The growing social commerce landscape in the African region

The growing social commerce landscape in the African region

The growing social commerce landscape in the African region

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Social commerce has grown to become a critical sales channel for businesses, especially in emerging markets, such as Africa. In 2021, social media platforms, such as Facebook, Instagram, and WhatsApp, suffered a major outage, which left businesses completely high and dry. Notably, a major portion of their orders is received through social media platforms. Consequently, when these channels were down, businesses had zero orders, reflecting how relevant social commerce has become in the region. For instance,

  • La Boul’ Accra, a local bakery and pastry shop, experienced a wave of panic firsthand when WhatsApp services were disrupted in 2021. Notably, the bakery did not receive any orders on the day, as compared to 60 - 70 orders it receives when WhatsApp functions normally.

Notably, local businesses have started to invest in e-commerce capabilities to reduce their dependency on social media platforms. To assist such businesses and help reduce their dependency on Facebook, Instagram, and WhatsApp, innovative startups are emerging in the region. For instance,

  • Bumpa, a social commerce startup based in Nigeria, allows merchants and small business owners to set up e-commerce websites without the need for any programming skills. The firm lets merchants set up an online store, accept payments, manage inventory, fulfill orders, track sales, and engage customers.
  • To further provide merchants with more social commerce tools, the firm also raised a US$4 million funding round in October 2022. Notably, the seed funding round was led by Base10Partners and included participation from Jedar Capital, Magic Fund, E62 Ventures, and Fast Forward Ventures, among other investors.
  • The firm has onboarded more than 50,000 merchants and has a product catalog of over 400,000. Bumpa is also planning to expand and scale its business in more African markets over the next few quarters.

With the growing social commerce market in the African region, more players in the space are raising investment from venture capital and private equity firms. For instance,

  • In March 2022, Tushop, a Kenya-based social commerce startup, also announced that the firm had raised US$3 million in a pre-seed funding round. Notably, the firm operated with a group-buying business model, thereby allowing community leaders to collect orders from the neighborhood and supporting last-mile deliveries. The pre-seed round was led by 4DX Ventures, and the firm planned to use the funding for expansion across Nairobi.

Along with fundraising activities, mergers and acquisition deals are also projected to grow amid the current macroeconomic environment, and these trends are already reflected in the African market. For instance,

  • In August 2022, Elloe, a conversational e-commerce startup, announced that the firm had acquired Flo by Saada, a Kenya-based social commerce startup. Notably, the acquired startup enables merchants to build conversational commerce solutions. This acquisition will further expand the social commerce capabilities of Elloe.

Over the next few quarters, PayNXT360 expects these trends to further continue across Africa. As more and more merchants turn to social commerce, startups are expected to scale their business in new markets, and therefore, will be required to raise capital to support their expansion plans. This will create investment opportunities for global venture capital and private equity players that are looking to capitalize on the growing social commerce landscape in Africa. 

To know more and gain a deeper understanding of the social commerce market in Africa, click here.

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