Nigeria’s e-commerce sector wobbles despite growth opportunities

Nigeria’s e-commerce sector has great potentials due to the nation’s vast population, growing appetite for mobile data usage and increased network coverage but the sector is still struggling to survive.

The e-commerce offers consumers a round-the-clock and more convenient way of shopping as buyers boycott all the stress that comes with shopping at brick and mortar stores since they have their orders delivered right to their doorsteps.

E-commerce simplifies the shopping experience for consumers, especially in big cities in Nigeria like Lagos where huge traffic, difficulties with parking lots and long queues can make offline shopping tedious and time-consuming, creating more complications with shopping. This should make online buying more attractive but figures have shown that many consumers are reluctant to shop online.

According to industry statistics released by the Nigerian Communications Commission (NCC), 4.2 million mobile lines were activated in the first three months of 2018 and at the end of March, 2018 the total number of active GSM lines stood at 148.8 million.

Recently, the NCC disclosed that Nigerians activated 11.2 million lines on the GSM networks in April, 2018 and this growth brought the number of active mobile subscriptions in the country to an all-time high of 160 million.

This ought to be great news for the e-commerce sector as this is a clear indication that more Nigerians spend bulk of their time on the internet which should enhance their chances of purchasing goods online but this is not the scenario.

Unlike most countries around the world, Nigeria is endowed with huge population of younger people who are technology savvy and a number of people using mobile data on their phones are massive but the country’s e-commerce sector is worth less than that of most countries.

According to UNCTAD estimates in July 2016, the global e-commerce market is worth around $22.1 trillion. A 2017 report from the US Department of Commerce, e-commerce sales raked in $394.9 billion in 2016. The Commerce Department reports online sales grew 15.1 percent in 2016 and accounted for 8.1 percent of total retail sales for the year. Recently, Jumia Nigeria, released a Nigeria Mobile Report recently which put the worth the Country’s ecommerce market at $13billion.

In February, 2018, Zinox Group, an integrated Information Communication Technology (ICT) solutions conglomerate acquired Konga with the aim of revolutionising e-commerce sector and positioning the business on a path of profitability.

Two months after the acquisition, Konga and Yudala announced a merger of their operations. According to Olusiji Ijogun, Konga’s Chairman, the merger would enable them expand the platform effectively and accelerate growth.

Consumers have often complained that the products delivered to them are of poor quality and entirely different from the orders they placed online which is one out of so many reasons why consumers are foot-dragging when it comes to online retailing.

A report by Jumia also shows that in 2017, 70 per cent of Nigerians preferred the cash-on-delivery option, compared to 28 percent and 12 percent for credit/debit cards and mobile money options respectively. The pay before delivery has been a turnoff for many consumers because trust issues are bound to arise when a consumer is using his/her card online. Many consumers prefer to shop at brick and mortar stores where they could to touch the product to ensure the texture and quality of the product is right by them before money exchanged hands.

A 2014 survey conducted by Philip Consulting reveals that 38 percent of Nigerians prefer to buy products through the internet with the middle class consumers constituting 28 percent of the population being the biggest purchases online.

With a young and growing demography of over 40 million people, the future of e-commerce in Nigeria is very bright but to redefine the sector, all issues holding consumers back from embracing online shopping needs to be tackled head-on.

CHINWE AGBEZE