Nigeria: Rise Of e-Shops

Online shopping culture is gradually gaining ground in Nigeria, but it is still light years away from what it is in other countries

—TOKUNBO OLAJIDE

They are nowhere near the UK’s online shopping business, which grossed more than £4bn last December in the Christmas bargains frenzy, but Nigeria’s online stores are gradually worming their way into the hearts of shoppers.

The last one year has seen a growing list of online shopping sites exploiting the growing internet awareness among millions of Nigerians to woo them to their virtual shops. Increased internet penetration and usage of smartphones are helping to gradually project online shopping from a pastime by a tech-savvy few into a mainstream activity.

Between 2000 and 2010, the number of Nigerian internet users reportedly grew from 200,000 to more than 40 million. The number has risen further in recent years, something which is fuelling the potentials of the growing e-commerce platforms. It is estimated there are now about 70 online retailers in Nigeria, selling everything from household items, electrical appliances, office gadgets and fairly used items.

Shoppers looking for good deals online are finding the e-shops appealing due to their discount offerings and wide range of products. The items range from top-end phones (especially BlackBerry models), electronics and computers, home appliances, cosmetics, fashion items, groceries, movies and books, with the incentive of free delivery to customers in certain locations.

The online shops employ growing e-payment platforms, which, though, are still largely underutilised by Nigerians because of their many drawbacks as unreliability and insecurity, caused by  widespread internet scams Nigeria is notorious for.

The frontrunners are konga.com and jumia.com.ng, but dozens of others, including egoleshopping.com, buyright.com, nigeriagalleria.com and circuitatlantic.com are also making modest strides. The list also includes nairaland.com, the popular interactive forum, which doubles as an online shopping and auction platform for second-hand cars, electronics and other home appliances.

Another site, ngpricehunter.com – a price comparison website – allows shoppers to find prices from many shops in one place and compare them and get the best deals on desired items. There is also yesidefashionstore.com, which stocks mainly clothes, shoes and fashion accessories; and www.mallforafrica.com, a US-based online store that serves Nigerian shoppers.

Of the lot, Konga and Jumia, which have larger financial chests, are registering the most impressive presence in the minds of online shoppers. The two constantly run promo ads on many sites frequented by Nigerians and also have commercials running on TV and radio.

Run by youthful Tunde Kehinde and Raphael Afaedor, co-founders and joint-CEO, jumia.com, which rebranded from kasuwa.com, was launched in June 2012, with the support of Rocket Internet – the European incubator of internet start-ups. One of the continent’s thriving e-commerce retailers, Jumia, aside from Nigeria, also operates in Egypt and Morocco, and plans to expand into other African countries soon.

In November 2012, barely five months into its operations here, the retailer secured a cash-for-equity investment from J.P. Morgan Asset Management, which took its stakes through a German holding company. The value of the deal was, however, undisclosed. The global financial giant, which also invested in Zando, South Africa’s largest fashion retailer online, had assets under supervision of approximately N320trn ($2.0tr) and assets under management of N2.08tr ($1.3tr) as at June 2012.

Jumia’s rival, Konga has also been making waves. Jumia is overseen by Sim Shagaya, founder and CEO, who once worked with Google and has degrees from Ivy League universities including Harvard. Konga now employs about 70 people – up from about 10, when it started out mid-last year.

Like Jumia, Shagaya’s Konga has defied Nigeria’s barely-there postal system to also run a delivery system relying on in-house deliverymen and private couriers to ferry goods to customers.

Jumia offers shoppers a range of alternatives for easy transaction via the internet, and promises that orders will be delivered “between one and five working days” to shoppers’ doorsteps. Konga, like its peers, deploys the e-payment system for shoppers to pay for their orders, but only one in 10 of its customers, according to Shagaya, use credit cards. The bulk of orders is still settled through cash on delivery.

“The immediate sort of objective is to give the Nigerian customer the best price the best convenience the best selection of goods that anybody else can give them in Nigeria whether they are online or offline doesn’t matter,” Konga boss, Shagaya, told CNN in an interview.

The shopping sites employ simple processes to make for a stress-free shopping for customers looking to buy items on its site. The shopper simply has to browse through the sites and choose from the range of products, click the ‘buy’ icon to add the items of choice to a purchase ‘cart’. Thereafter, the shopper can proceed to pay for the order online. Mindful of the widespread internet scams, Konga.com assures shoppers it employs “trusted payment gateways which use SSL encryption technology to protect their card information”.

Buyers can also pay for orders by bank transfer or deposit or opt for the ‘pay on delivery’, though this has conditions attached and application is limited to Lagos. In Lagos, the online shops make their deliveries through their dispatch riders, while deliveries to other states are handled by reputable couriers. During the process, buyers can track the movement/delivery of their order.

Konga claims to provide free delivery on all items, if total order amount is N3,000 or more in Lagos or N15,000 in other areas of the country. Otherwise, a delivery charge starting at N200 in Lagos or N950 and up for the rest of the country is charged. Jumia, too, claims to deliver nationwide to customers’ doorsteps, but only in locations in Lagos are goods delivered free-of-charge.

Since starting out in June last year, the Jumia owners claim to have generated over 100 new jobs, employing foreign and locally-trained Nigerians. “Where there is a skill shortage, for example, in online marketing, our approach is to bring in a foreign expert to teach local talents, thereby creating new skills in the economy and creating a sustainable base of talented Nigerian employees,” said Jumia’s co-CEO, Afaedor.

Speaking on the J.P. Morgan deal, Jumia’s promoters described it as an endorsement of the Jumia brand and the Nigerian consumer. “This investment is a real turning point for Jumia and e-commerce in Nigeria…The investment will enable us to focus on building a world class organisation with a dedicated focus on the best customer experience for the Nigerian consumer,” Afaedor and Kehinde, co-founders and joint CEO, said in a statement.

Despite appreciable strides so far made, the likes of Konga and Jumia would aspire to the heights of world’s leading online stores like Amazon, eBay, Play.com and Pixmania. In the UK, regarded as Europe’s biggest online spender, official statistics say nearly £1 in every £10 is spent on goods bought online for the first time. Nigeria too can look to better days as the e-commerce awareness grows further. “With a 25 per cent growth in online shopping in Nigeria and revenue valued at N62.4m in 2011, it is clear that online has come to stay,” enthused the Jumia promoters.

.This story was first published in THENEWS magazine of 28 January 2013