Voice of the Industry

Moroccos moment - the realm of new ecommerce opportunities

Wednesday 25 September 2019 08:13 CET | Editor: Melisande Mual | Voice of the industry

Michel Golffed, dLocal: "As Morocco begins to modernise its payments landscape, an opportunity exists for first movers who are able to build trust in the country."

When England’s Prince Harry and Meghan Markle visited Morocco for three days in February 2019, the royal couple toured Morocco’s schools and met with local entrepreneurs to promote gender equality. Even as the media seemed to focus on the wardrobe selections of the Duchess, the visit underscored Morocco’s ascension on the global stage.

Indeed, when EY published its most recent “Attraction Barometer,” Morocco was cited as having the most compelling business backdrop for global investment activity across all of Africa. This is due in part to the country’s role as the main commercial hub on the continent, located on the Strait of Gibraltar’s southern shore. But it also speaks to the country’s progress around corporate governance, the ongoing diversification of its economy, investments in infrastructure, and steady growth in commerce.

While momentum in Morocco’s economy is clearly building, other factors should appeal to global brands and ecommerce companies – namely the opportunity to be a first mover in a market largely untouched by foreign competition. While internet penetration has grown considerably over the past few years, now reaching approximately 70% of the total population, only 7% of internet users currently shop online. It speaks to a latent opportunity to build awareness and trust as Morocco’s younger demographics, with a median age of 29, show more comfort with ecommerce. And even as the total ecommerce activity in Morocco only totaled USD 244 million in 2017 – representing just a fraction of the online spend compared to other MENA countries such as Turkey – the size of Morocco’s market is expected to grow at a 40% compound annual growth rate (CAGR) over the next five years, according to AMI and Global Growth Markets analysis.

As it currently stands, Nigerian-based online-marketplace platform Jumia and local ecommerce player Hmizate, based in Casablanca, account for approximately 95% of all retail ecommerce sales in the country. To a certain degree, the slow uptake for retailers online traces back to central role of souks in Moroccan society, as the omnipresent marketplaces across Marrakech, Casablanca, and Tangier date back over 2,000 years. This is also why trust is so critical in a country where shoppers are accustomed to holding and scrutinising goods and then haggling with vendors before making a purchase. Traditional retail, as a result, generates less than 30% of ecommerce activity in Morocco.

While this dynamic creates a barrier to entry for retailers, the rich tradition and cultural history of Morocco’s ancient imperial cities fuels tourism, a major component to the country’s ecommerce growth. Travel expenditures account for approximately 70% of online purchases in the country, as consumers are generally less circumspect when securing airline tickets or hotel reservations online. This has allowed several global hospitality brands to make inroads in the country, which reinforces the sense of trust. Marriot International, in February 2019, announced plans to develop its first St. Regis resort in Marrakech, while Airbnb currently lists over 2,000 properties in Morocco, providing access to Morocco’s famed riads.

The Payments Paradox

One of Morocco’s distinguishing features – at least compared to other emerging market economies – is that over 50% of the population have bank accounts. The catch is that nearly three quarters, or 74%, of ecommerce payments take the form of cash. The rest of mix is comprised of domestic credit cards, representing 15%, with international credit cards (5%), debit cards (3%), digital wallets (2%), and bank transfers (1%) each grabbing just a sliver of the balance.

In unpacking the data, payment preferences also differ quite a bit depending on the type of purchase. For instance, when buying products online, nearly all of the transactions (96%) were completed through cash payments – cash-on-delivery being the preferred method. When paying for travel accommodations on the other hand, Moroccans are far more likely to utilise credit cards, debit cards or other digital forms of payment.

Building Trust

Across the broader ecommerce ecosystem, the different constituencies are doing their part to stimulate the conversion from cash to other payment options. Among the retailers and consumer companies, the bigger players have been proactive in their efforts. Jumia, for instance, frequently offers discounts to encourage the use of digital wallets or credit and debit cards, while both Procter & Gamble and Carrefour have pursued similar promotions in the country.

Credit card issuers, such as Visa and Mastercard, have also taken steps to stem fraud. Visa is working with Moroccan retailers, for instance, to help businesses adopt its “Verified by Visa” program, an authentication protocol in which account holders can confirm their identity through a one-time password.

The government has also sought to modernise its financial infrastructure. While Morocco has traditionally been behind the payments curve, in 2015 its central bank expanded on its definition of what constitutes a “payment institution”. The updated classification now allows non-bank providers and fintechs to offer digital wallets. In 2016, the government unveiled the “Digital 2020” initiative to position Morocco as a digital hub in French-speaking Africa. And earlier in 2019, Morocco unveiled a reform program to address social and economic inclusion, with approximately USD 700 million in funding from the World Bank.

This program is focused on three core pillars: to enhance financial inclusion for individuals and entrepreneurs, support the development of digital platforms and infrastructure (ie, increasing broadband internet access), and enhancing support to digital entrepreneurs. But beyond just creating a more inviting backdrop for digital businesses, another stated goal is to create more options around mobile payment solutions to increase the efficiency and lower the cost of transactions.

There is some evidence these efforts are showing traction. In a recent survey of online shoppers in Morocco by The CMI, nearly 60% of respondents expressed confidence when making online purchases and payments. Not to be overlooked, international brands are also building out ecommerce capabilities. Global retailing giant Zara, to name one, launched a Moroccan website in May 2019.

As consumers begin to trust the local payments landscape, commerce typically follows, which underscores the opportunity for global brands. The key before building market share, however, is to build trust. This represents another component to the first-mover advantage, at least in Morocco.

About Michel Golffed
vspace=2Michel is Vice President of Growth at dLocal. He is focused on leading strategic partnerships with fintech ecosystem players, as well as fostering relationships with key merchants while guiding them to implement holistic cross-border payments strategies that maximise conversions. Prior to this, Michel was CTO of dLocal, leading the companys engineering and innovation efforts and scaling its payments technology. 

About dLocal
vspace=2dLocal is an award-winning 360 payments technology platform designed to handle mass online payments in growth markets across Latin America, APAC, Middle East, and Africa. Over 450 global ecommerce retailers, SaaS companies, online travel providers, and marketplaces rely on dLocal to accept and integrate more than 300 locally-relevant payment methods in a single API.


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Keywords: Morocco, dLocal, ecommerce, Africa, marketplace, Jumia, payments, retail, emergent market, bank, bank account, digital wallet, credit card, debit card, Visa, Mastercard, fraud prevention, financial inclusion
Categories: Payments & Commerce | Ecommerce
Countries: Morocco
This article is part of category

Payments & Commerce