How Nigerian startups are using data to beat the competition

Sylvanus Egbosiuba

In today’s business world, data is no longer a luxury. In the words of famous British mathematician and entrepreneur Clive Humby, “Data is the new oil.”

John Sculley, an American businessman and former CEO of Apple, abruptly posits that “No great marketing decisions have ever been made on qualitative data.” Ronald Coase, a British economist and writer, advises, “Torture the data, and it will confess to anything.”

The views of these famous world business leaders point towards one undiluted fact: data is now the difference between sinking and staying afloat in business.

Across Nigeria, business startups are discovering that the smartest way to win against competitors is not just through hard work but by listening to what data says and implementing game-changing decisions that are based on what data shows. Data enables them to understand their customers, manage costs, predict future trends, and demonstrate their value to investors.

Nigeria’s startup scene is one of the most vibrant in Africa. Top African fintech giants based in Nigeria, such as Paystack and Flutterwave, have pioneered the use of data. Even smaller companies selling food, fashion, or ride-hailing services in major Nigerian cities (Lagos, Abuja, Port Harcourt, and Ibadan) face intense competition. Consequently, every founder is fighting for survival in a highly competitive market. The question is, how do some manage to break out and dominate while others fade away? The answer often lies in how well they use data. For a long time, many Nigerian businesses were run by gut feelings. A founder would decide what to sell based on instinct or what seemed popular at the time. Sometimes, that worked. But in many cases, it led to wasted effort and lost money. Although short-term monetary setbacks do not necessarily imply that a business is crumbling, these wasted efforts and loss of vital capital can spell the end of a business even before it sets sail. Hence, startups today can no longer afford to rely on guesswork. They need to know, not assume.

Founders who know how to collect and analyze the right data can see exactly what customers want, when they want it, and how much they are willing to pay for it. A typical example is Jumia, the largest e-commerce site in Africa. During its formative years, the company gathered huge amounts of customer data based on their browsing history and purchase behavior. These two data points enable Jumia to know exactly what customers really want at all times, especially during peak sales periods like the festive seasons. They did not stock all the items, but only concentrated on what the figures revealed people were after. The strategy of using data enabled them to grow fast in a hostile environment.

Individualization is one of the biggest benefits of data. Startups can decode a customer’s personal information, rather than collecting and analyzing data from a large customer base. For instance, ride-hailing applications like Uber and Bolt heavily rely on customer personalised data. They are not only aware of the number of rides occurring on any given day, but they are also aware of the precise time that demand peaks, which routes are the busiest, and which drivers have the highest rides. If mornings in Abuja are typically busy with high demand for office spaces, the app could encourage more drivers to log in during this period. This use of data in peak periods is a game- changer because passengers receive quicker journeys, drivers receive higher earnings, and the company receives loyalty. In this case, everyone wins: customers get fast services, and companies and riders smile to their banks.

One of the largest startup costs has always been marketing. Many companies invest in sending ads to everyone, hoping some will catch their attention. However, with proper use of data, startups no longer need to spray money and ads around and hope blindly for favorable results. Digital platforms and social media give new insights into users, what they like, where they reside, their age, and even their devices. Fashpa, a fashion startup based in Nigeria, uses this information to design specific campaigns. They may not advertise to the entire country, but focus on young women already involved with fashion content in Lagos. This is cost-saving and more effective. Even the small businesses are following suit. Instagram analytics will allow a food delivery brand in Abuja to understand that the majority of its orders are received during lunch hours, and they are made during weekdays. Armed with that information, they can drop advertisements between 10 am and 1 pm when hungry employees are likely to scroll the internet, and this singular move gives them a higher probability of conversion.

In present-day Nigeria, entrepreneurs are aware of the battle against increasing prices. Profit is taken by power outages, fuel increases, logistics delays and unreliable internet. Information provides a means of counterattack. Ride optimization data helps identify the shortest and quickest routes for riders through delivery companies like Gokada. This saves on fuel, decreases delivery time, and leaves customers satisfied. Agri-tech businesses such as Thrive Agric monitor agriculture data on farm productivity to determine the best time and crop to grow and process. Through this analysis, they ensure that they do not waste scarce finances and at the same time make the maximum profit. Each naira saved will give the business another war chest in the strive for competitive advantage.

Naturally, there are obstacles to using data in Nigeria. Internet connectivity in rural locations is poor, which makes it challenging to collect live data. The constant power outage is also a massive challenge since data is collected and transferred on digital tools. Nowadays, data analyses are carried out by experts known as data analysts. These professionals know how to harvest data and transform it into charts, graphs, and displays that drive business decisions. However, these professional skills are scarce, and only businesses with a huge budget can afford the top data analysts. Many small startups lack the resources to hire experienced data analysts. To add to this, data privacy is emerging as a huge issue. Gathering data is one thing, but keeping it safe is another. But even with these challenges, startups are not relenting. They are now training their own staff on how to operate simple tools, such as Google Analytics, Excel, and social media dashboards, before they can upgrade to more sophisticated systems. This simple move enables early startups to save costs and reap early benefits from their likely inexperienced workforce.

About the author:
Sylvanus Egbosiuba is a seasoned data scientist with over three years of experience transforming complex datasets into strategic business insights across healthcare, finance, and technology sectors. He specializes in predictive analytics, machine learning model development, and statistical analysis. He currently works as a Business Lending Specialist at Barclays, UK.