If you google "convenience store Taiwan" you'll get a bunch of results of travelers marveling at how actually convenient convenience stores are in Taiwan. They are convenient not only in their location, seemingly on every street corner, but also in their services offered.

Convenience stores in Taiwan offer the normal products - snacks, beverages, daily-prepared foods - as well as public transportation tickets, bill pay, mailing, photocopying, and access to additional digital services, like buying concert tickets through ibon kiosks. Small, conveniently located retail stores where you can do all that and more, sound familiar?

Sounds like the small mom-and-pop shops in African cities, which are becoming increasingly convenient and digitally connected.

This week, we published episode five of this season - Problem Solving for Fragmented Retail - in which we spoke to the B2B commerce platforms about the nature of retail in cities across the continent. One theme was the importance, and expected proliferation, of hyper-local retail.

Due to macro factors - a steep rise in the urban population in Africa and at a rate that is faster than supporting infrastructure is being built; low rates of car ownership; lack of refrigeration and cold storage infrastructure; low purchasing power of mass-market consumers - retail is small-scale and fragmented, and will remain so. Hyper-local retail has evolved to serve the needs of African consumers, in the context of these macro factors, and we cannot expect to see consolidation at the retail level, or a rise of big box stores, as a result.

By aggregating retailers at the end of the value chain - and disintermediating several layers of middlemen in the process - these B2B commerce platforms can then offer not only better pricing, but also financial services to their customers, who have built up an order history over time.

A further opportunity then, as both Twiga Foods' Peter Njonjo and Sokowatch's Daniel Yu shared in the episode, is to layer additional digital services on top of physical retail.

First it was airtime - in the form of scratch cards - then additional digital financial services like mobile money cash-in/cash-out, bill pay and intra-Africa remittance payments.

But as fintech folks predict that peer-to-peer fees will (or should) be free in the long run, agents who solely offer these services - that which rely on transaction fees to make a margin - may find themselves in a precarious position. It is for that reason, in particular, that a company like Nomanini (whose CEO, Vahid Monadjem, we spoke to during our interview series earlier this year) focuses on the fast-moving retail trade segment. Digital financial services account for 10 to 20 percent of these retailers' income.

And for consumers, of course, it is increasingly convenient to buy your bread and soap and cooking oil and top up your airtime and pay your bills all at the same place.

Moving another step further, these small shops are also on-ramps into ecommerce. While on one hand, these retailers may be selling an increasing amount of their goods via WhatsApp or Facebook, on the other hand, they are acting as ordering and pickup points for third-party ecommerce platforms.

If 80 percent of distribution occurs through small retail shops, the growth of ecommerce may come via these shops, not at their expense.

In Kenya, Copia Global claims their agent commissions for in-store ecommerce orders increases agent income by 30 percent, while also increasing foot traffic by more than 25 percent. And in India, not only does Amazon's “I Have Space” program as a crucial part of its distribution through these retailer delivery points, but they've become learning centers for new customers, as well. And perhaps most importantly, these models avail a much wider amount of products than what the retailers (or even nearby wholesalers) carry on their store shelves.

So when we start from the premise that this is what retail in Africa necessarily looks like - small, fragmented, "informal" - and we build accordingly, it opens up ever more opportunities for these retailers to become increasingly convenient, increasingly profitable, and increasingly embedded in the daily lives of mass-market Africans.

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✌️ Justin

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