Growing Egypt’s e-business and online shopping

Egypt is 12th in the world in investing in e-commerce, and by 2020 its e-commerce market will have almost doubled its 2014 figure to reach $2.7 billion, according to the State of Payments report produced by the payments agency Payfort.

“There is a lot of e-commerce potential in Egypt,” said Nahd Azab, an assistant professor of business at the American University in Cairo, adding that a “wave of entrepreneurship” is sweeping the Internet.

Over 50 per cent of Egypt’s population now has access to the Internet, ranking the country 14th in Internet use globally. Its young people are heavy users of the Web in the Middle East and North Africa region. According to eMarketer, a market research agency, 70 per cent of Egyptians aged 15 to 35 spend more than three hours every day online.

When it comes to Egyptian online shoppers, 50 per cent are aged between 26 and 35. “The percentage of Internet users who have shopped online has increased from 1.4 per cent to 8.7 per cent since the 2011 Revolution,” Azab said.

Young people are not only buying on the Web. They are also profiting by creating innovative online opportunities, something that is more necessary than ever since, according to the US magazine Forbes, Egypt has the fifth-highest unemployment rate in the world.

Dana Khater started her online business in Egypt when she was 19 years old. Now 22, she manages an online fashion store that helps designers be part of the fashion scene by providing them with a gateway to sell their pieces.

“Coterique.com is an online platform to discover emerging designers,” Khater told Al-Ahram Weekly. With just a few clicks on Coterique.com, consumers can buy items from designers in New York, London or anywhere in the world.

Over 3,000 Egyptians made online transactions in 2015, reports the Egypt Business Directory. Online purchases are expected to more than triple this year despite the moderate overall e-commerce penetration rate in Egypt at 3.4 per cent, according to the Global Entrepreneurship Library, a research publication.

The rate is low presumably because people are still sceptical about making online payments. “They think it’s untrustworthy and insecure,” Azab said, commenting that Egypt still has a largely cash-based economy.

In 2011, only 10 per cent of people over the age of 15 had bank accounts. “There are still less than two per cent of Egyptians who have credit cards,” Azab said.

Cash on delivery is the preferred method of payment among online shoppers. Eighty per cent of online consumers prefer this over credit or debit cards, according to the Payfort report.

“Only 10 per cent of those who make purchases on knockmart.com pay by credit card,” Ahmed Taher, co-founder of Knockmart, said. Taher founded his business with partners Omar Abbas and Hesham Hashish as an online grocery store that provides supermarket items including bread, fresh produce, and poultry and meat products.

Knockmart was the first online grocer in Egypt, beginning operation in late 2014. The idea of an online grocery was new to Egypt at the time, but in Britain ocado.com was founded in 2000.

“I no longer go to the supermarket. I buy my groceries from knockmart.com,” said Doua Suleiman, a mother of three and marketing director of Knockmart. “It takes 60 minutes to deliver, and I can buy items in any quantity,” she added.

Another online business in Egypt that is benefiting both working housewives and housewives who want to have a second source of income is yumamia.com. Belal Al-Borno founded Yumamia with business partner Mahmoud Al-Maghrabi to help women who have a passion for cooking make extra money by being Yumamia cooks.

“We provide meals for those who don’t have the time to cook. Consumers can quickly log in online and order home-cooked dishes like mahashi and molokheya done by one of our cooks and have it delivered to their doorstep,” Al-Borno said.

Yumamia picks cooks according to the taste and quality of their food, and examines all kitchens for cleanliness and hygiene.

By simply paying by credit card and not worrying when the deliveryman will show up to collect the money, e-commerce makes it easier for people to make online purchases. It’s simpler for the consumer to pay online, and it’s also simpler for businesses, Khater said, commenting that she would not want deliverymen handling large sums. “It isn’t safe,” she said.

“We know Egyptians aren’t fond of making online payments, so we provide cash on delivery,” Al-Borno added.

Creating a website is not overly costly. It costs about LE2,500 and maintenance is about LE500 a year.

“Marketing costs are the biggest challenges for online entrepreneurs,” added Azab. Finding qualified employees was one of the challenges that faced Taher when he started his business.

Slow Internet connections contribute to the slow e-commerce penetration rate in Egypt. The country came last on a list of 31 countries for having the slowest Internet speed after India and Nigeria, according to a report by We Are Social, a research group.

A Payfort report shows that electronic products were the most-purchased item among on-line purchases in Egypt at 17 per cent, followed by airline tickets at 16 per cent, and fashion items at eight per cent.

Reliance on the Internet for conducting business is also increasing daily, whether it’s for making or for transacting money.

Source: Ahram Weekly