Why e-commerce Start-Ups in South Sudan Are Failing

Did you know that 90% of e-commerce start-ups in South Sudan end up in failure within the first 120 days? That’s the fact!

While the e-commerce model of business is flourishing elsewhere around the world, especially in developed countries, South Sudan is still a long straight from reaching there.

When it comes to the South Sudan context, e-commerce is not even a digital business. People still prefer brick-and-mortar shops while those that start their e-commerce site end up carrying most of their operations offline because of the supply and demand.

Nevertheless, internet technologies have changed almost everything nowadays. You can order almost anything you want and it gets delivered to your location. All you will need is your computer, smartphone, and internet connectivity.

Until the government of South Sudan comes up with solutions to problems affecting the e-commerce industry, running an e-commerce business in South Sudan remains a difficult task for online entrepreneurs.

With that, let’s discuss some of the reasons why e-commerce businesses are failing in South Sudan

1. No e-Pay System

South Sudan has no electronic payment methods that online entrepreneurs can use to send and receive payments.  While this is true, e-commerce sites often require the use of an e-pay system to be integrated into the sites.

With an e-pay system, the clients that come to an e-commerce site are able to select the products and services they want to purchase, bill, select a mode of payment, and make the payments with a click of a button on the site. Some notable modes of payment include mobile money, visa cards, and wire transfers.

In South Sudan, the payment aggregator that provides such service is Nile Pay but still getting the API, documentation process and charges don’t come for cheap.

M-Gurush also exists but its services are so limited. It’s not clear whether they even provide APIs…

2. High Internet tariffs

South Sudan has one of the slowest and most expensive internet connectivity across Africa. For years the problem has been looming with little to no effort put towards solving it.  South Sudan has telecom companies operating in the country which include: MTN, ZAIN, and Digitel. Due to their few numbers, they monopolize the market setting rates that are unfavorable for the average South Sudanese.

South Sudan also has fiber connections which are also expensive for the average South Sudanese.

Until the problem of internet connectivity is resolved, e-commerce business will be difficult to carry on in South Sudan for most online entrepreneurs.

3. A bad website

A website is the core of any e-commerce startup. Without an e-commerce website, there is no e-commerce business. Unfortunately, a lot of South Sudanese e-commerce websites are horrific and unresponsive. They are developed using premade templates that have fake designs with bad graphics, are difficult to navigate through, and are not optimized for search engines.

If your clients cannot easily go through your website and find what they need, they will eventually leave for good. It even worsens when your clients can’t find your business or website organically, you will make no sales, and if you’re making no sales that simply means the end of your business.

Not being willing to invest in a good business website is a very big mistake start-up owners usually make which eventually costs their business.

Even if you have the best business plan, if you don’t have a good website that appeals to your clients, you’re simply wasting time.

4. Limited Banking Opportunities

South Sudan banks are discriminative against the business community. Banking in South Sudan is only for selected NGOs, Companies, and a few businessmen and women.

Consider my experience with one of the banks in South Sudan. I went to Stanbic Bank-South Sudan to open a personal bank account. On reaching there I was directed to one of the ladies who spoke to me with a lot of attitude. I told her I wanted to open a personal bank account then she asked for my profession, I simply told her am a business personnel. She quickly said that they only open accounts for selected NGOs and Companies. In addition, if I am an employee of any of the selected companies or NGOs, I’m supposed to bring a letter from my employer and present it to the bank before they can open me an account with the bank. Having heard all the lectures, I knew I didn’t stand a chance to have an account with them but I was perplexed because elsewhere in Uganda, I hold a USD and UGX account with Stanbic Bank – Uganda and I didn’t have to go through all those creepy procedures to open an account with them.

So you see not until the banking issues are resolved in South Sudan, the online entrepreneurs will be facing a big challenge.

5. No website traffic

Having no buyers is attributed to the failure of most of the wholesale and retail businesses. But when it comes to the e-commerce business context, website traffic simply refers to the flow of buyers in and out of your online store. If you’re to make real sales, you must receive lots of traffic on your site.

The best avenue for traffic is through search engine optimization and PPC advertising which can be expensive for a start-up business.

6. Poor customer service

Poor Customer Service is attributed to the low sales in e-commerce businesses. If an e-commerce business can’t provide service to the customers before, during, and after a purchase, the business is doomed to fail.

South Sudanese are not good at providing customer service. They are bad timers and can hardly provide support to their customers. They don’t realize that it leaves a bad impression on their business hence depriving potential customers.

7. Trust Issues

Just like you won’t expect an investor to invest in whatever business idea they don’t understand, South Sudanese are skeptical when it comes to technology and things that are new to them in general.

They fear using their debit/credit cards that’s if they possess one because of the popular notion of online fraud and poor quality of products.

In fact with the e-commerce model of business, just one bad encounter from online shopping can change how the customer perceives the whole business hence the next time, they may prefer to see the product first before making payment.

South Sudanese also don’t trust that e-commerce websites will deliver the exact items as displayed on their website. So they go the extra mile and order so many items and make comparisons to select the best.

8. Poor quality of products

Poor quality of products can spoil the relationship between the business and its clients. When people who come to your site find a product that appeases their interest but later discover that the product is fake, it damages your brand and increases your operational and financial costs. 

With that, South Sudanese do not trust that the e-commerce businesses can provide them value with the products since they have a perception that the products can be of poor quality.

9. No patience

South Sudanese are generally impatient people. A lot of them start e-commerce businesses with high expectations that they will accumulate immediate profits overnight, forgetting that any business needs time to grow. When things don’t go as they expect, they often give up.

And this is why so many e-commerce start-ups collapse even before they make one year in operation.

Also, South Sudanese have a habit of instant gratification. When they need something, they need it there and then, which times can tend to disappoint them when it comes to e-commerce businesses where you’re given a duration for your product to arrive especially when it is being shipped from abroad.

10. The Cash on Delivery(COD) mode of payment

The cash-on-delivery method of payment by e-commerce businesses has been misused by a lot of online buyers and, hence has resulted in huge financial losses by e-commerce start-ups. A customer can order an item or sets of items and later cancel them yet the items are already on their way for delivery to the recipient.

When such an instance happens, the cost of logistics like transportation of the goods falls back on the e-commerce company.

11. Low internet penetration and network unavailability

This is not only a major problem in South Sudan but almost everywhere in Africa. South Sudan’s internet penetration is not yet at a stage that favors e-commerce businesses.

Also, internet connectivity is not only expensive but slow as well making it unreliable.

If one doesn’t have a stable and reliable internet connection, placing an order online will be a very challenging task.

12. Low purchasing power

The purchasing power of an average South Sudanese is at its lowest when compared to developed countries like the USA, the UK, China, etc. The country has had several waves of an economic downtrend which has put most of the citizens below the poverty line.

With that, an average South Sudanese cannot allocate any budget for shopping, either online or physical shops. For many South Sudanese, their priorities have shifted to finding what to eat instead of online shopping.

13. Unfavorable Business Climate and Government Regulations

Establishing an e-commerce business in South Sudan is not easy at all. South Sudan laws are too harsh for businesses to operate smoothly.

You also have to go through an enormous amount of trouble and bureaucracy while trying to register your business in South Sudan.

While the cost of running a business is high in South Sudan, even the taxes imposed on businesses are so many that can make you just lose interest. Several huge amounts of taxes await you once your business is set up and they never stop coming while you operate your business.

14. Poor infrastructure

South Sudan’s infrastructure is overwhelming. The high cost of power and transport has a negative impact on e-commerce businesses affecting logistics and the general e-commerce operations in South Sudan.

With that, doing e-commerce business in South Sudan becomes very hard.

15. Retail giants dominating a large share of the market

The fact is if you start an e-commerce business in South Sudan today, you will not be in the same position as retail giants like Jumia, Amazon, eBay, etc. This is because these retail giants dominate a large share of the consumer online retail market.

They have all the resources and technology to support their operations fully unlike a South Sudanese-based start-up that’s starting from scratch.

16. Buying Culture

The e-commerce model of business is still a new thing in South Sudan and a lot of people are still ignorant about it thus have no buying culture. People have skepticism when it comes to e-commerce business and find no reason to buy online when they can just do shopping at local marketplaces or retail stores all over the country, moreover with products that are fairly priced as compared to those sold online.

17. Literacy rates

South Sudan has one of the worst literacy rates in the world. Only about 28% of the adult population in South Sudan can read and write.  So as much as you can fix any other pending issues, an illiterate citizen may not be able to use an e-commerce website that requires one to have reading and writing skills.

Without investing in the education of the citizens, especially computer literacy, the pool of clients for internet entrepreneurs will be enormously lagging.

18. Population size versus ability to use e-commerce platforms

South Sudan currently has a population of 12 million people and you would expect that a large population like that would entail that a lot of people are able to use e-commerce platforms which is not true in reality.

According to DataReportal, South Sudan has a population of 900.7 thousand internet users as of January 2021 which means internet users increased by 1.5% between 2020 and 2021. However, those figures remain an estimate because only about 4% of South Sudanese use social media while internet penetration in South Sudan stood at 8% in January 2021.

It should also be noted that not everyone that uses social media is engaged with online shopping which further limits the pool of potential clients for e-commerce business.

19. Poor Advertising and Online Marketing

A lot of start-up businesses usually make the mistake of advertising through traditional channels like billboards, radio, and TV hence running into millions of wasted pounds.

This type of aggressive promotion is not bad at all but not good for businesses that are just starting and have little working capital. Wasting money on such marketing channels leaves a business penniless and soon runs out of business.

For an e-commerce business that’s just starting, running a targeted social media ad campaign is recommended. For example, if you’re into the travel niche, target a working class of people aged 30-45 living in places that are known to have high conversion rates like Juba.

20. Lack of Search Engine Visibility

For a start-up business that’s not visible online, there’s no guarantee that the business will grow because it lose a lot of organic clients. If people search your business online like on Google or Yahoo and they can’t seem to find it, they will leave for good.

Likewise, if your business cannot be found on social media like Facebook, Twitter, etc., only a handful of people will know about your business.

To make your business appear online, you have to know a couple of skills like SEO and digital marketing. You also have to have an e-commerce website, register on Google My Business, and have social media handles like a Facebook page to boost your e-commerce business.

21. Product mistiming

South Sudanese don’t engage in things they don’t understand or have use for. A lot of e-commerce businesses either come too early or too late and that leaves a lot of people struggling to see how their product or services relates to their wants and needs.

The e-commerce businesses don’t do enough research about the market they are venturing into and end up reaping huge losses.

22. Price and costing issues

Since so many e-commerce start-ups come with high hopes of accumulating immediate profits over a short period of time, they end up overpricing their products which makes it expensive for the average South Sudanese to afford.

This discourages people who won’t buy from online stores because they believe that the prices are inflated and are expensive.

So they prefer marketplaces, local retail shops, and grocery shops to e-commerce sites.

23. Running Out Of Cash

Some e-commerce businesses in South Sudan mysteriously shut down due to a shortage of funds to fund the project.  While it’s possible to open an online store in South Sudan with less than $500, it doesn’t mean that $500 is all you need to invest.

Just like any other newly established business, running a fully-fledged online store will require several infusions of capital and labor.

We all know that Juba is one of the most expensive cities and operational costs tend to be so high from paying taxes to managing the entire business operations.

A lot of e-commerce businesses start operating on inadequate capital hoping that the business would soon generate enough income to sustain the business which most times never works.

When e-commerce businesses start operating and register little to no profits, they end up accepting their losses and shutting down their businesses completely.

Conclusion

South Sudan’s e-commerce industry is faced with numerous challenges which I may not be able to exhaust all in this article.

However, this industry has the potential to become just as profitable as any other industry in South Sudan especially if the internet connectivity issue in the country can be resolved.

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