As B2B companies like TradeDepot, Wasoko (formerly Sokowatch), and even Jabu prove, B2B ecommerce has become the darling of digital commerce funding venture capitalists in Africa. Entrepreneurs see B2B commerce as the road to Africa’s informal markets, and VCs are placing bigger bets on those hopes. But, the road—literally and figuratively—to tapping ecommerce’s potential, by doing business with the African street retailer, is almost as bumpy as the road to the consumer’s door.
The informal retail sector in Africa is the part of the economy that is not regulated, protected or taxed by the state. The sector is characterised by the strong presence of ‘spaza shops’, which are shops operating in a section of a residential home or on a stand. The business practices of spaza includes traditional retail but also basic financial services. It embraces all sectors, ranging from manufacturing, to retailing, to financial services. In Africa, where 90% of retail sales still happens via the informal sector, developing solutions to improve logistics infrastructure and supply chains, as well as secure payment transactions, is key.
Such informal businesses are often left behind by digitisation, however growing numbers of B2B ecommerce startups are bridging the gap. Betting on the improved connectivity and the rise of mobile ownership to digitalise the informal sector, they are opening new retail and payment opportunities to businesses and consumers in Africa.