How relationship with brand partners offers Jumia price competitive edge

Online shopping in Nigeria is a recent development and the phenomenon is fast catching on with Nigerians.  Before the establishment of online stores in Nigeria, a few Nigerians especially those in the upper class were ordering their products from online shops abroad and the products were delivered to them weeks anywhere in Nigeria. At this early period, price comparison was minimal as the ego of buying abroad and perhaps values were central.

Recently, few Online stores among them Jumia.com opened offices in Nigeria to offer even more superior services, value, speedy delivery and at a competitive price to Nigerians who were hitherto locked in online stores abroad.

Online business is growing in Nigeria due to some factors. As at the end of last year, Online stores in Nigeria recorded over $2 million worth of transactions per week, approximately N1.3 billion per month from about 38 percent of Nigerians that prefer to buy items through online, according to nationwide survey conducted by Phillip Consulting, a business and management consulting company.

The industry services are becoming competitive in terms of price and delivery. Jumia.com reveals its strategy of cheap prices  yet quality and superior services in the competitive online business in Nigeria.

On how Jumia Nigeria maintains its cheap rates, Co-Managing Director, Jumia Nigeria, Jonathan Doerr said in a report: “Jumia does not sell at cheaper rates because it offers inferior products. We are able to offer products at affordable prices which are less than other online retail companies and those of brick and mortar stores due to its wide assemblage of brand partners. You just name it, from Apple to Infinix to Lego, Samsung, L’oreal and more, Jumia has been able to forge lasting and favourable partnerships with the biggest brands who are able to offer Jumia their products at reduced tariffs and sometimes even exclusively. These brands are happy and always willing to work with Jumia due to a proven track record of service delivery, customer satisfaction and guaranteed volume of sales”

He further said that the company leverages its huge customer base, and its resultant economies of scale to drive down cost.

According to him while clarifying guaranteed volume of sale, he said  in economics, there is a concept called ‘Economies of Scale’. This concept explains that there are cost advantages which certain enterprises enjoy due to their larger size, output and scale of operation. Being that Jumia Nigeria is the biggest online retail store in Nigeria, accessible and patronized daily by many Nigerians nationwide, it only adds up that unlike the others, Jumia Nigeria can now afford to grow profit margins and provide lesser priced products to customers due to a reduced overall operating cost.”

Another factor that guarantees consumers the best deals on Jumia, he said  is the company’s fascination with sales promotions for customers. “You can describe it as Jumia giving back but Jumia is always happy when it’s customers are happy whether we are making profit or not.  He states that  about every week, customers can expect to find a sales promotion on Jumia with products being sold at  ground breaking prices”

Checks on some of the prices Jumia offers for some products showed a consistent competitive pricing when compared with international online retailers. Take for instance the Samsung Galaxy S5 – Copper Gold goes for about N95,000 while some foreign online shops sell it for between $499 and $569. These prices exclude freighting cost and other logistics. Also checks reveal that in Nigeria, this same product goes for between 100, 000 and N105, 000 in different online.

The low prices also apply not only to electronics but other products. Jumia customers attest to this. For Seyi, a manager in one of media houses in Lagos said Jumia products are cheaper compared to other online stores. He also confirmed the quality of their product.

In the vein, Oluwa Rotimi, a human resources practitioner who spoke to BusinessDay on phone said though he has not bought from Jumia Nigeria, but his experience with Jumia Kenya shows that the online store sells the same products at cheaper prices. Rotimi believed that the Jumia knows that it is in a competitive market hence its strategy to link directly to manufacturers in order to sell products cheaper than competition.

Jumia.com, established in 2012 was among the early entrants in the Nigerian Online store marketing space with the aim to be the one-stop shop for retail in Nigeria. In the last three years, more online stores have also opened offices to offer similar services, but the differentiating factor is quality of service and price.