Cosmetics giant L’Oreal’s partnership with pan African e-commerce platform Jumia signals a big shift in the way consumer packaged goods companies address the challenge of reaching the emerging African consumer classes in a cost effective manner. A combination of market forces and on the ground realities points to this solution as a sweetspot for optimal outcomes.
Business challenge for cosmetics
On their website, they acknowledge the complexity of informal distribution networks as a major barrier to cost efficient and optimal reach.
At the same time, they recognize that their largest markets are served by the very same fragmented and informal retail networks that pose such a challenge to their distribution and sales.
Connectivity and Communication
Smartphone penetration is growing exponentially across the African continent, as is the phenomenon of online retail. When you consider the trends, its not difficult to make the informed assumption that the customer segment representing this early majority is urban, affluent and informed. They are also likely to be the most relevant segment for international cosmetic brands.
Getting in on the ground floor
As e-commerce businesses grow and develop, they are changing the landscape of the retail and distribution environment, offering brands a way to quickly and easily (as well as cheaply) test the waters with their product range before investing in more extensive sales and distribution channels.