Editorial
Building confidence In Nigeria’s tough e-commerce market
Despite the positive projections and huge potential locked in Nigeria’s emerging e-commerce landscape, the sector is proving more than a tough nut to crack for the majority of players in the country.
Even for the sector’s pioneers, the struggle is real.
E-Commerce in Nigeria: An evolution
Heralded by BuyRight Africa.com, a platform founded by serial entrepreneur, Leo Stan Ekeh and which was challenged by the absence of credit card and e-payment infrastructure when it was launched over 12 years ago, e-commerce in Nigeria has always been and is still widely regarded as the next big thing.
The rise of latter-day powerhouses, Jumia and Konga also brought a flush of confidence in the sector. This was basically due to the keen interest from angel investors and venture capitalists, buoyed by projections of Nigeria’s booming youthful population and aspirational mindset of its growing army of digitally-savvy people.
The reality is, nevertheless, a bit less enthusiastic.
Jumia, owned by the Rocket Internet Group, has struggled to make its continent-wide business strategy work despite attracting considerable investment. Years of heavy expenditure on marketing and overheads coupled with glaring strategic deficiencies in how it has tackled Africa’s biggest market has turned the firm into a loss-making venture.
The company has also repeatedly taken some huge hits over product quality and bad press over the poor conduct of some of its staff.
Jumia has sunk deeper into losses on an annual basis, with figures reportedly in the region of over $150m. Despite reporting a Gross Margin Value (GMV) of €163.4m in Q2 2018, its Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) tells a sorry tale of huge liabilities in its balance sheet. Further fuelling fears are reports of a likely exit for its biggest investors after it emerged that Rocket Internet was planning to sell off its stake in the firm, even as other investors – MTN, AXA, Orange, Millicom and Goldman Sachs have remained mute.
A tale of false dawns In little less than the space of two years, a number of promising e-commerce ventures have either quietly exited the Nigerian market or declared their decision to make a shift away from a decidedly difficult terrain, ironically one that is widely regarded as boasting the right mix of ingredients required in creating Unicorns that will match the likes of other global super-heavyweights such as Amazon and Alibaba.
According to research, the Nigerian e-commerce industry is currently worth over $17bn, with estimates indicating that the sector could account for over $29bn by 2022. For the likes of Gloo.ng, OLX, DealDey and Efritin, among many others, however, e-commerce in Nigeria is no child’s play.
Of the distressed lot, perhaps only Yudala, founded by a then-23-year-old Harvard alumnus, Prince Nnamdi Ekeh in 2015, was able to successfully navigate the Nigerian e-commerce terrain.
Yudala had entered what was a keenly-competitive sector with a futuristic omnichannel strategy which fused a robust online platform with a chain of retail stores nationwide.
In addition to pioneering a series of firsts, Yudala was equally responsible for the first drone delivery in the e-commerce world and also holds the record of being the first e-commerce company to introduce an offline version of the hugely popular Black Friday sales.
The Yudala brand name was, however, absorbed into Konga after the combination of the operations of both firms in May 2018.
Gloo.ng founder, Olumide Olusanya, had cited the 2016 recession and its impact on business, a negligible Nigerian middle-class market and huge logistics challenges as reasons for the exit of the almost seven-year old e-commerce firm which positioned itself as an online super-store from inception.
The story was not much different for Efritin, an online marketplace for used goods which officially pulled the plug on its Nigerian operations on January 9th 2017, barely 16 months after its official launch.
The announcement that Dealdey, Nigeria’s only daily deals website, was shutting down its Nigerian operations almost a year after suffering severe financial challenges which led to a mass staff cull, did not come as a surprise to many.
The company had been struggling for a while to keep its head above water despite being the subject of a well-publicized acquisition in 2016 by Ringier Africa Deals Group (RADG), a joint venture between Swiss Ringier Africa AG and South African Silvertree Internet Holdings (Pty) Ltd.
Dealdey’s ouster came on the heels of reports that Career24, a leading online job portal owned by Naspers will be shutting down operations in Nigeria in March 2019.
Naspers, headquartered in Cape Town, South Africa is the face behind much of Africa’s largest pay-TV business and newspapers and is widely regarded among the world’s biggest investors in e-commerce after a recent surge of investments in a number of online-based businesses on the continent.
OLX, an online classified ads firm founded in 2006 and another Naspers-owned venture, also ran into heavy weather in Nigeria and some other African countries where it shut down its operations. Although boasting a useful business model, issues involving the unscrupulous practices of some sellers and buyers on its platform and the inability of the company to find a lasting solution led to a massive loss of confidence and subsequent failure of the business in Nigeria.
For Chris Uwaje, Africa Chair for IEEE World Internet of Things (WIoT), the challenge in cracking the Nigerian e-commerce market lies heavy in the approach or business strategy adopted by most players, many of whom fail to situate foreign business models, ideas and strategies within the culture of the people and Nigeria’s existential realities.
According to him, the high failure rate in the sector can be attributed to an absence of reliable knowledge of the nuances and predilections shaping the average Nigerian’s shopping behaviour which local know-how and capacity brings.
Uwaje revealed that, when asked which of the current players they would invest in given a seed fund of $1m, over ninety percent of a select group of budding tech entrepreneurs he was mentoring had plumped for Konga.
“It came as no surprise because of the local know-how, strong international network, consistent success and decades of experience in the Nigerian technology sector at the disposal of the new owners of Konga. Aligned to this is the quiet way they have gone about in repositioning the business without the usual hype that accompanies most e-commerce ventures in Nigeria.”
“Nigeria remains a fertile business environment, especially for online-focused ventures such as e-commerce companies. It is also a country with peculiar challenges and a very strong traditional approach to retail which requires a deep sense of local know-how and understanding by players. This is one of the biggest hurdles faced by e-commerce start-ups here. Many e-commerce ventures run with foreign concepts and strategies more suited to foreign climes, making it harder for them to survive the difficult terrain that is the Nigerian business space.”
Dr. Wale Ogunfunwa, an e-commerce enthusiast, is of the same school of thought.
In his opinion, a lot of e-commerce companies copy what obtains in advanced climes such as Europe and the United States, with scant regard for the infrastructural challenges encountered here.
“Here in Nigeria, logistics remains one of the biggest headaches faced by e-commerce players as our transport infrastructure is severely underdeveloped. Worse still, there are no reliable physical addressing system in some major cities, not to talk of the hinterlands. If you transplant a foreign strategy that works in Europe where delivery and transport infrastructure are highly developed, for instance, but which fails to address these identified gaps here, then you are bound to fail,” he submitted.
“Trust is also a major issue. A customer who has been disappointed the first time is harder to convince. Winning the e-commerce war in Nigeria requires a strong player backed by core local know-how and resources that can build and own its own delivery and supply chain network that will reduce delays to the barest minimum, while also presenting a strategy that will accommodate Nigerians’ proclivity for traditional retail.”
What hopes for the sector?
Considering the struggles of other players, the battle for the soul of the Nigerian e-commerce market is presently a straight fight between Jumia and Konga. However, it is clear where the pendulum is currently swinging.
Acquired by the Zinox Group from erstwhile majority investors – Naspers and AB Kinnevik – in a landmark deal in late 2017, Konga was one of the pioneers of the e-commerce revolution in Nigeria. Its online marketplace model, which was initially criticized by rivals including Jumia, made it an instant hit with a Nigerian populace that had just been bitten by the e-commerce bug.
The hugely popular model saw it rack up thousands of customers and merchants on its online platform which lived up to its name as Nigeria’s largest online mall, resulting in Jumia eventually copying and adapting the marketplace model.
In May 2018, Konga’s operations was merged by its new owners with that of Yudala, another bright star in the e-commerce space which had taken the e-commerce sector by storm with a futuristic omnichannel business model.
This model featured a combination of its online platform with a growing network of brick-and-mortar stores across Nigeria. Interestingly, the foresight in its omnichannel model was justified by global e-commerce giants such as Amazon and Alibaba which wasted no time in adapting it – a development that goes to prove that Nigerians are capable of leading from the front.
Since its acquisition by the Zinox Group – arguably Africa’s most structured technology conglomerate with over 30 years of brilliant success in the Nigerian technology space – and its subsequent merger with Yudala, Konga has gone a long way in restoring investor and customer confidence in the sector.
Building confidence through strategic investments
The owners of the new Konga – renowned for years of successfully navigating Nigeria’s technology space – have retained the omnichannel business strategy that Yudala was famous for. Not only that, it has taken this further by focusing on expanding its reach across Nigeria’s considerably huge landscape – a move that remains instrumental to capturing more Nigerians in the e-commerce net. As at today, Konga boasts over 35 physical retail stores across disparate locations nationwide, with many more in the pipeline. The company boldly claims its target is to reach the 774 local government areas in the country.
Also working for Konga is the huge investment in technology that is repositioning the business and its operations for cutting-edge efficiency. In addition to a world-class partnership with global tech giant Microsoft through which it is revamping its technology back-bone, Konga also boasts a well-equipped internal technology team which has built a suite of robust applications driving the company’s operations.
The company has also invested heavily in the acquisition of massive regional warehousing facilities including the latest – an 85,000 square meter space in Lagos.
It is, nevertheless, through two internally-owned businesses with which it has resolved the pain-points of logistics and payments that Konga has distinguished itself from the rest of the e-commerce field.
For Konga, Kxpress – an in-house logistics company, has been a source of blessings. Through the significant investments made by its new owners, Konga possesses arguably the most efficient delivery/logistics company with the largest network of line-haul trucks, vans, buses and motorbikes in the e-commerce space and with the capacity to handle last mile delivery to every part of Nigeria.
Deliveries are now handled within 24-48 hours and with minimal delays, further growing user confidence in the sector.
And through KongaPay, a Central Bank of Nigeria (CBN) licensed payment system owned by the company — Konga has also de-mystified the payment challenge. KongaPay, which works with all banks in Nigeria, allows users domicile funds in an e-wallet for their transactions on the Konga platform. In addition, Konga offers other options such as payment on delivery (POD), payment on pick-up of items and cash payment in all of its stores nationwide.
Efforts to speak with Leo Stan Ekeh, Chairman of the Zinox Group – Konga’s parent company – were unsuccessful. However, Nick Imudia, co-Chief Executive Officer, Konga Group, disclosed that the company is determined to change the e-commerce narrative in Nigeria for good.
“Creating confidence in the marketplace and in the minds of Nigerians of all classes is key to what we are doing. The Konga strategy is attuned towards considering the culture of the people, by providing them multiple platforms. Our intention is to continue to optimize and we certainly will not disappoint the trust reposed in us,” he disclosed.
The case for Konga is an even simpler one for Uwaje.
“The rise of e-Commerce in Nigeria will accelerate the innovative application and use of Drone Technology to deliver essential goods and services nationwide, facilitate rural community education as well as save critical lives at all levels of national emergencies.
“An e-Commerce platform such as Konga should be viewed as a too-big-to-fail enterprise…E-Commerce has great potential to reduce traffic congestions, infant and maternal mortality, deliver healthy living, wellness and improve meaningful life expectancy. These amongst others are the deep benefits of uplifting Konga as Africa’s foremost e-Commerce Platform,” he concluded.
[Contributed by Sammy Lee, a global e-commerce researcher based in the United States].
Just less than three weeks as the Lagos State Governor, Babajide Sanwo-Olu already kick-started the process of tackling the high level of traffic gridlock in the state.
Lagos, being the commercial capital of Africa’s most populous nation has been a subject of ridicule over the years as its residents pass through difficult moments arriving at their destination within an expected time-frame.
To put simply, 15 minutes drive could take up to hours because residents are usually stuck in Lagos traffic. This is the usual phenomenon. Arguably, one of the reasons a few Lagosians decided to relocate to other nearby cities.
The implications of Lagos traffic on the health state of residents are colossal. On a daily basis, week-in-week-out, many Lagosians suffer from stress emanating from this ugly development. Unfortunately, the larger majority are not able to detect the long term implications of being on the road for many hours.
Ask any average worker in Lagos ’what is the biggest challenge working in Lagos,’ you are most likely to hear its traffic jam. In as much as people try to wake up early enough to avoid being caught by Lagos traffic, they are eventually caught up by it. It’s simply inescapable.
However, the good news is that the newly elected Lagos State Governor is already making strategic moves to clean up the Lagos traffic mess.
Even before Sanwo-Olu won the election he had made his intentions known concerning the ugly development. In other words, traffic management is a critical aspect of his agenda to achieving a greater Lagos.
First, Sanwo-Olu has made an official visit to LASTMA Office to dialogue on the way forward to end traffic gridlock in the state. During the visit, Sanwo-Olu increased their allowances by 100%. Obviously, that was the first action-step by the Governor towards improving travel time in the state.
Sanwo-Olu being is a surveyor who understands the importance of taking a proper measurement and managing space, of which, they are critical to traffic mamanagement, but he started by motivating the LASTMA officials. That seems to be a good move even though their reputation has been dented over the years.
LASTMAN officials, arguably, have been part of the Lagos traffic problem in many ways than one. The incessant stopping of vehicles on the slightest mistake by Lagos drivers is appalling. At this point, when drivers are caught, they are taken to their office and are expected to pay huge fines.
From this beginning, Sanwo-Olu must fish-out scrupulous LASTMA officials who have enriched themselves at the expense of drivers, if he must achieve this agenda.
They break the law at ease and rewrite the codes in their various checkpoints and offices. That group must be properly sanitized as it would play a significant role.
Further, it now imperative to start doing real homework, increasing allowances is scratching the surface. Now, Sanwo-Olu must start digging the surface.
Although, prior to his assumption, Sanwo-Olu had suggested that one of the solutions is, ”when the road is blocked, extend this one to be six lanes and the other free one two lanes to ease the traffic.”
“You can solve all these problems without even building some of those things that can take you one or two years to build,” Sanwo Olu said.
According to Sanwo-Olu, he had consulted with experts who have identified major areas peculiar with traffic gridlocks in the mega city and plans had already been put in place to design quick fixes in the affected areas.
“It is not that this will solve all the traffic problems but we can design quick fixes, which is similar to the model that we use in some of the toll plazas.
It is going to take a lot of patience and enforcement because you know people also don’t obey things, we don’t have enough road signs and signage, all of those ones will come, but we can design things quickly.
“We have identified major gridlock areas and what kind of interventions we are going to have. These are some of our quick ways, high on impact in our views and we are going to push it in the first six months.It is going to take patience and a lot of enforcement.
We are also going to look at how to have a good mass transit system but it is not going to happen overnight,” Sanwo-Olu said.
The collaboration with LASTMA significant and commendable, however, unscrupulous elements in the system must be left out. The Governor has started well in this regard and hopefully, Lagosians will start to shuttle the state without so much stress.
Debt Management Office (DMO) report shows that Imo has domestic debt stock of N85bn plus foreign debt of $62.2m as @ 2018 Half Year.
Imo State’s IGR averaged N6.8bn annually.
It receives average of N85bn from Federation Accounts (FAAC)a year.
This puts its consolidated Debt/Gross Revenue @ 292.82%, or 369.65% Debt/Net Revenue. Either way, the journey is long, tough, rough and the future not far from being bleak.
With estimated population of 5 million growing @ 3%p.a, and 60% being youth,
Imo governor-elect, Emeka Ihedioha, should know that the problem at hand is as real.
Interestingly, the in-coming Governor has admitted that “Rebuilding Imo after Okorocha’s misrule a tough job”.
He said rebuilding the state from its current degree of rot under Governor Rochas Okorocha’s alleged misgovernance will not be easy.
He charged those who would make his government immediately he is sworn in on May 29, to roll up their sleeves because they would hit the ground running.
Ihedioha said these at Dukes Aldridge Academy, Turlock Road, Tottenham, London, yesterday, when he addressed Imo indigenes living in the United Kingdom.
He urged members-elect of the House of Assembly to quickly acquaint themselves with the existing rules as he would inundate them with executive bills once the House is inaugurated.
“I know it’s going to be a bit difficult because in the last eight years, our people have been used to misgovernance; we’re used to doing things the wrong way.
“We’ve not been used to getting things done the way they should.
“So, getting us to go back to how things should be won’t be an easy thing. It’ll be a bit difficult; it’ll be challenging but I’m sure we shall prevail.
“I’ve charged the members-elect to get themselves acquainted with the existing rules of the House to understand what the legislature should be, what it’s all about because, from day one, upon their inauguration, I would challenge them with certain executive bills to keep them together cracking,” the governor-elect said.
He regretted that the legislature was practically dead in the state in the past eight years because of Governor Rochas Okorocha’s governance approach that detested separation of power.
By: Sonala Olumhense [Punch Newspapers]
In six days, Nigerians of voting age will clarify not only whom they are, but whom they wish to be.
Four years ago, I helped bring to the leadership of Nigeria a man I had equally endorsed at the 2011 election: General Muhammadu Buhari, as President. In 2015, there really wasn’t much of a choice.
This year, there is: Anybody Else. Vice-President Yemi Osinbajo unintentionally captured the situation a few days ago during a campaign stop in Owerri.
Reaching down to his evangelical side, the pastor told the crowd: “The most important thing is that when the righteous are in power, the people rejoice.”
Then he asked, “Are you rejoicing now?”
The crowd erupted: “NOOOO!!!”
The vice-president seemed to think that he might have been misheard, or that his audience had perhaps got its cue wrong.
He tried again: “Under this government…are you rejoicing?” Louder came a thunderous tumult, as if the crowd thought Osinbajo was hard of hearing: “NOOOO!!!”
But here is the punchline, and I am going to quote the vice-president comma by comma in a statement he made as if it were 2015 and he was waxing delirious about the Goodluck Jonathan administration his APC presidential ticket was trying to defeat:
“Very good. The reason, the reason, the reason why we cannot rejoice under this government is because the Scripture says, ‘when the righteous are in power, the people rejoice.’”
I don’t know who wrote the screenplay of Osinbajo’s Nollywood appearance at that Owerri rally. Clearly, the answer to his question was supposed to have been a resounding “YES!”
In which case his conclusion, something about righteousness and political power, was supposed to be that Nigerians are happy today because the right people are in power and should be re-elected.
The louder rejection of his proposal the second time appeared to have thrown the vice-president out of his tradermoni heart and the law professor adlibbed into a verdict against his very purpose.
Now, I believe that Osinbajo, speaking before an audience he understood to be mainly Christians, had hoped to take advantage of their faith. In which case it is wise to look at the segment of the Holy Book he unwisely—but incompletely—drew from: Proverbs 29:2.
“When the righteous are in authority, the people rejoice: but when the wicked beareth rule, the people mourn,” it says.
It is not surprising that the vice-president avoided that second part, but his conclusion was unavoidable: Nigerians are suffering because its rulers—whatever they think of themselves—are wicked.
Osinbajo’s testimony against his own cause says almost everything anyone would like to know about where Nigerians find themselves this week as they vote.
Buhari himself continued the effort to market the same theme three days ago, calling on the Pentecostal Fellowship of Nigeria to stand for righteousness and truth, and preach against all forms of corruption, as “only righteousness” can elevate Nigeria.
Mercifully, he was not standing before an incredulous crowd to preach righteousness. But before Osinbajo spoke, Kaduna State Governor Nasir el-Rufai had inflicted a different kind of righteousness.
I have praised el-Rufai in this column for what seemed to be his clarity of vision, notably in March 2017 when the second of two powerful memos he sent to Buhari, leaked. The first was in April 2015, before Buhari took his oath of office, and the other in September 2016.
Citing “the progress of our party, our president, our government and our country,” the governor offered Buhari a 30-page, well-reasoned strategic plan in which he challenged the president to revamp the entire apparatus of government so that APC would not leave Nigeria worse than it had met it.
Stressing that the Buhari administration had so far failed to manage the “change” expectations of Nigerians or ‘to deliver even mundane matters of governance’ outside of fighting Boko Haram and corruption, he urged him to “act decisively.”
“Overall, the feeling even among our supporters today is that the APC government is not doing well,” the governor observed. He encouraged Buhari to consider communicating actively and directly with the Nigerian public to enunciate the government’s plans, strategy and road map to take Nigeria out of her economic mess.
For that purpose, he suggested that Buhari use a mechanism “akin to a State of the Union address…preferably in a joint session of the National Assembly,” during which he would explain some perceptions and lay out his vision.
Among others, he pointed out that APC could shape Nigeria’s political culture in (Buhari’s) image through active stakeholders and process engagement, saying, “We are not engaging at all, and (are) taking things and important matters for granted.”
El-Rufai counselled that the institutional weaknesses that enabled corruption to thrive under Jonathan and the persons involved, were still very much in control, “and many are around you.”
He wanted stronger hands and minds closer to the president, describing (former SGF Babachir Lawal) as “inexperienced, lacking in humility, (and) insensitive and rude to most VIPs,” and Chief of Staff Abba Kyari as “totally clueless.”
El-Rufai then spelled to Buhari the time: “You have both a crisis and opportunity in your hands to turn around our country in the right direction.”
But APC and Buhari’s ineptitude were just fermenting. They ignored all progressive voices inside and outside the party, and rotted in ambition, focus and performance. Buhari, for his part, never read any of el-Rufai’s memos: he handed them to the same key officials the governor had criticised, who shredded them and demonised him.
Last week, with days before the election, a key measure of the depth of the Buhari rot emerged: the same el-Rufai appearing on television to threaten the massacre of foreigners who “intervene” to disrupt Buhari’s desperation to remain in office.
“Those that are calling for anyone to come and intervene in Nigeria, we are waiting for the person that will come and intervene,” he said, threatening: “They will go back in body bags.”
It was a strange response to international expressions of concern about the elections being free and fair. Ambition and power clearly overrunning good judgement, el-Rufai threw away every benefit of the doubt.
But he illustrates what faces voters in Saturday’s ballot: the mind-boggling reality that a government that was enthroned with such overwhelming support is baying for blood for re-election.
Sadly, Buhari has been fully exposed as fickle of conviction, frail of body and fragile of mind. To say that he will rise beyond himself to inspire and elevate Nigeria is to bathe our children in sewage.
The truth is that the very deficiencies identified by el-Rufai in 2016 were not symptoms but chronic diseases that have now mutated, with APC politicians now contradicting everything they said in 2015.
This has nothing to do with PDP, but everything to do with Buhari’s character and poverty as a man.
In the real world, when there is an infectious disease, you flee. This week, Nigerians should free themselves by voting for Nigeria.
*Note: This editorial was first published by the Punch Newspapers
Badaru on Operational Tour of 82 Division, other Military Installations in Enugu and Imo States
Boost for Nigeria’s Oil Production, As NNPC’s Utapate Crude Grade Hits Global Oil Market
Defence Minister in S’Arabia to Discuss Counter-Terrorism
LASG Acquires New Outboard Engines For Optimum Boat Performance
Elon Musk builds Hotel in Mars, Sets to launch soon at $5million per night – Photos
We Do Not Accept Refugee Application Directly From People – Canadian Govt.
-
Spotlight3 days agoConcerned citizens appeal to Gov Sanwo-Olu, Dangote Foundation, Banks, MTN Foundation, NNPC, others to assist journalist for brain surgery
-
Politics3 days ago
President Tinubu Restructures Media and Communications Team
-
Travel2 days ago
Defence Minister in S’Arabia to Discuss Counter-Terrorism
-
GRPolitics3 days ago
With Commitment, Resilience We’ll Defeat Banditry and Terrorism – Badaru
-
Energy15 hours ago
Boost for Nigeria’s Oil Production, As NNPC’s Utapate Crude Grade Hits Global Oil Market
-
News8 hours ago
Badaru on Operational Tour of 82 Division, other Military Installations in Enugu and Imo States
