While most entrepreneurs are decrying Egypt’s partial lockdown as detrimental to their businesses, e-commerce platforms, emerging as the safest shopping method, could be a winner in this unprecedented global predicament.
"What happened over the course of the last month shows that e-commerce stands a good change to grow organically in Egypt,” said Hesham Safwat, CEO of Jumia Egypt, a subsidiary of a pan-African e-commerce marketplace.
Traffic on Jumia has increased in recent weeks, Safwat said.
Along with Amazon-owned Souq.com, Jumia has pioneered online shopping in Egypt. For eight years, the Nigeria-based company has been seeking to widen its customer base by offering unbeatable discounts.
“Now things are changing. People are shopping online not for the sake of any deals but because they are looking for their much-needed supplies," Safwat said, adding, "This will allow e-commerce companies to send their investments in the right direction such as improving logistics and technology.”
In 2019, AT Kearney forecast that e-commerce would surge in Egypt at a 28 percent compounded annual growth rate (CAGR) through 2023, as more local and foreign retailers had entered the market and the internet penetration rate had reached 50 percent.
With more stores shutting down, Jumia is required to handle an overflow of vendor applications.
"We are working 24 hours a day and we managed to send many big brands on our platforms," said Safwat.
So far, Egypt has recorded 2,505 coronavirus cases including 183 deaths. To contain the highly infectious virus, the Egyptian government has imposed a nightly curfew and suspended all economic activities on weekends. However, e-commerce delivery services are exempted from these restrictions.
Smaller e-commerce businesses are also seeing a window of opportunity to grow. The Giftery.com, a nine-year-old online gift shop that targets Egyptians with deep pockets, has witnessed an unprecedented flow of users who seek to mitigate the psychological impact of self-isolation. The company’s sales have recently multiplied several folds compared to similar months of previous years.
“Egyptians like gatherings, they like to cheer people up and celebrate events,” said Sarah Aclimandos, the company’s CEO and founder. “Now that this is not possible, the best way to send love to others is through gifts.”
To capitalize on the needs of the market, The Giftery.com is also selling sanitizers, care kits, sporting goods, entertainment, cooking and baking utensils.
"People also want to entertain themselves. They want to work out and solve puzzles. They have no outlet to do that other than at home,” said Aclimandos, whose online store already has tens of thousands of active users.
According to a 2016 UNCTAD report, Egypt has the largest population of prospective online shoppers in the Arab World. However, only five percent of the country’s 30 million internet users actually shop online.
Besides cultural resistance to online shopping, companies always cite poor logistics and the low rate of financial inclusion as obstacles.
A 2018 World Bank report showed that nearly 68 percent of Egypt’s adult population is unbanked. As a result, most e-commerce transactions are paid in cash-on-delivery, which is deemed costly to e-commerce businesses. Even credit card holders prefer to pay in cash due to perceived security risks, an attitude that seems to be changing now.
“We have recently seen a surge in credit-card payment by at least 20 to 30 percent,” said Karim Atallah, The Giftery.com co-founder.
The Central Bank of Egypt has recently set a daily cap on cash withdrawals and has encouraged more e-payments, a move aimed at reducing the risk of spreading germs.
Business to business e-commerce (B2B) platforms seem to be doing well in the wake of COVID-19.
Belal El-Megharbel, CEO and co-founder of MaxAB, a B2B marketplace that connects suppliers with small grocery retailers in Cairo’s underserved areas via an app, said: “The other traditional channels that grocery stores relied on are not as active as they used to be. This has created more room for us and our application to penetrate the market," he added.
Prior to the lockdown, most of the company’s 10,000 clients refrained from using the application and preferred to place their orders over the phone or via MaxAB representatives. With the lockdown in place, the app has seen more traction.
The number of app users has doubled, and the engagement has risen by 30 percent, said El-Megharbel.
“The initial plan was to become a fully app-based business by September but it is already happening now," said El-Megharbel.
(Reporting by Noha El Hennawy, editing by Seban Scaria)
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