Tanzania flourishes as new market for e-commerce

The newly-established delivery app industry in the country is serving up old business in a new format, diversifying the e-commerce market and driving consumer behaviour beyond COVID-19 pandemic.

At the time, the country also fell victim to the COVID-19 crisis in March 2020, the home delivery application, Piki Tanzania, which was still new and the only established app of its kind in the coun- try, became the only way some restaurants were doling out their services.

“I think a lot of people took that decision to stay at home and avoid con- tact. So, we suddenly realized how important we were becoming,” said Zadok Prescott, former CEO of Jumia Tanzania.
At the end of November 2019, Jumia, Africa’s leading online retailer known as the ‘Amazon of Africa’, had shut its e-commerce operations in Tanzania in a review of its portfolio.

Ironically, since the beginning of 2020, in the very market that Jumia exited, multiple e-commerce platforms suddenly sprung up, from food and grocery delivery apps to ‘online malls’ that sell commercial goods, besieging a market still relatively new to online shopping and dining. With the novel COVID-19 crisis, the role these platforms played in the lives of lo- cal businesses changed almost overnight. Piki surely has an advantage in the country with its reliable infrastructure and experience, but the commissions are not reasonable, said Hussein Hamadi, the owner of Levant restaurant in Dar es Salaam. He would rather people came into his restaurant because this is part of the service he wants to offer. Sidiqua Versi, co-owner of the Central Park Café, an American-style café and children’s park, agrees the delivery and commission fees are not reasonable for all, and individual delivery is far more financially sustainable, but an app like Piki is reliable and she would rather keep working with them to use
their customer base and keep her service time lyand efficient. However, she has noticed customers opting for cheap- er options and more players foraying into the market with unique business models. Duka.direct is an online grocery delivery service that runs on a platform created by Selcom Tanzania, a digital payment system developer that also saw a very quick change in consumer behaviour when COVID-19 gripped the country.
“The adoption was a lot faster than we had expected and we even had to accelerate deployment quite rapidly,” said Sameer Hirji, Executive Director of Selcom.
It is planning to expand to a range of services to include restaurant food delivery, as well as connecting to businesses selling electronics, pharmaceuticals and other items, eventually throughout the region.
However, its approach is not only controlling the supply of products, but in the long run, seeing itself as more than just being a customer experience and service provider.
“We’re thinking like a financial services business, but using consumer goods and services… We want to hopefully one day make e-commerce extremely mainstream and as a result, for the common man, who previous- ly couldn’t afford maybe cheese, because it was marked up at like 30 per cent at a supermarket, to be able to access those premium products and consume them more readily and rapidly,” he told ‘Business Times’.
He hopes to eventually pi- lot using Selcom’s widely-used payment agents to act as sales and pickup points, as well as introduce lending on the apps to allow customers to buy goods
by borrowing from banks Selcom has relationships with. According to him, least initially, Duka.direct can be a stand- alone business, not making much profit. But it needs to be part of something bigger that can feed it, and then continuously grow it… Hirji thinks that raising awareness and giving back value is where they see the market going,” he adds. The biggest problem the plat- form did face during the time was running out of space and lo- cal suppliers who were not able to keep up with the demand. ‘’That right image in the mar- ket matters in terms of what the delivery, the last mile, looks like and to a great extent the optics it presents in the market in terms of brand and professionalism,” says Hirji.