6 March 2014

Nigeria: Driving E-Commerce Business Among Nigerians

Government and the generality of Nigerians are beginning to see the huge opportunities that abound in e-commerce and online trade. However, Nigerian investors need the enabling environment to help them tap into the opportunities, writes Emma Okonji

The impact of retail e-Commerce business in Nigeria cannot be over- emphasised, considering the fact that Nigeria attracted over N205.4 billion worth of fresh investments into her retail sector in the last two years.

Confirming the figure, the Minister of Industry, Trade and Investment, Olusegun Aganga, at the recent inauguration of the Retail Council of Nigeria (RCN) in Abuja, explained that anywhere in the world, e-Commerce business had become a major driver of the economy.

According to him, global retail trade accounts for 27 per cent of the world's Gross Domestic Product (GDP). The retail sector also employs 17 per cent of the global workforce, which is about 800 million people. In the United States alone, one in every 10 people works in the retail sector.

"With over 80 million Nigerians living in metropolitan areas, it automatically creates huge opportunities for formal retail business like the e-Commerce business to thrive," Aganga said.

He identified the retail sector as a major driver of economic growth, job creation and wealth generation globally, pointing out that Nigeria has great opportunities for existing and new investors to take advantage of the online retail business in the country.

Nigeria as the next online retail destination

Nigeria's population is over 160 million and 84 million are under the age of 20 and by 2015 this age group will account for 52 per cent of the country's population, according to recent statistics that is in the public domain. This makes Nigeria the largest consumer market in Africa generating high demand for mobile phones, personal computers, iPads, that would be used to access the internet and shop online for personal cares, household items, and grooming products among others.

Online trade like retail e-commerce business is gradually developing in Nigeria, with the likes of Jumia, Konga, Gloo, Buyam, and more are springing up by the day. A few of them have attracted foreign capital to expand their business across Nigeria, while others are still struggling to survive, owing to low patronage as a result of high cost of bandwidth in accessing the internet, as well as limited developed online contents that should drive e-Commerce business in Nigeria.

President of the Association of Telecoms Companies of Nigeria (ATCON), Mr. Lanre Ajayi, had always insisted on developing the right content and application that will drive e-commerce in Nigeria. According to him, very little proportion of Nigerians shop online, as majority of them still prefer to go a market place to do physical shopping, while some even prefer to shop in traffic, along major roads.

There are many advantages to doing business online including the access to a huge customer base, as well as the freedom to shop anywhere, anytime, without carrying physical cash, thereby fulfilling the needs and wants of a customer.

e-commerce is capable of changing people's lives for the better in Nigeria. Not only are online companies employing large numbers of people, e-commerce also allows people to make an honest living where previously there have been few options.

As infrastructure gets better and the population becomes savvier, e-commerce is expected to play a huge role in growing the economy and giving the average customer more access to wealth and wealth creation, through the use of technology tools.

Government should therefore encourage Nigerian investors to invest in e-Commerce business, by creating the right environment for business to thrive, through the provision of basic infrastructure like cheap and available bandwidth for easy las-mile connectivity that will give the people unrestricted access to the internet at affordable cost.

Challenges in online retailing

Online shopping has been a nightmare for Nigerians considering the dearth of the much needed ubiquitous broadband in the country.

Also, from the challenge with products not been available to delay in delivery, Many Nigerians have become very skeptical about shopping online. This negates the culture of promoting technological advancement, that will ease traffic congestion on our roads and allow customers to shop online from the comfort of their homes, offices or wherever they may be.

One major challenge of online business in Nigeria, is the lack of adequate infrastructure that will drive the business. As the name implies, online business or e-commerce rides on broadband data infrastructure. The consumer must have access to the internet before shopping online. But a situation where huge broadband capacity still lies at the shores of the country, and cannot be transmitted to the hinterlands for easy access to offices and homes, pose serious challenge to online retail business in the country.

Again, lack awareness campaign on the part of the government, also pose serious challenge. Not many people are aware that can shop online with ease, and as such the old tradition of going to a large concentration of people in a market place to do their shopping, is still part of their lifestyles.

Nigerian investors, especially the start-ups, should be encouraged to invest in online business, in order to add varieties to the business. Government should also consider the training of software developers and giving them soft loans in terms of grant to develop local content applications that will drive e-Commerce in Nigeria.

Allaying the fears

Managing Director of Buyam.com, one of the few online retail companies, Mr. Emeka Mordi, however dismissed these fears saying the challenges of doing business online are same as doing business offline.

"There is a steep learning curve for all members of the value chain and there are significant infrastructure costs. Also, there are lots of external issues, which can take the focus off your primary goal that is to give the customer, our merchants and buyers, the best service possible," he said.

According to Mordi: "Buyam.com.ng is basically an online shopping mall which officially launched operations in April 2013. With over a 105 registered retailers; stocking everything from electronics, books, to fashion and health care.

"We fully intend to meet the needs of our rapidly growing customer base. Because we recognise that delivery is a key point of failure in this business, logistics will be handled by world class logistics provider, DHL Express and will be supplemented by our own in-house logistics company, Thanet Deliveries."

This is why Morpheus Limited, the parent company and promoters of the e-commerce platform, developed Buyam.com.ng. The site is essentially a platform for both Business to Business (B2B) and retail commerce (B2C) customers to access goods and services directly from merchants at no additional costs, he said. One of the core objectives of the company is to create a web-based, global marketplace where a variety of products can be bought and sold. The site covers Nigeria and will eventually expand to other African countries.

Speaking on customer security, he said: "Special efforts and measures have gone into fraud detection and prevention. Transaction repudiation and full consumer protection will be provided, so our customers can shop in a safe and secure environment."

On the perceived low internet penetration, despite its relative improvement in the past few months, Mordi said though we still have issues with the internet in Nigeria, nevertheless, we have seen significant improvement in internet penetration as more companies are now providing Long Time Evolution (LTE) internet services, cost is coming down, speed is getting better, stressing that for as low as N200 OR N500 you can get data packages from service providers.

He noted that they have designed their footprint in such a way that it does not take much internet speed. He was confident that with service providers spending more money on their network upgrade, it could only get better.

Another online shopping platform that is promoting e-commerce business in Nigeria is Jumia, which is an online shopping destination where customers can shop the widest selection of electronics, fashion, home appliances, kid's items and more in Nigeria and have them shipped directly to their homes or offices at their convenience.

It offers free free nationwide delivery, free returns and have several convenient payment options to choose from, either with debit/credit cards or cash on delivery. With affordable prices and great products, Jumia lets customers enjoy an awesome shopping experience with order sent directly to doorstep.

Jumia Nigeria belongs to the Africa Internet Holding which aims at supporting the evolution of the African online culture, with 8 fast-growing ventures.

Konga.com is yet another online marketplace that was lunched in July 2012. The online platform serves a retail customer base that continues to grow exponentially, offering products that span various categories including Phones, Computers, Clothing, Shoes, Home Appliances, Books, healthcare, Baby Products, personal care and much more.

Its range of services are designed to ensure optimum levels of convenience and customer satisfaction with the retail process, which include lowest price guarantee, 7-day free return policy, order delivery-tracking, dedicated customer service support and many other premium services.

"We are customer-centric and are committed towards finding innovative ways of improving our customers' shopping experience," the company said. Having exposed the potentials of e-Commerce business in Nigeria, it is expected that government taps into the potentials and bring them to bare, to enable Nigerians benefit from it.

Copyright © 2014 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.