In early January 2018, a mega acquisition that would alter the equation in Nigeria, Africa’s biggest economy, was about to go down.
On one side and spearheading this landmark acquisition was the Zinox Group, a Nigerian-headquartered but globally renowned technology group that had overseen over three decades of sterling and unmatched leadership in the Sub-Saharan African business terrain.
On the table was Konga, one of the latter-day pioneers of the new wave of e-Commerce in Nigeria which, incidentally, was first ignited by Leo Stan Ekeh, Chairman of the same Zinox Group with his BuyRight Africa, the continent’s first e-Commerce platform, which struggled over 12 years ago with the absence of a structured payment system.
And on the other side of the negotiating table was Naspers, a South African-based serial investment firm and AB-Kinnevik, another investment firm with its headquarters in Sweden.
Both firms had overseen years of huge investment in Konga which, however, had failed to yield the desired ROI. For all its boundless potential, the world-class technology infrastructure driving its operations and its solid human capital, the previous owners of Konga were just not able to crack the e-Commerce bug. Despite making useful in-roads and expanding the scope of e-Commerce in Nigeria, Konga was struggling to stem losses and carve a sustainable path to profitability. For these investors, the question was whether to persist with pumping massive sums into the business and see out the e-Commerce waiting game or cut their losses and walk away.
Naspers and AB Kinnevik plumped for the latter.
So, in stepped the Zinox Group and the announcement of its acquisition of Konga – a piece of news which reverberated around the globe and which, till date, is still widely regarded as one of the most brilliant acquisitions ever recorded in the African nay global business space.
In acquiring Konga, the jury was still out on whether the new owners – credible, ethical local-based but global business people with a track record of outstanding entrepreneurship – could succeed where Naspers and AB Kinnevik, with its war chest of funds, failed. Can Konga, under its new owners with a loss of about N34bn in her balance sheet as was rumoured, finally rise up and fulfil the latent potential it showed sufficient promise of, when it pioneered the marketplace structure which, reports say has now been adopted by the likes of Amazon, Alibaba and Jumia, among others?
For many e-Commerce watchers, it would take nothing short of a miracle.
But indeed, a miracle was afoot within the four walls of Konga, right from the day it came under new ownership. Three years down the line, investigations show that Konga is now seemingly reborn, a flourishing retail behemoth and a fitting standard-bearer for the African continent which has remained in need of an ethical, trustworthy brand it can count on in the e-Commerce space.
In tracing the trajectory of this beautiful bride of African e-Commerce and how it is now the toast of investors keen to get a slice of the business, it is important to state that, at the point of acquisition, Konga was perhaps written off by many industry experts.
As an avid e-Commerce researcher and enthusiast, I had followed keenly the narrative around the business from my base back then in the United States, especially from the foreign media right after its acquisition. The overriding sentiment then was one of quiet pessimism. However, one of the first things that caught the eye and which made Konga a business to watch was the merger of its operations, barely three months after its acquisition, with that of Yudala, another e-Commerce start-up with an excellent business model launched by tech whizkid Prince Nnamdi Ekeh, scion of the serial entrepreneur, Leo Stan Ekeh. Again, the assumption of another renowned corporate executive in Nick Imudia, a former VP at Nokia as Co-CEO calmed nerves, especially in the assurance that innovation, experience and quality corporate culture would drive the vision because of the ownership of the new Konga.
Having said that, many proud entrepreneurs would have persisted with running both entities side-by-side, as a merger would have definitely involved giving up a few things on both sides. In the case of Yudala, it gave up its name and took on the Konga brand name while for Konga, it shed its blue colour for Yudala’s eye-catching and striking fuchsia pink.
However, the grand merger of both companies, as decided by its new owners turned out to be a masterstroke, one in a long list of many brilliant strategies that have seen Konga rise to the summit of the Nigerian and African e-commerce market.
For in merging these two powerhouses, Nigeria now had a powerful e-Commerce engine – a platform that can today take on all comers and give even the likes of Amazon and Alibaba a good run for their money, should they eventually expand their operations to Nigeria in search of the much-touted lucre that the country’s predominantly youthful and aspirational population holds.
No other e-commerce player in Africa boasts the sheer reach at the disposal of Konga, arising from its composite nature. For savvy online shoppers, it offers a cutting-edge online platform, complete with a surfeit of payment and fulfilment options while for the many others who are still stuck in their die-hard traditional shopping predilection, the physical Konga stores dotting the landscape are a ready-made answer.
In examining the way and manner Konga has quietly risen like a phoenix and its transformation into a viable brand that may list on the NYSE and the London Stock Exchange, it is essential to cite this template of its new owners as one to be adopted by budding entrepreneurs or studied in global business schools.
Prioritising a sound structure, solid corporate governance and ethics over quick gains or hype, as is often the fare in the sector, the new Konga is an investor’s wet dream, a reliable entity that is today worth its weight in gold.
For all who come in contact with the brand, there is no denying the place of its outlook as an ethical brand. Konga boldly declares that its policies leave no room for cooking the books, falsifying sales figures or fraudulent practices. Merchants on its marketplace platform face blacklisting or other sanctions when fake or sub-standard items or products are traced to them. Better still, Konga has in place strong partnerships with a number of Original Equipment Manufacturers (OEMs) which ensure that it remains the most trusted source for genuine products in the entire e-Commerce ecosystem.
With the foundation of the new Konga strongly rooted as an ethical company, the management has gone about its business of shoring up other aspects of the business.
In addition to ramping up its operational efficiencies and reducing losses to the barest minimum, as stated by Prince Nnamdi Ekeh during a recent interview monitored on Arise TV, the new owners have also invested strategically in a few verticals that have raised the bar. Among these is the capacity of Konga to reach shoppers at the last mile wherever they may reside, a factor made possible by strengthening Kxpress, an internally-owned, digitally-driven delivery channel, through which Konga has demystified the challenging pain-point of logistics which has driven many other players out of the market.
Furthermore, Prince Nnamdi Ekeh also referenced the company’s massive warehousing facilities which have undoubtedly empowered it to effortlessly close and deliver big tickets or service heavy projects. Konga was recently in the news for making available tons of laptops at reduced prices for Nigerians at the height of the global scarcity of units; a scarcity occasioned by supply chain breakdowns exacerbated by the COVID-19 lockdown. It also boasts a reliable mobile wallet – KongaPay – licensed by Nigeria’s Central Bank which delivers a number of useful services for subscribers, including paying for online shopping, airtime/data recharge, money transfer, utility bills payment and many others.
But it is in the expansion of its wings that Konga has truly shown its strength.
Today, Konga is not just known for its first love – retail – but has grown into an e-Commerce group that also has in its fold, a travel and tours agency, Konga Travels, which has racked up a number of local and international awards within a couple of years of its existence, in addition to its other existing subsidiaries – Kxpress and KongaPay.
Konga has also grown 800 per cent since its acquisition as proudly announced by Prince Ekeh in the course of the Arise TV interview, propelling it to the cusp of history as Africa’s first profitable e-commerce player.
All these without any form of external investment…
But that is not all.
In Konga Health and Konga Food, two new subsidiaries which report in the media say will disrupt the medicare and food delivery ecosystems, the management of this e-Commerce miracle is also preparing the grounds for long-term dominance.
Africa has long suffered from the absence of an ethical, reliable platform it can fall back on in the global e-Commerce race.
That is no longer the case.
In Konga, the evidence is there for all to see that finally, Africa now has a strong voice, an ethical leader that Nigeria and the rest of the continent can look up to.
Bosun Idowu George, a freelance e-Commerce researcher, writes from the UK
