MailforAfrica.com, which is an African online shopping start-up, has partnered with eBay Inc (NASDAQ:EBAY). The new arrangement will enable American eBay sellers to put up for sale their commodities to African consumers. However, before the news of the partnership could spark a wave of speculations, the duo was quick to confirm that there is nothing like a buyout. Instead, the partnership is all financial, logistics and marketing based.
The mention of African consumers means that eBay will land on the African soil. True to this, its expansion plans which are expected to be complete by the end of this year will kick start with having the first warehouse in Nigeria before Kenya and Ghana can follow suit.
The good news is that MallforAfrica.com will accept local currency and digital payments methods the likes of M-Pesa for Kenyans and fintech partner Paga for Nigerians. With the increased demand for foreign products, eBay stands a good chance to penetrate the fast growing African e-commerce market. Besides, it will have it easy regarding logistics and keeping up with the economic regulations.
Online shopping has become the in-thing in Africa. Its sales according to McKinsey’s Global Institute are expected to hit $75 billion by 2025 given that the new partnership is likely to attract more sellers and shoppers. eBay has a strategy of driving its revenue growth and increasing its active users from 165 million to around 205 million. It is working on a richer inventory of products and better access to unique products.
It sounds like this is the best thing that has happened to eBay in the recent past. It is probably counting on the partnership to boost its revenues which have previously suffered stagnation perhaps because of the stiff growing competition from Amazon.com, Inc. (NASDAQ:AMZN).
Nevertheless, eBay which has a current Zacks ranking of #3 says that it will play safe with its strategy given that it also suffered from PayPal earlier on which force it to shut down a lot of its standalone mobile applications.