Scaling e-Commerce in 2022 & Beyond

If we have learned one thing from last two years, it’s that things can change in a blink — changes that we thought we had years to prepare for, and trends that we expected in the next 3 - 5 years have been accelerated by the pandemic.?

In essence, the crisis is compressing a half-decade’s worth of change into a few months - and in areas that are typically slow to evolve: customer behaviour, economic models, and payment systems. As with most structural shifts, a degree of reversion to past behaviour is likely, the overall trajectory for these trends, however, have received a strong push forward.?

The digital retail economy is one of the sectors that has experienced accelerated growth and adoption during this time.? Immediately, the public health restrictions to contain the spread of the virus were introduced, businesses and consumers significantly went digital — supplying and purchasing more goods and services online.?

Consumer behaviour has also shifted. When brick-and-mortar legacy institutions started closing down, consumers became increasingly more apt to seek out alternatives in everything from groceries to finance, online.?

This spike in e-commerce has not only raised the share of the global digital economy, but has also contributed to mitigating the economic fallout driven by the pandemic.?

United Nations Conference on Trade and Development (UNCTAD) report, estimates that e-commerce’s share of global trade has grown from 14% in 2019 to about 17% in 2020 bringing significant benefit in the ecosystem.

In Kenya, e-commerce is experiencing a moment of exciting change.? Granted that online transactions were witnessing steady growth before the pandemic, Covid-19 has been the ultimate catalyst in the growth of e-commerce as businesses around the country pivot to digital outlets to sell their products and services.?

This has seen the global rise of eCommerce and has facilitated the growth of cross-border sales where consumers are able to buy products that are not accessible within our borders. A similar trend is also seen locally where retailers today are even supplying remote rural areas.?

This is all thanks to the? availability of online payment infrastructure, with payment gateways providing solutions for e-commerce players to accept payments online; as well as flexible payment terms by merchants who often accept cash on delivery as payment option.

Unsurprisingly, this surge in e-commerce and growth in online transactions is sending shock waves across the retail industry. This has been followed by a sonic boom that is reverberating across the fintech sector. The intersection of ecommerce and fintech is a sweet spot for businesses today.

Effectively leading to a significant growth in the volume of digital payments and the need to create greater value in the commercial ecosystem.?

For players in the fintech space, the prospect of scaling e-commerce opportunities and driving financial inclusion makes a compelling case for examining the steps towards an enabling environment for e-payments and solutions necessary to fuel e-commerce in 2021 and beyond.

First, it has created an opportunity for disruptive innovations. With rapid demand for seamless and secure transactions, payment service providers have to constantly innovate to create a better payment experience for buyers while guaranteeing merchants simple and secure transactions.

Secondly, it has fuelled the need to expand and promote access and use of financial services to achieve a balanced economic growth. Every effort should be channelled towards expanding e-commerce to the countryside.??

Market integration through online trading platforms can have a broad and significant rural development especially in key sectors like agriculture.?

Fostering financial inclusion as individuals and businesses interact in the economy via the payments they make to each other through different instruments and channels.

Critically, will be the need to develop solutions that are easily accessible on mobile phones as part of expanding and enabling e-commerce toward underserved segments of the society.?

In Kenya, with a strong mobile money usage and a high mobile penetration rate, we are better placed to ramp up penetration of digital payments and volumes of transactions.?

Finally, drawing from our experience in Kenya, as e-commerce grows, so will the demand for products and services to manage the flow of payments from customers to merchants on the back end. Fintech players should keep innovating to meet these demands.?

The structural shift to digital commerce driven by the Covid-19 crisis is likely to continue in the years to come. The onus, therefore, is on players in fintech to create viable long term solutions.?

At Pesapal we are committed to bringing to market solutions that will play an important role in enabling and accelerating e-commerce innovation and growth across Africa.?

With multiple mutations of coronavirus, the future may be a little uncertain, but with innovations in payment systems, the future of e-commerce is far from bleak.?