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50%+ Ecommerce growth in Tanzania

In recent years Tanzania has experienced a unique digital revolution driven by advances in telecommunications (3G to 4G) and mobile payments. Unlike most other countries, Tanzanians skipped using desktops and jumped straight into browsing the web on mobile devices. Now with all major telecommunication providers offering mobile payment systems, Tanzanians and businesses are changing how they trade and make transactions. The 2018 launch of mobile payments, locally known as M-Pesa is pushing ecommerce mainstream. Not many Tanzanians have credit cards or a Paypal account, but almost every Tanzanian has a M-Pesa account or access to it.

Prior to M-Pesa if a businesses that wanted to launch an online store or ecommerce platform would face payment handling problems. It would either have to target foreign markets or foreigners in Tanzania as most would own a credit card, Paypal account or other form of common ecommerce payment means. It would have to accept cash on delivery for the local mass market. This is wouldn’t be considered long term sustainable as the local market is exponentially bigger and the high risk of carrying cash after delivery.

Now any business that wants to take payments directly online needs to simply build a website and integrate it with an M-Pesa provider from Tanzania. Easier payment management through M-Pesa solved one of the biggest hinderances of its mainstream acceptance – convinience. Furthermore, Tanzania was the first country in the world to achieve full interoperability of mobile money payment providers. With over 44% of adults having access to M-pesa and ability of users of different mobile money services to transact directly with each other, Ecommerce is a one of the major beneficiaries.

Some statistics related to mobile payments
– Mobile money penetration rates in Tanzania are 65% in urban areas, 25% in rural areas ( updated: May 2018 – Tanzaniainvest ).
– 1,444.6 million transactions valued at TZS 49,997.1 billion ( $22.5 billion ) were transacted in mobile money transfers between July 2016 to April 2017 ( Bank of Tanzania )

As ecommerce is still growing there is only less than ten official companies offering such services.
Jumia/ is our favorite not because of design and technologies used but its brand reputation.
OLX is a good exampleseems to have a modern looking site.
Shoponline have a decent website, but its not secured with HTTPS.
Zudua have a super old site, we need to approach these guys for a rebuild.
Kivuko also have a super old site, not secured with HTTPS.

Despite these nice statistics why are there only less than 10 ecommerce sites in the entire country? Even though the payment methods problem has been solved, there are still other barriers that are preventing further ecommerce growth in Tanzania. Our quick survey highlighted the following problems holding back ecommerce in Tanzania and how local companies are tackling them.

– Lack of sufficient start up capital to setup a professional ecommerce business, as you can see almost all these current ecommerce companies are foreign funded or owned by foreigners. Where are the locals? They use free social media: Input Mpesa account details and products on a free blog, Whatsapp, Facebook, Instragram.

– Lack of proper delivery addresses: Scheduled delivery at commonly known buildings and delivery centers.

– Lack of trust from buyers about the seller:

– Privacy concerns:

– Lack of significant discounts due to taxes and other ecommmerce costs:

– Ecommerce product delivery and inventory management hurdles are also keeping Tanzanians from buying online. They preffer not to wait days for an item. Or find it sold out online when they can get it offline instantly with a few minutes drive :

These problems are the opportunities. There is still a need for proper delivery companies that will integrate with sellers to convince Tanzanians that buying online is worth it.

With banks and other financial systems getting online, a more than 50% growth means more opportunities for both foreign and local Tanzanian businesses. With relaxed laws this provides several advantages for business as there is less competition. Several years later you can expect big players to enter the market and close this opportunity ( yes I’m looking at you Amazon ).

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