Before now, Africans preferred to pay in cash and physically visit stores to get their items. Many of them lacked bank accounts and credit or debit cards. Access to the internet and mobile phone ownership was similarly uncommon. In reality, convincing people to shop online required a great deal of confidence. Businesses who want customers to pay online found it difficult to succeed in African marketplaces. Klasha is here to make a difference.
However, this is quickly shifting as the historical infrastructure gap is filled and COVID-19 encourages consumers to adopt online shopping.
A mobile phone is now owned by an estimated 495 million people (or 46% of the continent’s population), while 303 million people have mobile internet subscriptions. According to GSMA data, these figures are projected to increase to 615 million and 74 million, respectively, by 2025. In South Africa, 79 percent of adults, 48 percent of adults in Nigeria, and 86 percent of adults in Kenya have access to bank accounts. Africans are becoming more accustomed to using their mobile phones to transfer money, with the continent accounting for $701.4 million (or 70%) of the global mobile money transactions’ $1 trillion value.
African internet firms are stepping up to tackle the challenging issues of making ecommerce in Africa function, despite the fact that the industry is still in its infancy on the continent. Klasha, a Nigerian e-commerce firm, is one of them. Since its launch in May of last year, it has garnered $4.5 million in a seed round from investors including AMEX Ventures, Global Ventures, Greycroft, and Seedcamp.
The success of Klasha demonstrates the enormous potential that e-commerce offers for the continent, particularly the desire of Africans to look for and pay for goods and services outside of Africa. By resolving payment challenges that consumers and businesses encounter when paying for goods online using various payment methods from different countries, it is utilizing this enormous potential.
Cross-border trade is made easier by the network of consumer- and business-facing Klasha solutions that are linked to one API. The Klasha Checkout, the company’s flagship product, enables users of e-commerce platforms, websites, and mobile apps to pay for international online retailers in local currencies while simultaneously receiving payment in G20 currencies including the dollar, euro, and pound. This encourages these international businesses to offer more services to customers in Africa.
A software called Klasha Cart initially allowed Nigerian users to create virtual dollar cards that they could fund to send and receive money anywhere in the world. Additionally, it let them spend more than the $20 to $100 per month cap set on debit cards issued by deposit money banks by the Central Bank of Nigeria.
African customers may now pay for items from international merchants including clothing from Asos, Zara, and H&M as well as streaming services like Spotify and Apple Music thanks to the app’s evolution.
KlashaWire, another of the company’s products, enables small businesses to pay their overseas suppliers in their home currencies, with the promise that they will get the money within three working days.
Payment Links creates a straightforward payment page that users can share via email or social media to enable merchants without an online storefront to accept payments from African customers.
Klasha has executed more than 210,000 transactions since its May 2021 launch and has more than 1,700 merchants on board. The number of merchants using the service is also growing at a 15% MoM rate.
Klasha CEO and co-founder Jessica Anuna was interviewed about the company’s development over the previous 12 months. She explained that she had been forced to build their ecommerce solutions in the first place, particularly the checkout and logistics feature, due to the slow delivery of customer goods, the unreliability of payment methods, and the refusal of ecommerce platforms to allow African customers to pay with their currency.
However, Anuna doesn’t think one business can solve the significant issues that the continent’s ecommerce industry is known for, which is why she promotes collaborations between ecommerce players and data analytics, logistics, storage, and warehouse service providers to address some of the industry’s most pressing issues.
Anuna stated on the call that the main goals of Klasha are to “simplify cross-border payments, assist African consumers in frictionless access to the goods and services they desire outside of the continent, and in turn, merchants outside of Africa can access consumers in Africa who want to buy and access their goods and services.”
According to Anuna, Africa’s rapidly expanding middle class, populace growth, and consequent rise in consumer spending have produced a sizable market for retailers as well as a profitable opportunity for venture capitalists to invest in the software businesses that link retailers to the continent.
“I believe that many VC funds currently investing in Africa are able to see the path to scale, which is ultimately what VCs want to see. The African market is still extremely young. E-commerce has only existed for a few years. This indicates that there are several potentials for the firm to grow and scale. And we are aware that the quickest growth occurs in the absence of development,” Anuna continued.
Klasha is carefully selecting its investors, and one way it has done this is by accepting funding from AMEX, the bank’s investment division. With AMEX’s assistance, Klasha will have access to the immense knowledge and network of the enormous bank, providing them a firsthand look at how it manages payment processing, scaling businesses across borders, and other difficulties she is certain Klasha will soon face as the startup grows.
Its consumer offering, KlashaCart, features an in-app store where customers can pay with naira and get fashion and electronics items delivered to their doorsteps in 7–14 working days. According to Anuna, the app has gained over 45,000 users since October and is expanding at a rate of roughly 15% MoM.
Klasha Logistics, which sits above the Checkout and Cart, enables goods and services from merchants and retailers to arrive at African customers’ doorsteps in 7–14 days.
A healthy 1.3 billion population poised to reach a quarter of the world’s population by 2050, as well as consumer spending on ecommerce predicted to increase from $16 billion in 2016 to $75 billion by 2025, are all crucial indicators for Klasha to construct a suite of ecommerce solutions.
Klasha’s approach to growth
Klasha, which presently works in Nigeria, Zambia, Tanzania, Uganda, South Africa, and Kenya, intends to increase product penetration in the six African nations where it is currently present. In the future, it intends to scale to other African nations and currencies. By focusing more on consumer and merchant marketing to increase awareness of them, it hopes to deepen its product. In the upcoming month, it plans to revamp KlashaCarts, its consumer app, and add Kenya to its service area.
Anuna claimed that Klasha needs to launch education programs to persuade people to switch to ecommerce because it is still relatively new in these nations. Localizing payment options, marketing, and its overall messaging is another concern for Klasha.
Klasha’s marketing approach includes identifying the ideal consumer segment and making sure that its product actually solves an issue for its new market.
Anuna highlighted that one important criterion for gauging Klasha’s progress will be the number of significant online retailers and marketplaces it has persuaded to integrate Klasha Checkout in an interview with TechCabal just as Klasha was launching last year. Klasha has accomplished this by gaining integration with WooCommerce, OpenCart, Wix, and Squarespace, which represents significant advancement.
When asked how it was going, she responded that Klasha’s merchant acquisition is expanding at roughly 20% month-over-month. She added that another statistic would be its capacity to acquire 5,000 merchants (MoM). She also disclosed that Klasha has handled over 210,000 transactions, representing a surge in transaction volume of 17.5%.