Dubai-based Mara Group is launching an Africa-wide online marketplace that it hopes will become the leading e-commerce business in Africa within less than four years.
Ashish Thakkar, founder of Mara Group and the executive chairman of the new venture, describes it as “a marketplace for global brands to plug into to sell locally in Africa, and for local brands to sell nationally, regionally and globally.”
Called Mara Sokoni, the platform is scheduled to launch in 10 countries, including Nigeria and Kenya, early in 2016.
Thakkar expects to rapidly roll out the service across Africa. “We will be in every country on the continent within the next three-and-a-half years,” he told WSJ Frontiers during an interview last week.
Thakkar was in New York with Christian Unger, CEO of Mara Sokoni, to raise capital for the venture. “We’ve self-funded the development to this point,” Thakkar explained, “but now we’re looking for $100 million investment” to fund the initial roll-out.
Mindful of the challenges in delivering products to consumers across the continent, Mara is also setting up a shipping company, Mara Xpress. “One of the big challenges in e-commerce on the continent is that last-mile logistics is a big bottleneck,” Thakkar said. “Mara Xpress will provide that last-mile delivery service.”
The potential market for e-commerce in Africa is huge, according to McKinsey. In its November 2013 study on the potential growth of internet use in Africa, the consultant suggested online retail sales across the continent could reach $75 billion by 2025.
Recent developments have clouded that outlook slightly, though. According to a report on the African retail sector by consultant AT Kearney, slowing growth in China and lower oil prices are putting pressure on the economic growth across the region that retailers have been expecting to feed into stronger consumption.
“For the many countries still heavily dependent on oil and gas income—such as Nigeria, Angola, and Mozambique—middle class growth has slowed,” the consultant says. “Perhaps more important for retailers, formal trade remains quite limited in nearly all markets,” it adds.
According to the AT Kearney report, Nigeria, with its sizeable population, growing upper and middle class and rapid economic growth, still offers considerable promise for retailers.
The consultant also notes that Nigeria has a “burgeoning online retail scene”, which sets it up as a natural choice for Mara’s early efforts to establish its online marketplace.
Unger said he hopes the Nigerian operation will “showcase that we are able to develop momentum, to get customers.”
But Mara’s new e-commerce platform will be going up against well-established and popular competitors, including Jumia, Konga, OLX and HouseholdMax. Another site, Mall For Africa, already acts as a marketplace for foreign brands, World Street Journal Reports.
Thakkar believes Mara Sokoni takes the marketplace concept further than the established products: “This will be the first two-way marketplace, global to local, local to global and local to regional. We are a true marketplace.”
Getting the logistics right will be crucial, Thakkar admitted. Headed by Charles Brewer, former managing director of courier DHL Express’s sub-Saharan African operation, Mara Xpress will take a grass-roots approach to developing its delivery network, Thakkar said.
“We’ll be training entrepreneurs, using people-owned fleets, [building the network] in a simplistic way but leveraging off technology with a team who really understand the continent and logistics,” he explained.
Unger anticipates that the model Mara Xpress is developing will sharply cut the cost of delivering packages across Africa. “We believe we can push down costs from an average $18 per parcel currently to around $8,” he said.
With its plan to cover the entire continent within four years, Mara Sokoni’s current effort to attract funding is unlikely to be its last. “Probably by the end of next year, when we go into up to 16 or 18 more markets, we will do another capital raising,” Unger said.