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Online shopping earnings to grow to Shs276b
Jumia, which operates in Uganda and Kenya, remains the largest online shopping platform in East Africa, commanding a shared market share of more than 60 percent. Photo / File
What you need to know:
- However, Uganda’s $74m (Shs275.5b) expected earnings, will largely be lower compared to Kenya and Tanzania
Uganda’s online shopping is expected to expand by 18 percent, grossing at least $74m (Shs275.5b) in revenue this year.
The growth, Knight Frank indicates, will largely be boosted by a gradual shift by traditional shops that continue to adopt digital retail services.
In a report highlighting East Africa’s Retail Landscape for the 2024 second quarter ended June, Knight Frank notes that despite its enduring popularity and resilience, traditional retail continues to encounter numerous challenges, such as the expansion of modern retail, the rise of e-commerce, and shifting consumer behaviours.
Therefore, the report further notes that to address these challenges, “an increasing number of traditional shops are gradually adopting digital retail services” under several online shopping stores, whose projected market volume is expected to increase to at least $128.6m (Shs478.9b) by 2028.
Electronics remains the most online traded item with a share of 23.9 percent, followed by hobby and leisure services and fashion at 22.2 percent and 19.1 percent, respectively.
Furniture and homeware, follow in that order at 11.7 percent, while care products, do-it-yourself items, and grocery, close off the top seven most traded online services and products with a share of 8.4 percent, 7.6 percent, and 7.2 percent, respectively.
Annual growth
The report further notes that online shopping is expected to gross a compound annual growth rate of 14.2 percent between 2024 and 2028, supported by an increase in trading by top e-commerce platforms, among which include Jumia, Dombelo, Jiji, Kikuu, Ubuy Uganda Dantty.
However, Uganda’s $74m (Shs275.5b) expected earnings, will largely be lower compared to Kenya and Tanzania, which the report indicates, are expected to gross at least $801.4m (Shs2.9 trillion and $485m (Shs1.8 trillion), respectively through online shopping by the end of 2024.
The report further indicates that Kenya and Tanzania’s online shopping volumes are expected to expand to $1.3b (Shs5.07 trillion) and $820m (Shs3.05 trillion), between 2024 and 2028, supported by a compound annual growth rate of 14.2 percent and 14 percent, respectively.
Jumia, which operates in Uganda and Kenya, remains the largest online shopping platform in East Africa, commanding a shared market share of more than 60 percent.
Uganda still lags behind regional peers in adapting to online shopping due to third-party cost-related issues such as internet and low penetration.
The low reach has largely limited online shopping to the Kampala Metropolitan Area with a sparse spread in a few urban areas, whose shopping doesn’t exceed 1 percent of total retail shopping.
