The Simple Nigerian E-Commernce Problem: My Perspective
By: Olajide Abiola
Tags: Venture Capital, Ecommerce, Startup, Nigeria, Founders

Ecommerce

Numerous factors have been adduced for the failure, shutdown and struggling of electronic commerce in Africa, especially Nigeria.

Lack of internet penetration

High cost of data

Poor logistics

Poor marketing

Poor market survey

Unfavorable market

These are some of the most cited factors and reasons for e-commerce startups to reach scale and profitability in Nigeria nay Africa. But I differ. I differ because one of the most important factor, which is LACK OF TRUST, made it difficult to impossible for most of all the e-commernce startups which found it impossible to reach scale or profitability. I speak with the benefit of insight offered by personally undertaken researches.

When you have thousands of online buyers receive items of lower quality or different from the one that was displayed or paid for, the ripple effects will certainly be in the multiple folds. This, in my studied opinion has been the greatest retardation to the scalability and profitability of Nigerian commence startups. Hundreds of thousands, if not millions of electronic commerce activity takes place in Nigeria. It is not just done through the mainstream commerce websites. They are carried out on Instagram, Facebook, Whatsapp and Twitter. This is where the largest percentage of electronic commerce takes place in Nigeria.

People who leverage social media and messaging apps to make sales and also order items are definitely internet connected. A fact that effectively invalidates the excuse of low internet penetration or high cost of data. I have personally interviewed over 135 colleagues who have made online purchases in the last 5 years what their biggest reservations and misgivings were for ditching indigenous mainstream electronic commerce sites for either amazon or individual vendors on Instagram, WhatsApp and Facebook.

The topmost reason was lack of trust in the ability of the electronic store to deliver exactly what was ordered.

The second was that, the online stores were in the practice of stocking fake or substandard items.

The third reason was the duration it takes for delivery of item to be fulfilled.

And the fourth is, resolution of order fulfillment related complaint; another issue entirely.

Some of these users have questioned why it should be faster to take delivery for items ordered from amazon in the United States than taking delivery of products that are available here in Nigeria. For instance, it takes an average of about 3 to 10 days for an order made from Abuja on the mainstream electronic stores to be fulfilled. Nope! Don’t be quick to cite poor logistics infrastructures. It is this same logistics infrastructure the likes of Redstar, UPS, DHL, GIG leverage to deliver items in good and real time. It is also the poor logistics infrastructure individual vendors on Instagram, Whatsapp, Facebook and Twitter leverage to fulfill orders in good time.

It is bad enough that the wrong item is shipped. This is made worse by the fact that it take almost a week for the order for wrong or fake item to be fulfilled. Much longer than traveling to the location where the item is shipped from, staying a night and traveling back to one’s place of residence. This is then made worst by being unable to get the complaint for a product return, exchange or refund in good time. That’s if one gets it at all. Please don’t argue about this. I used one of the sales force of one of Nigeria’s electronic stores to make orders of over N6m last year. About N400k worth of items were the wrong ones. I ordered for the higher specs of an item but lower specs of it was delivered. I requested a return within two days of the stipulated seven days and made sure to make a daily reminder. It is almost 5 months now and no one has called to even apologize or engage regarding the issue.

If we are to also speak of numbers, we have enough digitally literate and active internet users, who are not just mere statistic of 90 million connected devices. The volume of users and data subscription numbers from telcos continue to show impressive year on year uptick for the past 10 years. The use of mainstream electronic commerce has unfortunately not reflected the validated impressive numbers of internet connected and active users in Nigeria, which has been reported to be in the tens of millions, even if the 90 million connected devices is subject to the question of unique users. These numbers are real people, and these people represent a market presence. If data is expensive and millions are connected, it is a no brainer seeing the market. Today, Millions of Nigerians have downloaded and use multiple loan apps, through which billions of Naira have been accessed. These users use smart phones and debit cards, which are the same digital assets and skill set required to make online purchases. So, why have electronic commerce found it difficult to scale with more capital raises and greater ad spends? Yes, I know. People will naturally gravitate towards where they can access money than where they can spend money.

Investment in Nigeria’s Electronic commerce alone has topped over $750m if my record keeping serves me right. By every standard, this is huge money. These monies can perform a lot of business innovation miracles and attract the requisite human capital for driving successful idea execution. While still abysmal across industries and sectors, Nigeria is definitely not a pushover as it concerns raising the big venture funds. This is commendable and I celebrate all the startups who have demonstrated fund raising clout. We need as much company raising money also making money. My philosophy is that, if the idea is good enough to raise big bucks, it should be viable enough to make big bucks.

In closing, I personally do not buy the common and hastily adduced and academically rehashed excuses for the failure of electronic commerce in Nigeria. Too many fine talking points have been generated without thoroughly looking into the fundamentals by asking the real people (The users) that matter the WHYs.

Why don’t you make purchases from online stores in Nigeria?

Why do consumers prefer to buy items from Amazon over indigenous online stores?

It is easy to sit down in comfortable corporate places and throw corporate jargons here and there to explain away an addressable problem rather than really tackling the problem. If the market is jinxed as some have opined, then why are we innovating? What are the factors that make it jinxed? Are those factors not also economic and innovation opportunities? Innovation loses its essence without problems hence, the necessity to innovate. Without problems and needs, we will all be out of jobs and there will be fewer companies in the world.

Most times, the most nagging problems require very basic and simple solutions and not sophisticated language or thinking. As a matter of fact, it requires much intelligence to keep things really simple.

Just my belated one cent to the discussion.