How Nigeria is Leading the Way in the Emerging African ecommerce Market

20 March, 2019

E-Commerce Destinations

Nigeria is an exciting emerging market with a growing middle-class population and a developing economy – the largest on the continent. In 2017, the population figures stood at around 190 million inhabitants with 162 million of those being mobile services subscribers, making it the biggest mobile market in Africa with a rate of 84% penetration. These tech-savvy consumers have a growing appetite for online bargains and broader access to the global market. Things continue to look promising as GDP for 2019 is estimated to grow by 2.6%.

Historically, Nigeria has had an ambivalent and sometimes violent political past with deep ethnic divides. Since 1999, however, Nigeria has been a federal democratic republic, modelling its policies on established democracies such as the US and UK while also incorporating some customary laws specific to the region. Like all young democracies, Nigeria has experienced teething problems, but with the population placing greater demand on government for accountability and economic reform, many investors believe that the political climate should not deter progress.

The rate of e-commerce growth in Africa overall is exceeding the rest of the world by as much as 25.8%, therefore looking towards Africa’s most populous country makes complete business sense.

Nigeria’s e-commerce market

Nigeria’s e-commerce market is proliferating (estimated rate of 25% per annum), leaving little time to sit on the fence about trading in the country. The opportunities are there, the infrastructure is being created, and aggressive expansion plans are in motion – but you will have to sow the seeds early and make provision for a few growing pains.

Understandably, Nigerians are still wary of online retail for four main reasons:

  • Payment security
  • Delivery infrastructure
  • High cost
  • Product authenticity

The two big e-commerce platforms in Nigeria – Jumia and Konga – are paving the way for innovation and improved infrastructure, receiving considerable investments from foreign companies to scale up services and enhance customer experience. Figures show that Nigeria’s e-commerce industry has received a whopping $200 million in foreign funding.

Up until recently, Konga, like many other Nigerian e-commerce sites, accepted payment on delivery – 78% of Nigerians reportedly prefer this method. In a 2018 post on Medium, however, Shola Adekoya, former Konga CEO, explains the controversial decision to pull the plug on the POD option of their service:

“We have less complaints, order to delivery time has shrunk by 20% as we deliver faster, and failed deliveries are now down to 1.9% from 25.2% (we are marching towards less than 0.5%).”

Adekoya went on to say that initially, POD helped the company to gain trust and credibility, however, chasing payments on a national scale is expensive and time-consuming for any growing business – “We are now able to better consolidate the customer journey on the platform and spend more time on customer experience…”.

Undoubtedly, this has had a detrimental financial effect on the company as the majority of Nigeria’s population remains unbanked, but a necessary move nonetheless. The demand for FinTech innovation in the country presents companies in that sector with the lucrative opportunity to tap into a market that has all the gear and readiness to embrace e-commerce.

There are a few popular payment gateways in Nigeria such as Paystack, Flutterwave, GTPay and Interswitch, but admittedly, there is still a long way to go in order to obtain the trust of the Nigerian population.

The outlook is certainly positive, however, with current e-commerce transactions being valued at $13 billion. The Ministry of Communication and Technology predicts this number could increase to $154 billion by 2025.

Nigeria’s buying trends

Like the rest of us, Nigerians are using the internet to hunt for good deals and discounts. The country has one of the youngest populations (62%) in the world, and these individuals are hungry for information, value for money, and accessibility.

Businesses looking to enter the market will also have to leverage the power of social media in their marketing campaigns in order to acquire customers – platforms such as Twitter and Facebook play a huge role in the day to day lives of Nigerians. Audience targeting and converting customers is definitely one of the more trickier parts of launching an online business in Nigeria. It’s also important to have a fully functional mobile website when selling online as 55% of customers browse and make purchases from their phone.

The Asian Research Journal of Arts and Social Sciences identifies that many Nigerians still prefer to barter or make “ buy today, pay tomorrow” purchases – this, of course, does not fit in with the e-commerce model and a cultural mindset shift is required in order to get customers on board with trusting online platforms and committing to purchases.

What do Nigerians buy online?

  • 23% Consumer electronics
  • 23% Clothing and footwear
  • 15% Household appliances

For many Nigerians, shopping online is still considered a luxury, and one that is met with relative scepticism. Businesses and the government will have to collaborate on ways to simplify the process, from purchase to delivery, and improve the overall customer experience by lowering the cost and risk of placing orders online.

In 2016, 52% of people surveyed admitted to experiencing problems when making purchases online. Despite the hurdles, however, this does present an excellent opportunity for innovative businesses to establish themselves in the market. This is largely dependant on making educated decisions about the market and partnering with reliable and experienced companies that have secure networks and an in-depth understanding of the Nigerian consumer.

At the current rate of development in the country, growth in e-commerce is inevitable and likely to see consumers leapfrog the need for brick and mortar retailers; this makes Nigeria a country worth seriously considering when venturing towards expansion in Africa.


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