Foreign investors are increasingly involved in the West African market, thanks to its economic potential and new business possibilities. The region has some of the largest economies in the world, with a consumer base that is expanding quickly due to a growing demographic.
Despite its large consumer base, the region has witnessed some notable setbacks in its e-commerce sector. In 2021, MallforAfrica shut down its operations in Nigeria and Glovo and Jumia Foods also ceased to operate in Ghana between 2023 and 2024. Due to the volatility of the e-commerce market, we’ve highlighted steps international investors must take to avoid failing in the sector.
Market Segmentation
West Africa is diverse and has a wide range of consumer tastes, which is calling for a more complex classification method. Demographic factors like age are important when dividing the West African market into segments. Since the average age of people in many countries is in their youth, ensuring that products and services meet their needs is a good idea.
For example with nearly 70% of the Nigerian population being less than 30, it’s a sports-centric population that readily welcomes technological advancements. This, in turn, makes one of its thriving industries the online sports betting and casino market. This market is projected to reach $254.50 million in 2024, with Ghana also anticipating up to $26.04 million in the same year. Potential e-commerce investors can emulate this market as a constant that operators use to appeal to the youthful demographic is the use of promotional offers. The operators typically allow users to play for free with bonuses before playing with their funds. It’s common to find sportsbooks or casino sites offering free spins and cash bonuses to users, letting them play their best real money slots with no deposits.
Conduct a Market Analysis
West Africa has several varied economies, which have different degrees of development and stability. It is necessary to research their distinctive characteristics to develop an effective business strategy. The region has both high-income and low-income countries in terms of their economies. Côte d’Ivoire and Ghana, for instance, have experienced stronger economic growth than most, whereas Senegal and Nigeria are struggling with inflation and high unemployment rates.
The developmental differences must be considered before delving into the e-commerce sector of a certain region. For example, some countries have better transportation, phone and utility networks than others. Taking this into account gives a potential e-commerce investor much-needed facts before setting up.
Evaluate Market Potential
Market size and competitive dynamics are two of the most important factors when estimating the demand for your e-commerce products or services. With an expected growth rate of 11.31 percent from 2022 to 2027, the business market in Western Africa is forecast to reach US$5.13 million in 2027.
In terms of competitive dynamics, it is essential to research how well competitors have been received and the steps they may have taken to increase their appeal. Similarly, the real estate markets in Ghana and Nigeria have a great potential for investment and growth. It is essential to divide the market into groups based on demographics, location, and psychographics to learn what customers want.
A Potential Gold Mine
The West African e-commerce market, when properly maneuvered, can be a pot of gold. However, investors must deal with navigating the market by taking into account the factors discussed. This will ensure they avoid pitfalls suffered by some predecessors.