E-Commerce Sector in Ghana: Zoobashop, Ghana’s Premier Online Retail Store

Interview with Albert Biga, Founder and CEO of Zoobashop

What is your assessment of the e-commerce sector in Ghana? What are the latest trends?

This is a conversation that I have quite frequently. It usually centers around what happened in North America in the early 2000s where all you needed to do was register a company with “.com” at the end and you would raise easily 5 to 20 million in venture capital because everybody saw the future of tech in e-commerce. We are seeing, while not as crazy as North America, a bit of that trend in how bullishly people are investing in e-commerce in our part of the world. A lot of people find it a little strange that almost ten years ago, there were no e-commerce companies in most of sub-Saharan Africa, with the exception of South Africa. Then, all of a sudden, all these e-commerce companies came up. The reason is simple: ten years ago, we had several challenges that made e-commerce almost impossible. One was that income levels were very low so most people were concerned with “bread and butter” issues and not necessarily things that you could purchase online. We have poor infrastructure in roads, etc. Connectivity was still an issue ten years ago in most of sub-Saharan Africa. It has not gone away even today, but it is improving. Payment gateways did not exist before. In fact, as recently as five years ago, you struggled to find a third-party payment processor who would agree to process payments for you online in sub-Saharan Africa with all the perceptions, misplaced though they were, of fraud. Those were the issues that inhibited the setting up and the growth of e-commerce within the region. A lot of these bottlenecks have been largely cleared and connectivity has improved a great deal, income levels have gone up, customers have gotten a lot more sophisticated than they were before. We are starting to see a lot more new devices such as, MID, smartphones, laptops in the hands of more people in sub-Saharan Africa. Those are also the variables that invariably will propel the industry going forward. I have no idea empirically what the industry is worth now, but if I were to hazard a guess, e-commerce in sub-Saharan Africa is worth probably 10 billion and it is estimated to grow to almost 30 billion by the end of 2020. So, these are interesting times for the industry.

How is the competitive environment here in Ghana?

We are a well-run company. The team has a good mix of tech and business people. That gives us a big edge in the market.

The first thing to understand is that all e-commerce players put together are probably not even scratching half the percent of what the industry is worth. So, the question of competition has to be put into context. There is a lot more growing and education that all of us as e-commerce companies need to do to carry along a large band of the retail operations onto our channel than there is fighting amongst each other. In 2016, we sampled 2,000 university students across a number of tertiary institutions and we found some startling numbers. For example, less than 40% of the people sampled knew that a red asterisk on an online form to be filled out meant it was a mandatory section. That explained why we were having so many abandoned carts because people simply did not know what to do. These are not illiterates. I have people reach out to me asking how to shop online when on our site, it says very simply, “click to buy.” You click, you put in your details, order complete, and it gets delivered to you. So, there is a lot of learning to be done. I see a lot more scramble and competition for who gets to take the customers and help them be able to maneuver online than there is between us. That said, there are a few companies around that are playing the price game. First, it is not sustainable long-term and secondly, it stands to reason that if the person is just a bargain hunter, then they are not necessarily loyal to you. What are you selling? Are you just selling price? It means that the next company that comes along that is cheaper than you will be where the customer will jump. We at Zoobashop like to focus on service. Our number one value proposition is awesome service that we give to our customers. Second is product durability. We invest a lot of time in the selection of our vendors. We do not just pick any vendor because ultimately that is what determines what kind of products we sell on our side. These points are in addition to things that are shared with other online players like convenience, delivery to your door, product variety, etc.

How do you stand out and what are your key competitive advantages?

Firstly, is service. It is a big deal for us. Especially online, where you almost do not have a touchpoint to the customer, service is very important. A lot of other players downplay it, especially those who are playing the bargain game, who want to be the cheapest. We are not in that space. We are in the space of providing awesome online shopping. Firstly, for every single order that hits our system, the customer gets a confidence boosting phone call to say that we have received their order, how many items, payment method, delivery location and time, etc. We engage the customer and that is the touchpoint that makes the customer feel special. It is a known fact that when you go e-commerce or online, potentially you risk losing that touchpoint, but we make sure that that touchpoint is still there. After the order has been delivered, we sample a number of the completed orders and check on how the product is doing and if the client is happy. In cases where customers are unhappy with a product, we allow them to return the product for a full refund within seven days. Service is our number one advantage. Another advantage we have is that because we are not hired guns, we as founders understand the business and we have grown it from day one to where it is now. We have not gone crazy spending money that we do not have. We are quite a lean operation which means that we can pass on savings to our customers. More importantly, when we start talking to investors, it is a big asset for many of them that we are not a company that has just racked up debt and burned cash like a few of our competitors do. We are a well-run company. The team has a good mix of tech and business people. That gives us a big edge in the market.

In the US for instance, some of these companies are completely digital. But funnily enough, sometimes, people are less inclined to pay the same price when one is digital and one is not. Some companies went back to brick and mortar from e-commerce for the people to get a feel for the product. Is this something that can happen here or is happening? Are you interested in pursuing this?

I have heard this argument a number of times and there is no credence to it. People point to companies like Amazon buying brick and mortar stores. Put it into perspective. Amazon is seeking to grow their business and note that they are growing their business in areas where online has no play currently. Amazon did not buy an electronics store or a mobile phone store, they bought fresh foods. This is an area that had not done well on Amazon so they were basically acquiring the whole network to be able to play in that space. They are considering buying into pharmaceutical which is also a completely different space. By that, Amazon is not necessarily saying that they need people to touch and feel products, they are simply saying that there are some products that do better physically than they do online. For every other product, there is Amazon. Hence, the reason for those acquisitions. It is not the case that Amazon is admitting that digital is failing and they are coming back to brick and mortar.

What is your international outreach? Are you playing only in Ghana or do you have an intention to go further?

Originally, when we launched, West Africa was our focus. We have made advances in Liberia and Sierra Leone. Interestingly, we have some partnerships or potential partnerships we are exploring in Rwanda, Tanzania, and Kenya. We do have interest in expanding, and a lot of it is in the works currently, some of which I am not in a position to disclose because we are in the middle of negotiations and conversations.

Is this a necessary step for you or can you stay in Ghana? Ghana is at the moment 90% or more of your business.

There are two reasons why it makes sense to expand. One is that Ghana is only 26 to 28 million. In my own crucible, what will happen in the e-commerce space is similar to what happened in North America in the late 2000s. Lots of e-commerce companies at some point started to merge, they were acquired, or they collapsed. It will play out the same way here. So, while we want to expand outside of the country, we will not rush just to expand. The key thing is that in whatever markets we play, we need to make sure that we are a big player in the market so that when the mergers and acquisitions start to happen, we are a credible partner within the space that we play. The second consideration is that as a tech company, we own the platform that we use. That is an asset. That enables us to reach out to other countries, find partners who are in country, leverage our platform that we have already invested in, and go into some kind of partnership and play in those markets. So, those expansions are a natural progression considering that we own the platform. We need to take caution with expansion to make sure that we are not just spreading ourselves thin.

For all these projects are you looking for investors? Are you open to partnerships?

We are looking for partnerships, investments, all kinds of conversations are ongoing with that. Obviously, we want to expand and to expand you need investment. But, our choice of potential investor or our preference is one that we can leverage more than just cash, that we can leverage some technical knowhow, some industry experience, maybe some retail distribution experience.

Are you also looking for technological improvement?

Technology is important and that is probably one of the things that is a challenge for every tech company because technology moves really fast and you need to keep up with the times. But, fortunately, we are a tech company. We understand technology. Especially now, you do not need to necessarily have all the technical skills to be able to develop and/or run a platform. I have some young developers developing small add ons for me from university, I have developers in Belarus, I have developers all over. Basically, we coordinate all the work that these developers do. Because we understand the space, access and technology are not such a big deal.

What are your current challenges?

HR is definitely one. It is not particular to us as a business and the tools and the channels that we use for our business are all very new, so finding people who are skilled at those tools is a bit of a challenge. The other challenge would be regulatory issues, which we cannot do anything about. Globally, technology or technology investments precede regulations. Typically, what happens is that once technology has advanced beyond a certain point, then regulation needs to play catch up. When there is a bit of a disjoint in the conversation it gets a bit difficult. Invariably, once regulation comes into play, people understand your business and they are able to provide, be it government or private players, some kind of support to your business.

Project yourself into the medium term, three years’ time. What is your mission? What would you like to have achieved?

We want to be a key or big e-commerce player within the subregion. We envision this will happen in three to five years. We expect that there will be lots of mergers, acquisitions, and buyouts, some friendly but some not. We want to be uniquely placed when that play happens. For example, if there is any big player today that wants to aggregate e-commerce companies from West Africa today in Ghana, we are a player no one can ignore. That for us is very important.

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