Why e-Commerce may headline Nigeria’s next economic boom

FG challenges young scientists on innovation, Nobel awards

By Prince Osuagwu, Hi-Tech Editor

The Nigerian e-commerce in-dustry is said to currently worth over $17bn. This is buoyed by a growing cashless economy which has seen digital payment and electronic banking implemented in phases across 27 states of the federation, beginning with Lagos as a pilot in 2012.

FILE: Computer

 

Factors helping the ecommerce sector remain in the upward swing included the current trend of having most transactions conducted electronically in the country.

More so, the successful adoption of electronic payments in Nigeria is encouraging the entrance of payment service providers such as Visa and MasterCard, which see Nigeria as a promising market. These service providers have also forged alliance with relevant financial institutions which resulted in debit cards from many local banks such as Citibank, Zenith, UBA, and Fidelity, mainly being used for online financial transactions.

Insurers should take up intensive awareness on benefits of micro insurance to SMEs

Meanwhile, the demand for electronic transactions also attracted payment facilitators from Europe and Asia who are investing in Nigerian electronic infrastructure projects.

All these, including the growing army of digital and technology savvy youths and massive penetration of the smartphone combine to paint a healthy ecommerce sector with very strong and positive projections.

Struggling to stay afloat

However, despite the positive projections and huge potential in Nigeria’s emerging e-commerce landscape, the sector is replete with challenges. Many players are either falling out or struggling to remain afloat.

In little less than two years, a number of promising e-commerce ventures have either quietly exited the Nigerian market or declared their decision to make a shift away from a decidedly difficult terrain, even with the enviable population and all other right mix of ingredients to replicate the feats of world renowned players like Amazon and Alibaba.

The likes of Gloo.ng, OLX, DealDey and Efritin, are among many others, that have experienced the difficulty of standing firm and afloat in the Nigerian e-commerce market.

Difficulties and failures

Gloo.ng was hit by the 2016 recession which impacted heavily on businesses. The company also added a negligible Nigerian middle-class market and huge logistics challenges as reasons for the exit of the e-commerce firm which operated for almost seven years.

The story was not much different for Efritin, an online marketplace for used goods which officially pulled the plug on its Nigerian operations on January 9th 2017, barely 16 months after its official launch.

Dealdey, Nigeria’s only daily deals website, shut down its Nigerian operations almost a year after suffering severe financial challenges which led to a mass staff layoff. The company had been struggling for a while to keep its head above water despite being the subject of a well-publicised acquisition in 2016 by Ringier Africa Deals Group, RADG, a joint venture between Swiss Ringier Africa AG and South African Silvertree Internet Holdings (Pty) Ltd.

Buhari pledges to end illegal tax collections

Dealdey’s ouster came on the heels of reports that Career24, a leading online job portal owned by Naspers will be shutting down operations in Nigeria in March 2019. Naspers, headquartered in Cape Town, South Africa is said to be the face behind much of Africa’s largest pay-TV business and newspapers and is widely regarded among the world’s biggest investors in e-commerce after a recent surge of investments in a number of online-based businesses on the continent.

OLX, an online classified ads firm founded in 2006 and another Naspers-owned venture, also ran into heavy weather in Nigeria and some other African countries where it shut down its operations. Although boasting of a useful business model, issues involving the unscrupulous practices of some sellers and buyers on its platform and the inability of the company to find a lasting solution led to a massive loss of confidence and subsequent failure of the business in Nigeria.

Of the distressed lot, perhaps only Yudala, founded by a then-23-year-old Harvard alumnus, Prince Nnamdi Ekeh in 2015, was able to successfully navigate the Nigerian e-commerce terrain.   Yudala had entered what was a keenly-competitive sector with a futuristic omnichannel strategy which fused a robust online platform with a chain of retail stores nationwide. But eventually, the brand was, however, absorbed into Konga after the combination of the operations of both firms in May 2018.

Acquired by the Zinox Group from erstwhile majority investors – Naspers and AB Kinnevik – in a landmark deal in late 2017, Konga was one of the pioneers of the e-commerce revolution in Nigeria. Its online marketplace model, which was initially criticised by rivals, made it an instant hit with a Nigerian populace that had just been bitten by the e-commerce bug. The hugely popular model saw it rack up thousands of customers and merchants on its online platform which lived up to its name as Nigeria’s largest online mall.

Why they failed

Among the numerous factors that may have culminated in the exit of these otherwise bright e-commerce brands, Africa Chair for IEEE World Internet of Things, WIoT and current Director- General, Delta State innovation hub, Dr Chris Uwaje, said the most common was not being able to appreciate that the challenge in cracking the Nigerian e-commerce market lies heavily in the approach or business strategy adopted by most players, many of whom fail to situate foreign business models, ideas and strategies within the culture of the people and Nigeria’s existential realities.

Akeredolu facilitates N750m NDE loan for 6,800 women, youth in Ondo

According to him, “the high failure rate in the sector can be attributed to an absence of reliable knowledge of the nuances and predilections, shaping the shopping behaviour of average Nigerians, which local know-how and capacity brings.”

However, despite all the struggles, there’s still a glimmer of hope that the sector may headline Nigeria’s next economic boom.

E-commerce and financial technology in Nigeria are strengthened by fast growing youth populations, expanding consumer power, and increased smartphone penetration. The current e-commerce spending in Nigeria which is estimated at  $17 billion, may triple and by 2025, hit $75 billion in revenues per annum, according to global management consulting firm, McKinsey & Company.

McKinsey & Company is the trusted advisor and counsellor to many of the world’s most influential businesses and institutions.

Interestingly, the battle for the soul of the Nigerian e-commerce market is at  present  a straight fight between Jumia and Konga. However, the war would be won by whoever recognises the ace technology that swirls the magic.

AI makes the difference in e-commerce

With such a wealth of e-commerce businesses and competition set to become even fiercer, tech professionals say that staying visible and relevant has never been such a challenge for online retailers.

However, they have also identified the budding technology, Artificial Intelligence to spin the magic wand.

Experts are upbeat that the advent of artificial intelligence, AI, has made competing in the crowded marketplace possible- even for small e-commerce businesses.

Some of the ways in which AI can help e-commerce businesses, included:

Social listening

So much information is shared on social media through listening to what potential customers are saying. Businesses can gain insight into new markets and understand how their current products and strategies are working. Keyword or brand name tracking in social media can be performed efficiently through data mining. This data can then be condensed into actionable feedback to improve the customer experience and the brand’s reach.

Predictive marketing

Predictive marketing is a marketing technique that involves using data analytics to determine which marketing strategies and actions have the highest probability of succeeding. The more customer data gathered, the better the optimisation will be for that customer. This is achieved with the aid of artificial intelligence.

Product personalisation

With so many companies and products vying for attention, consumers gravitate towards those sites that are personalised to them. Personalisation is taking over how customers buy. By utilising information on customers that is widely available through their online presence, businesses can provide personalised ads, make relevant recommendations, and craft specific content for them. This would not be possible without the power of AI to sift through the data.

Customer service

By next year (2020), 80 per cent of all customer interactions will be handled by AI. This is because Chatbots are fast becoming an indispensable tool in customer service as a replacement to call centres, they are significantly cheaper and more efficient. Chatbots can be integrated into shopping carts, online support and order processes. When it comes to a chatbot, Jumia is already ahead of others.

Allows businesses to be localised

No matter where an e-commerce business is based, mining location-based intelligence from customer data allows them to appear local. By offering location-based offers, location-specific advertising and predicting location trends, local customers can raise the efforts of businesses in their own towns.

Efficient data analysis

No human team has the capacity or time to accurately and thoroughly record, analyse and digest the volume of data available from potential customers all over the world.

E-commerce businesses that rely on user-driven feedback are falling behind those that use AI to gather and use information.

Source link

What do you think?

0 points
Upvote Downvote

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Loading…

0

Comments

0 comments

Black Friday! Major Tragedy, As Tanker Explosion Burns 13 Vehicles In Benin, Many Feared Dead – Daily Advent Nigeria

Tanker Explodes Opposite Ojo Barracks In Lagos, Many Properties Destroyed – Daily Parrots Nigeria

11-Year-Old Boy Hustles For Stranded Family Who Sleep Outside In Lagos. Photos

11-Year-Old Boy Hustles For Stranded Family Who Sleep Outside In Lagos. Photos