E-commerce redefines Nigeria’s retail industry space

Mention the words ‘Nigeria’ and ‘economy’ and you are likely to conjure up images of sprawling oil fields and vast sums of petrodollars. With an enviable supply of the world’s most valuable commodity, Nigeria’s oil and gas sector has been key driver of the economy for many decades, constituting 95 percent of its foreign exchange earnings.

But today, new engines are helping to power Africa’s most populous nation. Consumer-facing industries have quietly grown into a significant economic force and are poised to continue growing.

Fuelled by a new generation of Nigerian consumers, wholesale and retail sales are already the third largest contributors to the nation’s GDP, according to a Mckinsey report titled ‘Africa’s growing giant: Nigeria’s new retail economy,’ Nigerians desire a convenient, well laid out, modern shopping experience.

In recent times, shopping in Nigeria has got a whole lot easier with the rise of e-commerce platforms. It is now a common trend to see Nigerians browse online retail websites to find everything from fashion to electronics, and in as little as 48 hours, such a product is delivered to them. That is the world of online shopping as we see it today.

Analysts say that the retail sector in Nigeria has continued to expand with sales increasing faster than real GDP. Growth is driven by the continuous rise of the Nigerian population, increasing disposable income and the desire by many business owners to modernise retailing. In the past few years, click and mortar has consolidated with brick and mortar to contribute to Nigeria’s retail sector.

According to Evangeline Wiles, managing director of Kaymu, “e-commerce is set to redefine the retail sector in 2015 and beyond. E-commerce has advanced both at a local and global level. With high rates of internet and mobile broadband usage in Nigeria and the growing confidence of online shopping in the hearts of Nigerians, e-commerce will continue to play an important role in the growth of the retail sector.”

As Nigeria moves toward a cashless economy, Omobola Johnson, minister of communications technology, has disclosed that Nigeria’s e-commerce market has a potential of $10 billion with about 300,000 orders made on a daily basis.

Speaking further, she says e-commerce has attracted $200 million foreign investment till date with about 36 percent of the country’s 170 million people connected online, noting that the “Nigerian e-commerce market has created over 12,000 jobs since 2012, expanding the infrastructure, warehousing, advertising and logistics services industry.’’

Quoting Mckinsey’s “Lions Go Digital’’ report, which predicts that the internet could contribute up to $300 billion to Africa’s GDP by 2025, up from an estimated $18 billion in 2013, Johnson says the ICT industry has a powerful effect on the sectors of the economy contributing a combined 2.56 percent of added value.

In a report released by the Federal Ministry of Communication Technology, there is a tremendous growth in the area of internet usage, social media participation and e-commerce. The analytic study shows growth pattern from 2013 to 2014, with a major focus on mobile phone, internet usage and broadband penetration.

Insights presented for e-commerce at the end of June 2014 revealed that 63 percent of Nigerian internet users had bought at least one item online, 60 percent of these buyers claimed to have used their mobile phones for these purchases.

The rate at which online businesses are springing up in Nigeria, along with the availability and accessibility of broadband internet can expand the boom in e-commerce and make Nigeria the hub of online business in sub-Saharan Africa in 2015.

Anne Agbaje