19/07/2018. Echoing our 2017 e-commerce survey, we share with you today the results of the 2018 version of this study. It was conducted in the field by our team of investigators who interviewed 1,289 people in Antananarivo.
Table of contents
- An increase in e-consumers
- Sustained satisfaction
- Refractory to e-commerce
- Conclusion of the 2018 e-commerce survey
- Quick diagnosis and conference-debates
- The opportunities of e-commerce
- A national switch, the end of the tunnel?
- Other conditions for successful e-commerce
- Annex: the modus operandi of the study on e-commerce 2018 in Madagascar
An increase in e-consumers
In November 2017, only 1 in 10 respondents said they had already made at least one online purchase. In 2018, this category now includes more than one person in three (35%).
What’s changed? Quite simply the explosion of “shop” pages on Facebook, a media that is easily accessible both in terms of cost (free with most telephone operators) and usage. They are thus 95% to have made their purchases on this social network and only 2% to have done so on a Malagasy website (3% on a foreign site). However, Facebook’s e-commerce tools are not used (payment, invoicing, etc.) and we are left with DIY: only the connection and the order are made online, payment is then made only on delivery and generally in cash. It is at a point where we would like to talk more about wild e-commerce rather than e-commerce in the true sense of the word.
The goods most purchased online are unsurprisingly clothing, with half of the respondents admitting to having bought dresses, trousers or shoes online. Another 36% have already bought high-tech products such as a smartphone or computer. On the other hand, those who use the Internet to buy home products (furniture, decoration, etc.) or food products are in the minority.
Finally, the most common range of expenditure is between 20,001 and 100,000 Ar, where 53% of the amounts spent by those who have already purchased online are found. Next comes the bracket of less than 20,000 Ar (22%) and that from 100,001 to 500,000 Ar (20%).
A good point for e-commerce in Madagascar: consumer satisfaction is maintained.
Already in 2017, 43% of Malagasy e-buyers were very satisfied with their online purchases. Now they are 54%, i.e. more than half of those questioned. Is this the beginning of maturity of the Malagasy online offer? We really want to believe so, but the future will surely tell us.
Refractory to e-commerce
65% of our sample have never made an online purchase before. Among the reasons for this reluctance, one third of them say that the online purchasing process is too complex. It is true that the act presupposes a good knowledge of computers in a country where the adult literacy rate is only 64.5% (Source: Unicef, 2012 figures).
The second reason is the blatant lack of confidence, since 20% of them are afraid of being swindled. It must be said that in a country where scamming is a national sport, it is surprising to see this argument move from first place in 2017 to second this year. Finally, the lack of Internet access only comes in third place (19%).
In any case, the potential of the market remains intact despite a drop of 14 points as 41% this year say they are ready to experiment with online shopping compared to 55% in 2017.
Conclusion of the 2018 e-commerce survey
As time goes by, it seems that things are becoming clearer for Malagasy e-commerce. Without going so far as to say that the market is ripe, we see trends emerging such as a clear leaning towards clothing and high-tech or a preference for simplicity of use and user-friendliness of the purchasing platform on the part of buyers.
Moreover, the main obstacle to online shopping today is the complexity perceived by the consumer. However, and in general, a Malagasy who buys online still spends as much today as last year (between 20 001 and 100 000 Ar).
We also notice that the potential is there. With a 25-point increase in e-buyers in the space of a year and 41% of people intending to buy online, the market, although trembling, seems to exist. It remains to be seen whether the local environment is ready to welcome and above all to support this new type of economy, and that’s a good thing since this is the question that UNCTAD (United Nations Conference on Trade and Development) has tried to answer in partnership with the Ministry of Commerce and Consumer Affairs. To go further, I invite you to read on.
Quick diagnosis and conference-debates
From 9 to 13 July, a series of workshops were held at the CCIA (Chamber of Commerce and Industry of Antananarivo) bringing together private sector actors, representatives of various ministries and other state institutions, and UNCTAD. UNCTAD is a specialized UN entity that assists developing countries. It does this by supporting them in their integration into the global economy.
Under the title “E-commerce strategies and the existing regulatory framework“, these workshops had the dual objective of presenting the evaluation work carried out by UNCTAD on the state of e-commerce in Madagascar and collecting the views of the various participants present at the meeting.
Begun in June of this year and expected to last until August, UNCTAD’s rapid diagnostic work, led by their consultant Mr. Gil Razafintsalama, has raised a paradox as often seen in Madagascar: laws governing e-commerce exist, the market is latent, and yet nothing concrete is done to move forward.
While talking about the market, there is nothing to excite Amazon or Alibaba about, but there is a real expectation on the part of consumers who are just waiting for the right business environment to be put in place to make it happen. Seriously, with 95% of people who have already bought online having done so on Facebook, we can say, even without going into the numbers, that Malagasy people want simplicity and trust to govern their online purchases (and also because access to Facebook is free with some operators, it goes without saying :P).
A good legal basis
Surprisingly, Madagascar has a fairly comprehensive arsenal of laws governing e-commerce in particular and digital activities in general. Consider this:
- Law n°2014-024 on electronic transactions
- Law n°2014-025 on electronic signature
- Law n°2014-006 on the fight against cybercrime
- Law n°2017-038 on the protection of personal data
- Law n°2016-029 on communication (:D)
- Law n°2016-056 on electronic money
- Law n°2014-026 on the dematerialization of administrative procedures
In addition, there is the sacrosanct law n°2015-014 on the guarantee and consumer protection, applicable even on online transactions, and that every good Malagasy consumer should know by heart. Ok, I’m kidding, but leaf through it occasionally, you will then know that the majority of Malagasy merchants are in fact outlawed. An example with article 30:
“Article 30 – For all sales operations, the buyer of a non-compliant product has a period of fifteen (15) clear days from delivery to return the product to the seller for exchange or refund, without penalty. If this period normally expires on a Saturday, Sunday, holiday or non-working day, it is extended until the first following working day. »
Who has not yet heard the famous “Ny entana efa lafo dia tsy azo averina intsony ramose a” (lol)? But it gets better. Read article 14 of the same law:
“Article 14 – Prices are freely determined by the law of supply and demand. All professionals must be able to publish their prices to consumers either by means of marking, labelling, display or by any other appropriate process, to inform consumers of the special conditions of sale authorised by the texts in force. »
In any case, Madagascar does have laws that protect privacy, protect consumers, protect electronic transactions and condemn cybercrime. Who would have thought.
A latent market
Here, let me simply redirect you to the results of our 2018 e-commerce survey, which provides a snapshot of the state of e-commerce on the Big Island. You can see not only its potential, but also the expectations of consumers and the avenues that need to be explored to attract them online.
Edit: If you want to dig deeper into the traditional market, this survey on where Malagasy people are shopping in 2018 is for you.
Nothing concrete has been done to move forward
I confess, another deliberately provocative title on my part. “But if, Andriatiana, something has been done”: in 2012, the State set up the Steering Committee for the Development of Electronic Commerce (CPDCE), an organization under the Ministry of Commerce and Consumer Affairs whose main mission is to develop concrete strategies to develop e-commerce in the country. In practice, they are the ones behind the laws mentioned above.
But apart from this multi-collegial and inter-ministerial committee bringing together both the public actors concerned and private protagonists who are also concerned about moving the schmilblick forward, it’s peanuts. Of course, everything is going well on the legislative side, but in practice, 6 years later, everything is still to be done and the regulatory work of the SCPDCE is simply under-exploited. There is not even an e-commerce strategy in our National Development Plan 2015-2019. We are walking on our heads, I tell you.
To give you an idea of what an aberration this is, imagine that beautiful flat bypasses have been built to go fast and relieve the traffic jams in the city centre. Once built, we let the pedestrians walk there without worry (because, “Democracy!”), we even install them pedestrian crossings eh, just to do things right, we then put 3 good big speed breakers and viva la revolución! -_-
Now, it is all very well to criticize, but what exactly is there to do? Well, everything, or almost everything. The State, as the country’s primary responsible for its development, must make tangible efforts in the right direction if it really wants to move us forward in the direction of e-commerce. And there is no lack of axes for that.
Let’s look at the Internet in Madagascar:
- low penetration rate (6.30% according to the Autorité de Régulation des Technologies de Communication, ARTEC)
- lower quality (according to the operators, it is true)
- and especially prohibitive cost as soon as you get out of mobile plans (which, by the way, annoys more than anything else with their 18565252*79952# and their system that pumps up your remaining credit when the plan is finished *cough* Telma cough).
Is it not possible for the State to work with operators to provide a more favourable breeding ground for the development of e-commerce? One only has to look at the popularity of free Facebook among certain mobile operators such as Orange which, combined with the simplicity of its connections, explains the multiplication of “merchant” pages on it today.
The financial system
On the banks’ side, there is a noticeable lack of real means of online payment with the impossibility, for example, of interfacing a Malagasy bank card payment module with any e-commerce management platform (Magento, Prestashop, WordPress Woocommerce, etc.).
Well, it’s true and we’re not going to blame them for that, the banks in Madagascar have other fish to fry: with a bank rate of 5% in the place, the priority is elsewhere.
However, one does not prevent the other and it is quite possible to seduce the unbanked while working on e-commerce and even make life easier for exporters with online payment. I would even say that these three objectives are complementary, because if online payment by credit card becomes possible in Madagascar, the market will follow and the number of banked people will surely increase. But to do all this, it is up to the government to work with the banks.
Means of payment
Then there is Madagascar’s limited openness to international means of payment. We trade with the whole world and it is time to position ourselves with a mentality of seller and no longer an eternal buyer.
But what does a (good) salesman do? He or she does everything possible to remove barriers to entry so that the barge has no excuse not to buy. This means, among other things, offering his products with the least possible additional costs and with the most convenient method of payment. In other words, the exact opposite of what we currently have on the Big Island: exaggeratedly high bank fees, paperwork at all levels, you really have to want to do business with a Malagasy seller to enter this micmac. Even to pay online locally today, we have to bend to a lot of gymnastics (with mobile money in particular) so that in the end, discouraged, we privilege the species. In both cases, the State must clean up and open up to the world.
Capitalizing on what has been achieved
Finally, it should be noted that a few people of good will have already worked to bring Madagascar into the era of e-commerce. There are technicians, start-ups and even private entities that are observing the market. Getting closer to these people who are already trying, at their level, to make e-commerce a reality in Madagascar will allow the government not only to avoid the pitfalls, but also to capitalize on their experiences and even to recover skills that it does not necessarily have.
To give just one example, let’s turn to Ariary.net, an online payment platform in ariary present since August 2017. At last count, it has 400,000 users, yet it still has to make do with vouchers simply because it lacks the funding to access monetary transactions. This is an excellent opportunity for the government.
But even without all this, the involvement of the State is more than desirable when we know that there must be no divide between the private and the public. What would happen if the private sector found itself 5, 10, 15 years ahead of the State in e-commerce? The latter would not even be able to understand a market that it has to regulate in order to make it a source of income.
The consequences of the lack of government involvement are irrefutable: Madagascar is currently in the 20 countries that are lagging the furthest behind in e-commerce (source: UNCTAD). This justifies the intervention of UNCTAD in the Big Island to make a preliminary diagnosis of the state of our e-commerce, then to produce a list of recommendations to establish a framework based on a common public/private vision. Mouais. Let me put it another way: “we came to look, here is what we need to do to get everyone to agree, then it’s up to you”. Basically, the will, the strategy and the implementation will always come from the State!
Of course, this is how things should be done, but, ladies and gentlemen, this is a good example of a snake biting its own tail. And it’s a shame, because e-commerce is money that stimulates the economy. Just look at it.
The opportunities of e-commerce
As mentioned above, e-commerce can simplify transactions. But in addition to opening the doors to more efficient globalization, e-commerce is above all the economy of the 21st century, an economy where money flows travel at the speed of digital technology. I can’t tell you exactly how fast it’s going, but it’s in any case a lot faster than a payment slip that you have to fill out in triplicate. It allows structures to be more agile, more responsive and to have a just-in-time cash flow.
Indeed, UNCTAD has noted that with e-commerce comes an automatic export bias and that e-traders have a higher resilience than those in traditional trade.
E-commerce means 380 million consumers worldwide. It is also 25 trillion US dollars of sales in 2015, of which the proportion of ICT-related services has increased by 40% in 5 years (between 2010 and 2015).
From a local point of view, e-commerce makes it possible to facilitate domestic trade and thus to encourage everyone to consume. Especially since, in addition to the transparency of prices, which will now be displayed on their own without having to ask (online, no price, no one buys), the savings that merchants will make on storage or rent (no physical address) should advantageously be reflected in the overall price and thus stimulate the adoption of e-commerce.
Now it is a matter of becoming aware of the challenge that e-commerce represents for the country. Integrating global e-commerce and developing means of payment to operate serenely is a survival imperative for Madagascar. Everyone is already there and if we delay too long, to paraphrase Mr. Gil Razafintsalama, “We’re going to get eaten. ». I’m getting a lot more silk.
A national switch, the end of the tunnel?
An interesting fact was highlighted at the first exchange workshop following UNCTAD’s presentation. It would seem that banks as well as various economic actors interested in harmonizing the Malagasy monetary system (I am thinking especially of mobile money operators) are working hand in hand to develop a national payment switch. The precise term used has been “interoperability of transactions“. That made my ears quiver with excitement.
This national payment switch will therefore integrate all the country’s economic protagonists into a merry band that will work towards the interoperability of all national transactions with, in time, and this is where there is hope, an international opening. The idea is that, alone and separately, the banks, and even the Central Bank, do not carry much weight on a global scale. It is simple, the profitability/risk ratio is simply not worth it for operators such as, at the drop of a hat, PayPal. But if they all put their weight in an “inter-all” group, the situation will immediately be different, especially since a switch will mean a homogenization of protocols, basically, all banks will speak the same language in Madagascar. For sure, it will be weird.
The rub now is that work is certainly underway, but the switch is not expected to be operational until 2020. After that, better late than never, as the other one would say.
Other conditions for successful e-commerce
As you can well imagine, the ingredients necessary for the emergence of a true electronic economy are not limited to a switch and means of payment. These are just two of the many pillars on which all market economies rest. In addition, and these are even complementary axes on which the government must work, there are :
Trust is the basis of all business relationships. Without it, everything collapses like the subprime crisis that shook the United States and then the world in 2007: the loss of confidence that then affected American banks led to their downfall (bye, Lehman Brothers).
Amazon, the world’s largest e-merchant, employs more than 540,000 people and has deployed more than 100,000 robots in its warehouses. Its goal? To streamline its logistics as much as possible in order to optimize its costs and flows.
This is what allows this giant to deliver the same day and at a fair price. A good e-merchant is therefore a guy who masters his logistics: warehousing, handling, means of transport and delivery. As we are in Madagascar, I would add the state of the roads! Unless the poor Malagasy e-merchant has to do like Domino’s Pizza and repair the roads himself to deliver faster …
I see some smiling :) Yes, security. Because sending a Renault Express with your logo on it and your iPad and MacBook Air in the traffic jams of Tana is not a good idea.
Security is a prerequisite for your success as an e-merchant. I wouldn’t comment any further because I think the state already knows that insecurity is taking its toll all over the Big Island. It’s up to them to take care of it.
Ok, this is more a consequence of e-commerce than a condition, but since we’re walking on our heads, I’ll put anyway :P.
The consumer’s interest in buying online lies in the practicality of this mode of consumption and the normally reduced prices offered. If we lose sight of this, we lose the whole point of e-commerce. It would therefore be interesting to frame the activity with specific laws (a specially designed customs law with preferential tariffs, for example) that will enable e-traders to export and import competitively.
I would just like to end with one thing. Some will always say that the state will not budge, while others will see the difficulties and give up. But isn’t it better to think differently, to take things in hand and say to oneself that in the end, “difficulties” is just another way of pronouncing “business opportunities” ;).
Annex: the modus operandi of the study on e-commerce 2018 in Madagascar
The survey on e-commerce 2018 was answered by 1289 Tananarivians approached in the street. Here are the main characteristics of our sample:
- 58.96% are women
- 41.04% are men
Age groups :
- 30.33% are between 18 and 25 years of age
- 32.12% are between 26 and 35 years old
- 21.72% are between 36 and 45 years old.
- 8.53% are between 46 and 55 years of age
- 4.97% are between 56 and 65 years of age
- 2.33% are over 65 years of age
Socio-professional categories :
- 22.34% belong to the category Craftsmen and Traders
- 20.95% belong to the Student category
- 13.27% belong to the Professionals category
- 12.57% belong to the category Employees
- 10.40% belong to the category Intermediate professions (teachers, medical staff in hospitals, etc.)
- 7.21% belong to the category Other persons without professional activity (military, church people, non-working spouses, etc.).
- 4.97% belong to the category Workers
- 4.97% belong to the category Executives, senior professionals and business managers
- 2.64% belong to the Retired category
- 0.70% belong to the category of farmers