Source: Geopoll Newsletter)
This has been expected. I have predicted that by 2022, the ecommerce platforms we may have are really Facebook, Instagram and WhatsApp in Africa. I expect these ICT utilities to add store features in their platforms to make it easier for people to list and sell things. That also means that people can get paid easily.
The dominance of Facebook group as an ecommerce ecosystem, especially for marketplaces, would be driven by the following.
Free Internet: When you shop on Facebook, under the Internet Free Basics, you do not waste mobile credit. This means that more people will increasingly adopt it. It puts the traditional ecommerce players on clear disadvantage.
Trust: Facebook deals with the issue of trust in African ecommerce. Both the buyer and seller have clear linkages with others as the accounts do not just appear. So, it makes the bonding better. You would see a seller account with 2000 likes and that boosts your confidence level that the seller is genuine. Traditional ecommerce companies do not enjoy that since accounts are not socially associated in their platforms.
Commission: We expect Facebook commission to be lower compared with traditional ecommerce. The implication is that more people will flock to Facebook group. The Facebook group has an element of entrepreneurial freedom since the sellers can “build” the stores themselves.
Network effect: While a company like Konga is hosting about sub-500k active users in its platforms, Facebook has largely everyone that is online in Nigeria. That is a huge advantage. That can move sellers to operate accounts there.
Facebook may not do this in U.S. because of antitrust issues, but I am not sure anyone can stop it in Africa. Yet, this goes beyond Facebook; Instagram would be the best show room most businesses would have in Africa. That is already happening in the continent as photographers, designers, and artists are abandoning traditional websites to focus on their Instagram engagements. As ICT utilities like Instagram put store features, in their platforms, many things would happen: they will disrupt the traditional nexus of ecommerce.
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