Nigerian e-Commerce is not working, so the two market leaders, Konga and Jumia, are switching to traditional street stores to survive!
After 2 years of operations and hard learning, Tunde Kehinde and Raphael Afaedor, co-founders of Jumia confessed: “Nigeria is still largely an offline market when it comes to retail. Customers have doubt about entering details online to make payments. They would rather want to have their goods in hand before parting with their hard earned cash.”
Another confession that is not made above is that Nigerians would also prefer to call the eRetailers to order, instead of filling an online form to place an order. Yet the “eCommerce” websites receive a lot of traffic because of publicity and advertising, but nigeria consumers use them as simple catalog for discovering products and comparing prices.
So last year, Nigeria eCommerce Pioneer Konga opened 6 of what they called “pick-up stores”. Customers will call to order, then they rush the product to the local proximity store for pickup.
Following Konga example, the heavily funded Jumia opened this summer 16 “cash-on-delivery centres” which would work in the same way as Konga’s “pick-up stores”.
It’s too soon to make any conclusion on those initiatives, but as an analyst, I’ve to say that the 2 Nigeria ecommerce leaders are in panic mode. They seem to be under pressure from investors to show results, therefore the teams are losing focus.
The story sold to investors and nigerians: “you to sit at your desk or in your house, press the buttons on your device and we will come to you with what you desire” is yet to be delivered on.
“e-commerce has been invented for countries where service manpower is expensive and women work. In most subsaharan Africa, the situation is reversed. Urban women, at least, have more time to go shopping and manpower is cheap. So the market is too narrow to allow margins in e-commerce” Conrad McLeod Le Guen
In conclusion, street Kiosks Business would be more profitable in short and long term in Nigeria for these retailers than their current e-commerce business models.
Beyond the hype, eCommerce will take long years before delivering on its promise in Africa, and unluckily pioneers like Jumia or Konga will be forgotten if their investors won’t push too hard on them to deliver on their past business plan, but let them pivot in short terms to activities with higher margin, less heavy operational costs, far better barrier to entry and long term assets building.