When we see on TV and in movies that Africa is a third world country, one would be sure to understand that a third world country would be slow to embrace some high-level form of transactions. But it can be said now based on statistics that Africa is one of the top continents that embraced Gift Card Supply and trading, with over half of the transactions coming from Nigeria, Kenya and South Africa in the past 3 years.
The impact of Gift Card Trading on Ecommerce in Africa can never be overlooked this time as it now amounts to one of the most popular orders of the day, with E-commerce increasingly disrupting the retail industry in Sub-Saharan Africa.
The Statistics
The United Nations Conference on Trade and Development (UNCTAD) reported that the number of online shoppers in Africa surged annually by 18% since 2014. The rapid Internet penetration through smartphones over the past decade largely contributed to the growth of Africa’s e-commerce.
The International Telecommunication Union statistics also revealed that the share of the population using the Internet increased from 2.1% in 2005 to 24.4% in 2018.
Gift Card As An Alternative Payment Option
As known, gift cards, in general, are more like money in digital form. They hold money values but the only difference is that it can only be spent in the store whose brand produced the gift card. For instance, a $100 amazon gift card can be used to make a $100 purchase on the Amazon website. Alternatively, for instance, some people choose to sell off their google play gift card to dropshippers if they do not need it, which makes it a big win-win for both parties.
Furthermore, Africa’s payments services architecture is evolving in response to changing customer expectations and technology, offering a range of disruptive payment models enabling more people, even without a bank account, to take part in online shopping.
The Impact Of Gift Cards On Ecommerce
In several African countries, e-commerce is used to extend retail services to small towns and the rural population, where there is a limited choice of goods available. Retailers are increasingly leveraging on technology to drive sales and to better engage with customers.
Statistics portal Statista reported that the total value of e-commerce in Africa reached $16.5 billion in 2017 and is expected to reach $29 billion by 2022. Now with the advent of Gift card trading, e-commerce platforms would be seeing a surge in purchases.
The strong growth in the e-commerce sector primarily supported the overall gift card industry during 2020, and it is vice-versa, a trend expected to continue over the forecast period. Increasing smartphone penetration and consumer’s inclination towards online shopping has positively impacted the e-commerce sector. In South Africa, for instance, the growth in the e-commerce market is one of the factors driving gift card market growth in the country. With growing online sales the spending on gift cards is also likely to increase in the country.
The gift card market in Kenya recorded substantial growth in the last few years. As one of East Africa’s largest economies, technological advancements in the payment industry widened the scope of the gift card market in Kenya. The market growth has been primarily backed by the rising adoption of gift cards by the millennials and Gen Z consumers, expansion of the retail sector, and growing inclination towards cryptocurrencies.
Consumers are widely accepting alternative payment options such as mobile wallets and electronic money transfer, instead of cash. The presence of the international brands in the Nigerian mobile payment system such as Visa with mVisa platform makes the mobile payment system more competitive. Moreover, it is expected that the global economic slowdown is unlikely to affect Africa’s economy and the gift card market in the coming years.
The demand for gift cards is also increasing as we now have more dropshippers springing up because they can now use discounted gift cards to make purchases which proportionally means more profit for them. The trend of converting gift cards into cash on websites like Cardtonic is also gaining popularity among Nigerians.
Cryptocurrencies and gift cards are driving the remittance market in Africa, and more specifically in Nigeria. Key players such as Cardtonic allow Nigerians to trade gift cards offered by domestic and international players such as Konga or amazon.
In conclusion, the relationship between gift cards and ecommerce is symbiotic as one will always benefit from the other. If the trend continues, both industry will be having a big boom in the coming years, and this indirectly will be of big help to the African economy in general.