Building Confidence In Nigeria’s Tough E-Commerce Market


Despite the positive projections and huge potential locked in Nigeria’s emerging e-commerce landscape, the sector is proving more than a tough nut to crack for the majority of players in the country.

Even for the sector’s pioneers, the struggle is real.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur


Heralded by BuyRight, a platform founded by serial entrepreneur, Leo Stan Ekeh and which was challenged by the absence of credit card and e-payment infrastructure when it was launched over 12 years ago, e-commerce in Nigeria has always been and is still widely regarded as the next big thing.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur

The rise of latter-day powerhouses, Jumia and Konga also brought a flush of confidence in the sector. This was basically due to the keen interest from angel investors and venture capitalists, buoyed by projections of Nigeria’s booming youthful population and aspirational mindset of its growing army of digitally-savvy people.

The reality is, nevertheless, a bit less enthusiastic.

Jumia, owned by the Rocket Internet Group, has struggled to make its continent-wide business strategy work despite attracting considerable investment. Years of heavy expenditure on marketing and overheads coupled with glaring strategic deficiencies in how it has tackled Africa’s biggest market has turned the firm into a loss-making venture.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur

The company has also repeatedly taken some huge hits over product quality and bad press over the poor conduct of some of its staff. Jumia has sunk deeper into losses on an annual basis, with figures reportedly in the region of over $150m. Despite reporting a Gross Margin Value (GMV) of €163.4m in Q2 2018, its Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) tells a sorry tale of huge liabilities in its balance sheet. Further fuelling fears are reports of a likely exit for its biggest investors after it emerged that Rocket Internet was planning to sell off its stake in the firm, even as other investors – MTN, AXA, Orange, Millicom and Goldman Sachs have remained mute.


In little less than the space of two years, a number of promising e-commerce ventures have either quietly exited the Nigerian market or declared their decision to make a shift away from a decidedly difficult terrain, ironically one that is widely regarded as boasting the right mix of ingredients required in creating Unicorns that will match the likes of other global super-heavyweights such as Amazon and Alibaba.

According to research, the Nigerian e-commerce industry is currently worth over $17bn, with estimates indicating that the sector could account for over $29bn by 2022. For the likes of, OLX, DealDey and Efritin, among many others, however, e-commerce in Nigeria is no child’s play.

Of the distressed lot, perhaps only Yudala, founded by a then-23-year-old Harvard alumnus, Prince Nnamdi Ekeh in 2015, was able to successfully navigate the Nigerian e-commerce terrain.  Yudala had entered what was a keenly-competitive sector with a futuristic omnichannel strategy which fused a robust online platform with a chain of retail stores nationwide. In addition to pioneering a series of firsts, Yudala was equally responsible for the first drone delivery in the e-commerce world and also holds the record of being the first e-commerce company to introduce an offline version of the hugely popular Black Friday sales. The Yudala brand name was, however, absorbed into Konga after the combination of the operations of both firms in May 2018.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur founder, Olumide Olusanya, had cited the 2016 recession and its impact on business, a negligible Nigerian middle-class market and huge logistics challenges as reasons for the exit of the almost seven-year-old e-commerce firm which positioned itself as an online super-store from inception. The story was not much different for Efritin, an online marketplace for used goods which officially pulled the plug on its Nigerian operations on January 9th 2017, barely 16 months after its official launch.

The announcement that Dealdey, Nigeria’s only daily deals website, was shutting down its Nigerian operations almost a year after suffering severe financial challenges which led to a mass staff cull, did not come as a surprise to many. The company had been struggling for a while to keep its head above water despite being the subject of a well-publicized acquisition in 2016 by Ringier Africa Deals Group (RADG), a joint venture between Swiss Ringier Africa AG and South African Silvertree Internet Holdings (Pty) Ltd.

Dealdey’s ouster came on the heels of reports that Career24, a leading online job portal owned by Naspers will be shutting down operations in Nigeria in March 2019. Naspers, headquartered in Cape Town, South Africa is the face behind much of Africa’s largest pay-TV business and newspapers and is widely regarded among the world’s biggest investors in e-commerce after a recent surge of investments in a number of online-based businesses on the continent.

OLX, an online classified ads firm founded in 2006 and another Naspers-owned venture, also ran into heavy weather in Nigeria and some other African countries where it shut down its operations. Although boasting a useful business model, issues involving the unscrupulous practices of some sellers and buyers on its platform and the inability of the company to find a lasting solution led to a massive loss of confidence and subsequent failure of the business in Nigeria.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur

For Chris Uwaje, Africa Chair for IEEE World Internet of Things (WIoT), the challenge in cracking the Nigerian e-commerce market lies heavy in the approach or business strategy adopted by most players, many of whom fail to situate foreign business models, ideas and strategies within the culture of the people and Nigeria’s existential realities.

According to him, the high failure rate in the sector can be attributed to an absence of reliable knowledge of the nuances and predilections shaping the average Nigerian’s shopping behaviour which local know-how and capacity bring.

Uwaje revealed that when asked which of the current players they would invest in given a seed fund of $1m, over ninety per cent of a select group of budding tech entrepreneurs he was mentoring had plumped for Konga.

“It came as no surprise because of the local know-how, strong international network, consistent success and decades of experience in the Nigerian technology sector at the disposal of the new owners of Konga. Aligned to this is the quiet way they have gone about in repositioning the business without the usual hype that accompanies most e-commerce ventures in Nigeria.”

“Nigeria remains a fertile business environment, especially for online-focused ventures such as e-commerce companies. It is also a country with peculiar challenges and a very strong traditional approach to retail which requires a deep sense of local know-how and understanding by players. This is one of the biggest hurdles faced by e-commerce start-ups here. Many e-commerce ventures run with foreign concepts and strategies more suited to foreign climes, making it harder for them to survive the difficult terrain that is the Nigerian business space.”

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Dr. Wale Ogunfunwa, an e-commerce enthusiast, is of the same school of thought.

In his opinion, a lot of e-commerce companies copy what obtains in advanced climes such as Europe and the United States, with scant regard for the infrastructural challenges encountered here.

“Here in Nigeria, logistics remains one of the biggest headaches faced by e-commerce players as our transport infrastructure is severely underdeveloped. Worse still, there is no reliable physical addressing system in some major cities,  not to talk of the hinterlands. If you transplant a foreign strategy that works in Europe where delivery and transport infrastructure is highly developed, for instance, but which fails to address these identified gaps here, then you are bound to fail,” he submitted.

“Trust is also a major issue. A customer who has been disappointed the first time is harder to convince. Winning the e-commerce war in Nigeria requires a strong player backed by core local know-how and resources that can build and own its own delivery and supply chain network that will reduce delays to the barest minimum, while also presenting a strategy that will accommodate Nigerians’ proclivity for traditional retail.”


Considering the struggles of other players, the battle for the soul of the Nigerian e-commerce market is presently a straight fight between Jumia and Konga. However, it is clear where the pendulum is currently swinging.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur

Acquired by the Zinox Group from erstwhile majority investors – Naspers and AB Kinnevik – in a landmark deal in late 2017, Konga was one of the pioneers of the e-commerce revolution in Nigeria. Its online marketplace model, which was initially criticized by rivals including Jumia, made it an instant hit with a Nigerian populace that had just been bitten by the e-commerce bug. The hugely popular model saw it rack up thousands of customers and merchants on its online platform which lived up to its name as Nigeria’s largest online mall, resulting in Jumia eventually copying and adapting the marketplace model.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur

In May 2018, Konga’s operations was merged by its new owners with that of Yudala, another bright star in the e-commerce space which had taken the e-commerce sector by storm with a futuristic omnichannel business model. This model featured a combination of its online platform with a growing network of brick-and-mortar stores across Nigeria. Interestingly, the foresight in its omnichannel model was justified by global e-commerce giants such as Amazon and Alibaba which wasted no time in adapting it – a development that goes to prove that Nigerians are capable of leading from the front.

Since its acquisition by the Zinox Group – arguably Africa’s most structured technology conglomerate with over 30 years of brilliant success in the Nigerian technology space – and its subsequent merger with Yudala, Konga has gone a long way in restoring investor and customer confidence in the sector.


The owners of the new Konga – renowned for years of successfully navigating Nigeria’s technology space – have retained the omnichannel business strategy that Yudala was famous for. Not only that, it has taken this further by focusing on expanding its reach across Nigeria’s considerably huge landscape – a move that remains instrumental in capturing more Nigerians in the e-commerce net. As at today, Konga boasts over 35 physical retail stores across disparate locations nationwide, with many more in the pipeline. The company boldly claims its target is to reach the 774 local government areas in the country.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur

Also working for Konga is the huge investment in technology that is repositioning the business and its operations for cutting-edge efficiency. In addition to a world-class partnership with global tech giant Microsoft through which it is revamping its technology backbone, Konga also boasts a well-equipped internal technology team which has built a suite of robust applications driving the company’s operations.

The company has also invested heavily in the acquisition of massive regional warehousing facilities including the latest – an 85,000 square meter space in Lagos.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur

It is, nevertheless, through two internally-owned businesses with which it has resolved the pain-points of logistics and payments that Konga has distinguished itself from the rest of the e-commerce field.

For Konga, Kxpress – an in-house logistics company, has been a source of blessings. Through the significant investments made by its new owners, Konga possesses arguably the most efficient delivery/logistics company with the largest network of line-haul trucks, vans, buses and motorbikes in the e-commerce space and with the capacity to handle last mile delivery to every part of Nigeria. Deliveries are now handled within 24-48 hours and with minimal delays, further growing user confidence in the sector.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur

And through KongaPay, a Central Bank of Nigeria (CBN) licensed payment system owned by the company — Konga has also de-mystified the payment challenge. KongaPay, which works with all banks in Nigeria, allows users domicile funds in an e-wallet for their transactions on the Konga platform. In addition, Konga offers other options such as payment on delivery (POD), payment on pick-up of items and cash payment in all of its stores nationwide.

Building Confidence In Nigeria’s Tough E-Commerce Market - Brand Spur

Efforts to speak with Leo Stan Ekeh, Chairman of the Zinox Group – Konga’s parent company – were unsuccessful. However, Nick Imudia, co-Chief Executive Officer, Konga Group, disclosed that the company is determined to change the e-commerce narrative in Nigeria for good.

“Creating confidence in the marketplace and in the minds of Nigerians of all classes is key to what we are doing. The Konga strategy is attuned towards considering the culture of the people, by providing them multiple platforms. Our intention is to continue to optimize and we certainly will not disappoint the trust reposed in us,” he disclosed.

The case for Konga is an even simpler one for Uwaje.

“The rise of e-Commerce in Nigeria will accelerate the innovative application and use of Drone Technology to deliver essential goods and services nationwide, facilitate rural community education as well as save critical lives at all levels of national emergencies.

“An e-Commerce platform such as Konga should be viewed as a too-big-to-fail enterprise…E-Commerce has great potential to reduce traffic congestions, infant and maternal mortality, deliver healthy living, wellness and improve meaningful life expectancy. These amongst others are the deep benefits of uplifting Konga as Africa’s foremost e-Commerce Platform,” he concluded.

Contributed by Sammy Lee, a global e-commerce researcher based in the United States