Social Media Dominates Online Trade for Small Businesses in Africa, GSMA Survey Reveals

In a recent survey conducted by the GSMA, an association of mobile-phone operators, insights into the online trading habits of small businesses across six African countries have emerged, shedding light on the prevalent use of social media platforms for commerce.

Contrary to the rise of Amazon-style retail platforms tailored for logistics and simplified payments, the survey found that a significant majority of small businesses in Ghana and Ethiopia (three-quarters of respondents) exclusively utilize social media for their online sales. In South Africa, the only country where a majority incorporates online marketplaces, the trend showcases a unique regional variance.

According to Mark Wensley of Caribou Digital, a research firm, many entrepreneurs kickstart their online ventures using WhatsApp. They create chat groups to showcase their products to friends, leveraging the status bar for promotions and utilizing their contacts list to monitor customer preferences. As their businesses expand, entrepreneurs often turn to broader social media platforms such as Facebook or Instagram to reach a wider audience.

The survey highlights the grassroots approach taken by these businesses, where trusted local motorbike drivers are often employed for efficient and reliable delivery services. Payment methods vary, with bank transfers and mobile money being common, but cash-on-delivery emerges as the most popular choice among consumers.

One of the driving factors behind the preference for independent online selling, as opposed to established marketplaces, is the cost factor. Entrepreneurs appreciate the cost-effectiveness of handling their online presence, as opposed to the commissions charged by online marketplaces, typically ranging from 5-20% of the sale price.

The findings of this survey underscore the dynamic and diverse landscape of online commerce in Africa, emphasizing the influence of social media as a primary tool for small businesses to connect with customers and facilitate transactions. As the digital economy continues to evolve, understanding these local preferences and practices will be crucial for businesses and policymakers alike.


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