Nigerians aren’t in a hurry to ditch brick-and-mortar stores for online shops. But there is something happening with online shopping trends in Nigeria, something worth the rubbing of palms in anticipation.
Nigeria has stolen a march on other African countries in this respect. Perhaps leveraging its status as Africa’s most populous country, it now has 40% of the continent’s e-commerce ventures operating within its borders. So says the African Ecommerce Startup Ecosystem Report 2017, published by Disrupt Africa. The report paints a partly promising picture of our online service delivery platforms.
Nigeria’s E-Commerce Scene Is Attracting International Interest
There’s more for Nigeria to be proud of. Its commercial nerve centre, Lagos, was the birthplace of Jumia, Africa’s first billion dollar tech company. Jumia, along with its rival Konga, have paved the way for other players in what is an ever expanding e-commerce sector. Jumia’s own report says the industry in Nigeria is worth $13 billion.
It’s hard to not want a bite of this always expanding cake, especially if you have the funds to get some for yourself. Deep pocket investors from across the world have staked huge bets on ecommerce startups in these parts. Jumia’s unicorn status owes much to multi-million dollar investments from Rocket Internet, AXA, Goldman Sachs, Orange and CDC; Konga, until fairly recently, had funding from Swedish company Kinnevik and South Africa’s Naspers.
But the pretty numbers aren’t the entire story.
The challenges of a developing market
E-commerce is still dealing with teething pains. Kinnevik and Naspers are reported to have taken heavy losses from their investment in Konga, in the run up to that company’s purchase by Zinox. Jumia hasn’t yet managed to match its might with sustained profits. And the Disrupt Africa report referred to earlier indicates that more than 70% of e-commerce companies in Nigeria and other African countries are running at a loss.
These grim realities are borne out in the failure of many businesses in this sphere. In February, online classifieds marketplace OLX, announced that it was shutting down operations in Nigeria. A year before, Efritin, another major player in the space, closed shop. Both gave similar reasons for their departure from the scene- an unbearably difficult business environment. Numerous others have failed, without the widespread gasps of dismay that greeted the demise of bigger names in Nigeria’s ecommerce.
A future of real promise
Nevertheless, there’s still great potential in online retail and service provision. Powered by the fall in average smartphone prices and increasing internet penetration, Nigerians are opting for the convenience of online shopping in greater numbers. The industry could become a key driver of growth in a future Nigerian economy that more closely mirrors a world greatly dependent on digital technology.
