- The document discusses the rising e-commerce market in Nigeria, highlighting opportunities and challenges. It analyzes market statistics, consumer profiles, and the major online retail brands like Jumia and Konga. - Some challenges identified include trust/security issues, poor logistics infrastructure, and quality regulation concerns. - Recommendations to manage these challenges include strategic brand positioning and leveraging growing mobile penetration, improving the customer experience, and strategic partnerships with banks, payment processors, and logistics companies.

1. Nigeria’s rising e-commerce market
Reflection Paper
By
Rachael Morka Maiye

2. OBJECTIVE OF STUDY
My aims are:
- To highlight the potentials of online retailing in Nigeria as well as
- To identify associated challenges and
- Share insights on how these challenges could be managed using the value
opportunity discovery and value recognition facets of the marketing framework.
CORE ISSUE
Can the market value be fully realised given existing challenges?
INTRODUCTION AND BACKGROUND
In 2014, Nigeria emerged
as the largest economy in
Africa (GDP est. $594.257
billion), with a population
of approximately 175
million (7th
largest
population in the world)
of which 48% are under
the age of 20. It is
projected that by the end
of 2015, this age group will
account for 52 percent of the total population, making it the largest consumer market in
Africa for mobile technology. According to World Bank report,
urbanisation has become a trend in Nigeria with an average of 49 percent of its
population living in Metropolitan cities, which creates a unique leverage for the online
retail industry, given that internet infrastructure are better developed in these cities.
Following the recent enforcement of the “cashless policy” by Central Bank of Nigeria (a
policy strategically created to reduce the use of physical cash and encourage the
adoption of electronic payment systems), online retailing in Nigeria gained significant
visibility in 2014. Even though the two major online retail brands - Konga and Jumia were
launched since 2012, there seemed to have been an awakening in 2014 with a well
targeted social media advertising push, backed by huge investment in distribution and
supply structures. This awareness not only boosted sales, but also paved way for smaller
online retail stores like; DealDey, buyam.com, supermarket.com, tafoo, gidimall and
yuzos.

3. MARKET OVERVIEW
Online Retail Consumer Profile:
Age - The typical online shoppers in
Nigeria are mostly students and
working professional between the
age brackets of 20 – 35 years. Based
on a recent survey conducted by
Philips Consulting, individuals
between the ages of 25 and 35 years
are frequent users of internet
shopping, while the reverse was the
case for the over 50.
Gender- Out of the total
number of female respondents,
65 percent of them are online
shoppers, and 53 percent of the
male respondents do online
shopping.
Income Group– The survey result
shows a positive correlation
between income level and
internet shopping. The statistics
represented below is based on
annual income (in US dollars)
classification in US dollars at a
conversion rate of $1 to NGN160.

4. Current Market Statistics:
- Leading online retailers make an average of $2 million worth of sales on a weekly
basis.
- No fewer than 500 orders are placed daily with top retailers nationwide.
- At least 300 orders are delivered to customers on the same day.
- Less than 20% of delivered items are returned for exchange or refund.
- Most often, deliveries are done by company employed delivery personnel, but on
special occasions or out of state deliveries, external courier services are used to
make deliveries.
- Top selling items on online stores are; Mobile phones, Electronics, Fashion
products and personal care products.
- Existing payment methods are electronic payment or cash on delivery.
Market Relevance:
To the Consumer- Online shopping avails the consumers the opportunity to shop a wide
range of products (that may not easily be found in a single off-line store) and compare
prices right from the comfort of their homes and offices. It saves the consumer the
hassle of driving through traffic or needing to make out time from a busy schedule.
To the Retailer- Internet retailing is a cheaper and faster way to expand geographically.
The low set-up and running cost of online retailing cannot be overemphasised, coupled
with the wide range of products that it allows retailers to feature on a single website.
Challenges Associated with Online Retailing in Nigeria:
Trust and Security Concerns- A huge challenge for the online retailer in Nigeria is gaining
the trust of consumers, as the business relies heavily on electronic payment systems
which are prone to phishing attacks, pharming and other forms of internet fraud.
Unfortunately, Nigerians still suffer very high rates of internet-related fraud which are
mostly occurring through online transactions. The banks and other local payment
platforms indemnify themselves against such losses, which makes the average consumer
sceptical.
Illiteracy and Language Barriers- Nigeria’s ethnical diversity and varied languages (with
500 spoken languages) make it difficult for online marketers to create customer
experience that cut across the various groups. You find that a large percentage of mobile
phone owners utilise less than 1% of its functions (mainly make and receive calls). Also
high level of illiteracy in the country is deterrence to shopping online.

5. Poor Logistical Infrastructure- the core aspect of online retailing is logistics.
Unfortunately, this is still a going concern for Nigeria; spanning from poor road networks
to almost non-existent public transportation systems. Another prevailing issue is the
difficulty in locating customer addresses as most buildings are poorly mapped.
All of these associated challenges significantly increase the cost of delivery, making
online shopping unattractive to the consumer who ultimately bears the cost.
Quality Regulation- Given the business model of most online retail stores which involves
a network of multiple vendors from various locations within and outside the country
delivering orders directly to customers, it is difficult to track the quality of goods being
supplied. Also owing to lax government regulation of product standards, substandard
goods are widely in circulation. This again, discourages online shopping as consumers
prefer to see and have a feel of the product before payment is made.
The Major Online Retail Brands in Nigeria:
Jumia Nigeria Limited (jumia.com.ng)
 Incorporated in June 2012 by two college students Raphael Afeador and Tunde
Kehinde and bought over in 2014 by a joint venture company (African Internet
Holding ) comprising; MTN, Rocket Internet and Millicom International Cellular,
each with equal shares of 33.3 percent.
 19th
most frequented site in Nigeria, and 2nd
most visited online shopping website
with 4 million visits to the website in May and June of 2014 (Alexa Internet).
 Market value share of approximately 43 percent.
 Robust investment of $70 million in strong brand advertising campaigns, Search
engine optimisation and supply logistics (500 delivery vehicles nationwide and a
90,000 square foot warehouse located in Lagos).
 Product ranges include; Mobile phones, computers, home appliances and fashion
for both sexes.
 Business model is similar to that of Amazon, where various vendors are linked to
sell on their platform, in addition to maintaining in-house inventories.
Konga Nigeria (konga.com)
 Launched in July 2012, shortly after Jumia.
 Number one most visited website with 4.5 million views as of June 2014, and 17th
most frequented website nationwide (Alexa Internet).
 Product categories include; Mobile phones and tablets, computers and
accessories, Electronics, Fashion, Home appliances, Personal care, Books and
Stationaries, Toys, Foods and drinks, Music and Movies, and sports equipment.

6. Other popular online retail brands include; dealdey, OLX, gidimall, kaymu, Buyam, Taafoo,
Adibba, Egole, Gloo, Webmall, Fashpa, and Mystore.com.ng.
RECOMMENDATION
The above mentioned concerns could be managed with well-tailored strategic planning,
implementation and constant re-evaluation. My recommendations are follows:
Strategic Brand Positioning- It is very important for online retailers to carefully map out
their market niche and own it. First step to achieving this is to conduct a well-designed
consumer research; identify your customers, what their needs are, and what they are
saying about your brand. With the information in mind, design a value proposition that
addresses those needs. Register your brand in their minds through strong and well
targeted advertising campaigns online and offline. It is also very critical to increase
visibility on social media and search engines.
Leverage Growing Mobile Penetration- Online store websites should be designed such
that it is easy to access on the most basic mobile phones. Mobile phones could also be
utilised in building consumer intimacy; keeping them informed on the status of their
order through text messages, and send text alerts on existing promotions on the
website. It could also be used to collect customer feedback on shopping experience.
Manage Customer Experience- As with many product or service offerings, it is very
essential to attract and retain customers on your business network. Marketers need to
pay close attention to customer feedback and complaints in order to help enhance their
experience. Place strong emphasis on customer satisfaction pre and post sales, seek
feedback promptly, ensure proper screening and routine quality assessment of featured
vendors, address issues relating to product dissatisfaction by either offering refund or
exchange – a happy customer will always tell a good story.
Strategic Partnership and Collaboration- To save on cost and gain customer trust, the
following strategic partnerships are recommended:
 Banks and Payment Processing companies- these stakeholders are key to the
business and essential to align with them in building strong security around online
payment channels as this would help address the issue of security that was
identified above. Get the banks to guarantee customer transactions through the
website as this will encourage more patronage.
 Logistics Companies- it is important to build a good relationship with logistics
companies that service the business and communicate the importance prompt
and delivery.

7. References
www.euromonitor.com
www.jumia.com.ng
www.konga.com.ng
Philips Consulting
Daily Independent