E-commerce boom: How telcos are driving conversation
Pre- Internet Era
How most Nigerians lived pre- 2001 before the emergence of internet is gradually being forgotten. In pre- internet period, communication which dictates actions was pretty slow, sending pictures and letters to another person was by physical method, bank and other transactions were manual, locating places without Google maps was also by asking questions and indoor games were devoid of electronic devices.
Today, the millennials would perhaps need history textbooks to understand how the older generation coped with life and successfully managed the economy when that life is juxtaposed with today’s economy and leadership.
E-commerce and the digital world
The coming of Internet facilitated by the telecommunication companies which was only established in 2001 beginning with MTN, after Nigeria’s usual politics, has enhanced living. These companies have provided infrastructure and platforms on which internet services are premised.
In addition to digital media, e-commerce which was hitherto non-existent is now growing in Nigeria. Virtual transaction has meant that businesses can be transacted from the remote corners of homes but enabled by the internet.
“E-commerce is a business that is on the rise today and the internet’s vast potential has made it easier for organizations to reach out to a larger pool of the people. In the real world, if you set up shop at ‘x’ place, your target crowd will be the people from the vicinity which really limits the consumers you may get. But with the virtual internet world, there are no such barriers. People could just come to your site, buy items and the only onus on you is to get the items delivered to the correct destination”, Devang Shah who acknowledged the significance of e-commerce was quoted in SelfGrowth.com website.
“The first and foremost cause behind the success of e-commerce business is its reach. E-commerce business operates on the internet platform and today with the internet’s power, you could get far more customers than you could by running an actual shop.
“E-commerce business reduces destination barriers. With the internet, distance never becomes an issue because the consumer can buy anything that he wants with the click of a mouse”, Shah said.
Overview of e-commerce in Nigeria
According to a report published by the Oxford Business Group, recent investments demonstrate sustained investor interest in e-commerce platforms in Nigeria, which boasts the continent’s largest population and economy. Ombola Johnson, the former minister of communications technology, predicted Nigeria’s e-commerce industry will reach a valuation of $10bn in the years ahead, with some 300,000 online orders expected each day. This growth would be in line with trends throughout the wider continent, with consultancy McKinsey estimating that the African e-commerce market is on track to reach $75bn in revenues per annum by 2025.
More so, the report also stated that recent acquisition activity suggests international investors are similarly bullish on the country’s online retail prospects. In March Nigerian e-commerce outfit Jumia raised $325m in capital from new and existing investors, including French insurance firm AXA, US investment bank Goldman Sachs and German start-up incubator Rocket Internet, which already holds a stake in Jumia.
One month earlier, Rocket Internet’s Africa Internet Group, the parent company of Jumia, became the continent’s first “unicorn” – a start-up valued at over $1bn – after receiving a €75m investment for an 8% stake in the company from AXA. DealDey, another Nigerian online shopping start-up – which aggregates and advertises promotions on goods and services, similar to US-based Groupon – was acquired by the African subsidiary of Swiss media and e-commerce platform Ringier in April for an undisclosed sum.
The report however noted that Nigeria’s emerging middle class represents a large market for e-commerce platforms in Nigeria. In March consultancy PwC released a report on retail prospects in Africa, which said Nigeria’s middle class – defined as households that earn between $8500 and $42,000 per annum – grew by 600% between 2000 and 2014.
Projecting, by 2030, the number of middle-class households is expected to nearly triple, from 4m in 2014 to 11m, although this still remains a small fraction of the country’s 170m-person population. The expanding base of households that have access to discretionary income has increased demand for retail trade, but e-commerce firms are also benefiting from the still-rising rates of connectivity.
As of February 2016, the report stated that more than 93m Nigerians had mobile internet subscriptions, according the telecoms regulator, the Nigerian Communications Commission (NCC). Meanwhile, a 2015 survey from PayPal found that 65% of internet users in Nigeria already shop online and a further 24% are expected to do so in the future.
Increased access to 4G LTE services, which were rolled out across the country over the past few years and promises of internet speeds of up to 230 Mbps should also help facilitate the uptake of e-commerce.
Telcos as enabler
Despite the challenges, telecommunication companies in Nigeria have continued to support the progress of e-commerce in Nigeria, largely through the creation of value based products for their stakeholders. For instance, MTN Business, a solution that seeks to be a reliable and dependable supplier of business communication solutions to the Nigeria enterprise market has contributed significantly to the economy through facilitation of business, offering a suite of Voice, Internet, Data and Branch Connectivity Solutions. MTN Business currently serves a teeming number of corporate and public sector organisations across industries.
Projecting into the prospect of an all inclusive telecommunication environment that requires a very strong backbone, MTN Nigeria in 2003 commissioned a digital transmission project to address the yearnings of the sector in Nigeria.
According to report, MTN’s investment in the critical infrastructure was deliberate to meet the needs of Nigerians across voice and digital space.
In January 2003, MTN commissioned the first phase of its digital microwave transmission backbone, Y’ello Bahn. This interconnects with Cameroun in Borno and Cross Rivers States and with Niger Republic in Sokoto State. In terms of distance and capacity, this makes the Y’ello Bahn Africa’s most extensive digital transmission infrastructure which has significantly contributed to enhancing call quality on the MTN network.
With continuous extensive investment in infrastructure and a focus on innovation, MTN Business is able to deploy new and flexible services and solutions tailor-made to address customers’ peculiar business communication needs. MTN Business continues to work with various partners to design and deploy solutions that are both affordable yet innovative meeting the need of the Nigerian small business enterprise.
No doubt, the massive investment in telecommunication infrastructure has been the mainstay on the various solutions deployed to boost e-commerce, e-business and SMEs’ operations in Nigeria.
“We are determined to enable the Nigeria’s $520 billion economy further grow. MTN understands the role of SMEs to achieve this and that is why we rolled out the MTN SME Data Share. This product provides customers with better pricing which introduces lower cost on-net GSM Voice, Data and SMS bundles targeted primarily for the SMEs. Thus, it allows businesses to make more calls, download more data and send more SMS at remarkably reduced prices” the report said.
In the last 16 years, telecommunication companies have successfully driven and enabled conversation in social media and stimulated e-commerce in Nigeria. While the Generations Y and Z are typically perceived as increasingly familiar with this digital and electronic technology, Generation X and others before them who lived a manual life are marveling how things have changed. These companies have enabled digital inclusion resulting in to economic expansion and require supportive legislative framework to protect their investment to the advantage of Nigerians.