Sunibel Corporate Services

E-commerce in Mauritius: the ideal platform for your international strategy

With 21.8% of the world’s population (about 1.8 billion people) shopping online and e-commerce sales to the amount of USD 2.8 trillion in 2018 (and expected to reach USD 4.8 trillion by 2021), the growth of e-commerce over the past two decades has been impressive.

During his presentation of the National Budget, the Honourable Pravind Kumar Jugnauth, Prime Minister and Minister of Finance and Economic Development of the Republic of Mauritius announced a series of measures that intend to diversify and reinforce the product base of the country’s International Financial Centre. Consistent with previous Budgets, the Government focuses on the development of innovative sectors. These include Fintech – consisting of a new regime for Robotics and AI-enabled financial advisory services – and e-commerce, a sector for which Mauritius wants to become a major player.

Why is Mauritius a competitive platform for e-commerce activities? What are the different types and forms of e-commerce? What are its benefits and disadvantages? How Sunibel can help you in conducting your e-commerce activity? Here is all you need to know about e-commerce in Mauritius.

 

E-commerce in Mauritius: a competitive platform for your online activities

The World Trade Organisation defines electronic commerce, or e-commerce, as the “production, distribution, marketing, sale or delivery of goods and services by electronic means”, most notably through the internet. Simply put, it allows the consumer and the buyer to complete transactions online. The major advantage of e-commerce is that it makes products and services cheaper and more accessible to consumers.

With e-commerce activities expected to be growing exponentially, especially in Africa, Mauritius can play an important role in its development. Indeed, Mauritius ranks first among African countries on international indices, including for ICT development and ease of doing business. With this in mind, the government has recently announced the introduction of a scheme for the headquartering of e-commerce activities, while companies setting-up an e-commerce platform in Mauritius (prior to 30 June 2025) will benefit from a 5-year tax holiday.

Earlier this year, the Honorable Pravind Jugnauth said the government is committed to accelerating “the country’s move to an age of digitally enabled economic growth”. Being part of Africa, Mauritius looks “forward to fostering further innovation and bringing more prosperity to the region”.

Approximately a quarter of the African continent’s population has access to the internet and, with fast increase in the number of smartphone users, this number is expected to grow even faster. According to McKinsey Global Institute’s “Lions go digital: The Internet’s transformative potential in Africa” 2013 report, the firm projected that annual online sales could reach USD 75 billion by 2025. With Africa’s in internet connections growth from 2.1% in 2005 to 24% in 2018, no wonder why the continent’s is an attractive place for e-commerce.

 

What are the different forms of e-commerce?

Online shopping

It is the process of shopping on a digital platform. The product you choose to buy can be either tangible or intangible. For instance, you can buy a tablet on Amazon, or you can purchase the latest album from your favourite singer, directly on your phone (or laptop) from iTunes. You can even register for a Master’s degree online through e-learning platforms such as Coursera.

Internet Banking

Although some operations have to be made at the bank, almost all banks nowadays offer services through their website: transferring money, opening a new account, pay off credit cards, or applying for an overdraft facility.

Electronic payments

Some companies offer, on their website, an online payment service that allows for online transactions. For instance, they often use PayPal for the secure transfer of funds.

Purchasing tickets and online booking

With digitisation, no need to go to a ticket office and stand in line. With online shopping, it is easy for consumers to purchase tickets for concerts or movies and bus or train online. Restaurants or hotel reservations can also be made online.

Online auctions

Many websites allow people to place bids and acquire products at competitive prices online. Like real auctions, only that the product cannot be seen physically.

Online entertainment

This form of e-commerce can be described as subscription-based. The company gives access to its ‘resources’ against a monthly/yearly subscription fee, such as Netflix and Spotify.

 

What are the different types of e-commerce?

Business-to-business (B2B): is the exchange (electronic) of products and/or services between businesses: the supplier and the buyer. This type of e-commerce includes online product and supply exchange websites that allow businesses to search for products or services, and to initiate transactions through e-procurement interfaces.

Business-to-consumer (B2C): it is the most popular form of online shopping and refers to businesses selling products and services to individual consumers. Nowadays, there are a large number of virtual stores selling all types of consumer goods.

Consumer-to-consumer (C2C): consists in the trading of products, services and information between consumers. Usually, this type of transaction is carried out through an online platform provided by a third party such as eBay and can take the form of online auctions (see above).

Consumer-to-business (C2B): are individuals that make their products or services available to businesses to purchase online. Popular examples of C2B platforms include iStock (where users sell their photographs, images, media and design elements) and Fiverr (freelance service marketplace).

Business-to-government (B2G): also referred to as business-to-administration, consists in electronic transactions between businesses and government institutions or public administration.

Consumer-to-government (C2G): consists in online transactions between consumers (citizens) and government bodies or public administration. However, it is not the process where the government buys products or services from citizens. Rather, it is the use of electronic systems by citizens to make payments, file tax returns, etc.

Mobile e-commerce (m-commerce): features electronic transactions made via mobile devices, such as smartphones and tablets, through the use mobile applications. M-commerce includes mobile shopping (online shopping through a mobile device), mobile banking, and online (mobile) entertainment.

 

Benefits and disadvantages of e-commerce

Advantages

E-commerce holds numerous benefits that makes it more convenient to consumers. They are:

Accessibility: unlike traditional bricks and mortar businesses – which tend to open for fixed hours and may be closed during public holidays or weekends for instance, these websites are accessible 24/7, allowing visitors to browse and shop online at any time.

Speed of access: technological advancement and faster web browsing make e-commerce more attractive to consumers. No need to get out of the bed, go to the store, look for the product you want and queue up to be able to check out. When buying online, a few clicks (or touches for smartphones) are enough to engage in a transaction.

Global reach: bricks and mortar businesses (with no online shopping option on their website) sell to consumers who physically visit their stores. E-commerce allows businesses to sell their products to any customer who has access to the internet, extending its customer base to the world.

Practicality: while customers shopping physically may have to go through a whole store to find that they are looking for, e-commerce provides visitors with the ability to browse products, or categories of products. This search feature makes it easier for the consumer to find the product(s) he/she is looking for.

Lower cost: although they may have to incur warehousing costs, other costs such as employees’ salary or rent do not apply to e-commerce businesses, lowering the total cost of a product.

Product recommendations: e-commerce websites track consumers’ search and purchase history. This allows them to display/recommend products based on consumer preferences.

Disadvantages

The downsides of e-commerce include:

Limited customer service: with its global reach, and depending from where the service is provided, e-commerce businesses may provide limited (and not instantaneous) customer service, which is subject to time zones, unlike physical stores.

Inability to see or touch: a picture of a product on a website can provide an indication about a product. However, it is different from experiencing the product such as trying on a shirt or shoes. Indeed, products can be different from consumers’ expectations (in terms of look and feel).

Waiting time: in physical stores, consumers pay for and uses the product instantly. In e-commerce however, the consumer has to wait for the product to reach his/her address. Depending from where it is shipped and through which carrier, the product ordered can take a few days, weeks, or even months to reach destination.

Fraud and online insecurity: the security risk associated to e-commerce and online shopping mainly concerns credit card information. E-commerce websites give the possibility to consumers to store their credit card information online, to make future purchases easier. If the website is hacked, the security of consumers’ credit card information will be compromised. Another method used by hackers is to attract consumers onto an imitation version of a well-known e-commerce website, with the objective of collecting their credit card information.

Competitors: e-commerce businesses do not require a large initial investment, as compared to a physical store, meaning more competitiveness.

 

Sunibel can accompany you in conducting your activities as an e-commerce in Mauritius

The team of Sunibel will guide you in the setting up the corporate entity that will allow you to carry out your activities as an e-commerce in Mauritius. Our services include:

  • Structuring and setting up of your company
  • Accompanying you in the application for the e-commerce certificate
  • Provision of directors and company secretary
  • Opening of bank accounts in nominated currencies
  • Opening of necessary merchant account facility with selected bank(s)
  • Accounting and bookkeeping (including tax filings)
  • Corporate administration and other services
  • Provision of registered office address and sourcing of staff
  • Assistance with Occupation Permits and relocation

 

Sources:

Clement, J. (2019). Topic: E-commerce worldwide. [online] Statista. Available here.

McKinsey Global Institute (2019). Lions go digital: The Internet’s transformative potential in Africa. [online] McKinsey & Company. Available here.

World Trade Organisation (n.d). Electronic commerce. [online] World Trade Organisation. Available here.

Desvaux, G. and Poignonnec, S. (2019). How e-commerce supports African business growth. [online] McKinsey & Company. Available here.

Rouse, M. (2019). What is e-commerce (electronic commerce)?. [online] SearchCIO. Available here.

Ecommerce Platforms. (2019). E-commerce Definition. What is E-commerce? E-commerce Explained for 2019. [online] Available here.

Díaz, C. (2019). What is E-Commerce? Definition, differences with other terms and first steps to follow if you want to launch your e-commerce. [online] Doofinder. Available here.

Kazeem, Y. (2018). E-commerce is thriving in Africa despite hurdles to the “last mile”. [online] Quartz Africa. Available here.

Dupoux, P., Ivers, L., Dannouni, A., Sqalli, Z. and Ngambeket, G. (2019). How Online Marketplaces Can Power Employment in Africa. [online] Boston Consulting Group. Available here.