E-Commerce In Africa: How To Deal With Lack Of Street Addresses?

By Dana Sanchez Published: November 8, 2016, 12:57 pm

In the developing world, 85 percent of new jobs are in the informal economy, according to the U.N. — that’s the economy that’s off the grid, that probably doesn’t have an address and that is thriving in African slums.

Tapping in to the buying power of the informal economy, Cape Town-based clothing retailer Foschini Group is developing innovative solutions to deliver purchases made online by its e-commerce customers living in slums, according to a report in IT-Online.

Foschini has 200-plus stores in prime shopping centers and central business districts in Southern Africa, selling ladies wear, footwear, accessories, and jewelry. It’s the second largest department-store retailer of cosmetics in South Africa.

Getting online orders to township residents where few people have a street address is a challenge requiring innovative solutions, said Robyn Cooke, Foschini’s head of e-commerce.

“It is essential that we adapt global standards of best practice to suit the South African market and socioeconomic conditions,” Cooke said.

To that end, Foschini has introduced a system called Pargo — third party collection points — and is considering drones to deliver packages bought by online shoppers who live in townships.

Customers can collect deliveries at a pick-up point close to home, choosing it as a delivery option at checkout. It’s free with purchases of 500 rand or more ($37.60 US). A map allows shoppers to choose the most convenient pick-up point for their parcel. Once the parcel arrives at the pick-up point, a text message is sent to the shopper saying it’s there.

“We are also looking at innovative deliver-to-me options, leveraging geolocation services like Uber does to avoid the need for specific street addresses,” Cooke said, according to IT-Online.

With a huge diversity and density of cultures and people, African slums are producing a type of innovation that goes beyond people just eking out a living, says Fernando de Sousa, general manager of Microsoft Africa Initiative. They’re becoming economic powerhouses, de Sousa said in a CNBCAfrica interview. Read more in this AFKInsider report.

The number of people living in informal settlements around the world is predicted to grow from 860 million today to more than 900 million by 2030, according to City Metric.

Sub-Saharan Africa has the highest rate of slum dwellers of any major world region, with over 60 percent of the urban population—about 200 million people—living in slums, according to U.N.-Habitat.

Slums are characterized by some combination of overcrowding, tenuous dwelling structures, and poor access to water and sanitation, said Sean Fox in a 2014 study, The Political Economy of Slums: Theory and Evidence from sub-Saharan Africa, published in World Development.

Cooke expresses certainty that drones will work well for delivering packages in this environment.

“We believe (drone delivery) will happen at some point in South Africa,” Cooke said. “It’s going to take a while to iron out the legalities, and will be driven by emergency medical requirements and the like. But it will happen at some stage in the next five years for smaller, easily transportable items.”

The Kenyan government recently said it plans to spend Sh2.8 billion ($28 million US) naming all roads, and assign numbers to all buildings and parcels of land, Standard Media reported in late October.

Creating street addresses will play an important role in transforming Kenya into an e-commerce hub, said Sammy Itemere, a spokesman for the National Addressing System being developed by the Communications Authority of Kenya.

This is the second time Kenya is attempting to develop such a system, after a failed attempt between 2008 and 2010 when it only managed to pilot the system in Nairobi, Standard Media reported.

The system will enable Kenyan authorities to pinpoint where every Kenyan lives and works. It will also benefit the Kenya Revenue Authority’s tax base.

“The system will make it easy for them to easily identify businesses and their precise locations,” Itemere said.  “Online retailers will now be able to offer door-to-door deliveries, cab hailing services will be able to locate their passengers with more precision, while food deliveries and supermarket grocery shopping will be made a lot easier.”

The U.N. estimates that 70 percent of the world is unaddressed. “Addresses are more than just a place where the post goes,” said Charles Prescott, founder of the Global Address Data Association, in a Wired interview. “It’s an indicator of who you are. It’s a tool people use to distinguish human beings.”

Applying for a job or a bank account without an address is almost impossible.

U.K.-based What3words and other geocoding companies are trying to solve that problem.

What3words overlays the planet with a grid of 57 trillion plots of cubicle-sized land, and uses an algorithm to assign each one a three-word phrase — much easier to remember, the company says, than numbers.

Addressing Homes uses a grid-based, numerical address system for people in Liberia. Addressing the Unaddressed creates alphanumeric address codes for people living in Calcutta’s slums.

In June, global shipping provider Aramex led a $8.5-million round of funding for What3words, and it plans to use the system to fulfill e-commerce orders in the Africa, Middle East and Asia, according to Wired.

Urban underdevelopment offers myriad opportunities for political and economic entrepreneurs, Fox said in his study, The Political Economy of Slums:

Urban underdevelopment has proven very profitable for a range of actors in African cities, resulting in the emergence of a broad constellation of status quo interests opposed to investment and deep institutional reform.

The proliferation of slums in sub-Saharan Africa in recent decades is de facto evidence of government failure to invest in urban development. But history is not destiny. As Africa’s urban population continues to grow, politicians are increasingly likely to find it in their interest to address the basic needs of urban residents. And if they are committed to stimulating economic growth and diversification they will need to do so.




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