Online retail in Nigeria came into the scene about six years ago and became very popular about 3 years ago with the advent of key players like Jumia and Konga, over time the sector became flooded with different niche markets and according to Startupdaily it was recorded that there have been at least 500 e-commerce businesses launched across Nigeria.
At a point, the sector was one of the major contributors to the country’s growing GDP, however, with the seemingly impressive opportunities in this industry, there were obvious challenges that were impeding accelerated growth. Some of these challenges include
Lack of proper infrastructure, taxation, security issues, privacy concerns, high cost of shipping goods to and from Nigeria, low penetration of credit cards usually required to shop online (debit cards are the common payment cards available in Nigeria), unreliable distribution and delivery processes, residual distrust of paying online in a society where cash is the king, etc.
All these issues are generally common with E-Commerce in any other developing country, but it takes time and effort to build trust and make the most out of it. Since most of this e-commerce firms depend largely on external funding/investment it has been very difficult to keep up with these challenges which are not cost-effective to manage.
It’s not long we begin to see the results of some of these unsurmountable hills played out in this industry, some companies engaged in mass retrenchment over and over again in a bid to cut costs and stay in business. Despite all, it was difficult for some to stand the wind of economic quagmire that besieged Nigeria last year.
The wind blew really hard and some companies couldn’t stand the test of time, some went into extinction and some mergers and acquisitions, the question is what is the future of online retail in Nigeria? Not long we began to see dispirited headlines
Some of the headlines
Efritin left first Efritin shuts Nigeria office, blames bad economy — Technology — The …
Jumia’s sister company Kaymu also folded up Jumia Market (formerly kaymu) is folding up – Tech – Pulse
Not long we heard about Konga’s acquisition by Zinox Zinox acquires Konga in shock deal
Just yesterday we were greeted with a shocking news from the stables of OLX Nigeria OLX closes shop in Nigeria – Punch Newspapers
There is no gainsaying that e-commerce companies in Nigeria haven’t broken-even, while customers and fans are usually carried away by the glamour of amazing ads and products displayed on the site, it’s only the management of these organizations that know where the shoes are pinching them.
For some of these companies, you cannot divorce their mergers or fold up from gross mismanagement which is a general syndrome that plagues Nigerian business. No doubt that those ones that still have the cash to spend will continue to thrive, but it’s only a matter of time, to tell if online retail in Nigeria is truly a lucrative business at this time.
Written by: Oluwatobi Adekunle (Digital Marketing | Brand Communication | PR & Online Reputation Management)