Surging E-Commerce Growth in Nigeria

Just like when Automatic Teller Machines (ATMs) were first launched in Nigeria, people have started to embrace buying online.

I remember when ATMs and Debit/Credit Cards first debuted in Nigeria, people I spoke with told me back then that they won’t carry ATM Cards due to fear of fraud. Years later, many of these people have embraced the use of ATM Cards, online banking and mobile money.

There are online retail businesses springing up; that are selling products and services and gaining customer’s confidence across Nigeria.

Over the years, movies and popular media have made it sound as if financial criminals are concerntrated in Nigeria thanks to the infamous 419 scams. For this reason, it has been difficult for many people in Nigeria to access financial services online that are open to other countries until recently.

Why did PayPal wait to enter Nigeria?

We now have PayPal, Google, Facebook, Bloomberg, all opening offices in Nigeria. There are other companies that are home grown that have also taken the leap and started their e-commerce operations primarily for Nigerians, and the businesses appears to be thriving.

I was at one of DealDey’s pick-up centre at Lekki. I bought an item from DealDey online and since there wasno 'Pay On Delivery' option, I went to pick it up and paid using GTpay.

GTPay is one of the many payment options that DealDey integrated, it is a "secure internet payment gateway developed to facilitate payments online using debit Cards issued by banks on the Interswitch Network".

In Nigeria 'Pay on Delivery' still accounts for the majority of the e-commerce transactions.

Same way that ATM is growing in popularity with people, I see online commerce getting there pretty soon and I have my reasons.

Why E-Commerce Growth in Nigeria is Surging

Selling online (in Nigeria) is relatively tough — there are several challenges like logistics, payment processing and then gaining confidence of the Nigerian consumer.

The very first set of bold businesses to tackle these challenges started with Pay on Delivery.

You visit the e-commerce website, browse the online store, place an order and wait for it to be delivered to you before you pay.

This made Sabunta and Kasuwa very popular then. Sabunta and Kasuwa later merged and became known as Jumia. Jumia has since expanded to several other countries in Africa (Egypt, Morocco, Kenya, Ivory Coast, Uganda, Ghana and Cameroon).

DealDey had already been on the Nigerian E-Commerce scene before Jumia. Soon after the Jumia launch, Konga emerged — founded by the people behind DealDey. They have grown to be a force to be reckoned with. Some of the best Nigerian developers that I have met now work at Konga — which is a sign that many of the good designs you’re seeing at Konga are done by indegenious designers.

Both Jumia and Konga have enjoyed unprecedented funding from investors. They have spent so much in advertising online and offline, expanding warehouse facilities and delivery services. Some of the billboards in the elite neigbouthood have been taken over by Jumia and Konga, their ads can be heard during early morning and evening rush hours.

Improved Service and Competition

People used to complain a lot about the poor service when these online stores started showing up. But things are getting better. They are not where they should be yet, but improved.

In addition to having bigger warehouse facilities and delivery vans/bikes, Jumia, Konga and DealDey now have pick up centres across cities and towns in Nigeria, making their service readily available to more people. You might decide to have the item delivered to you or choose to pick up at a pick up location closest to you.

We now have new entrants following these pionners. Namely

and a host of others.

Payment processing companies that are Nigerian (e.g. Etranzact, Pocket Moni, Paga) have also stepped up their game. We have some of them making their service more robust so that online stores can integrate them; hoping that soon enough, consumers will move from Pay on Delivery to paying for the order before it is delivered.

PayPal has enabled Nigerians to open a PayPal account and spend money using their PayPal account to shop online, however, they are yet to enable online stores in Nigeria to start using their service.

While online stores are awaiting PayPal to open up to them, they’ve been using indigenous payment gateways most of which still have to go through Interswitch and Etranzact.

Given these scenarios, there is a lot of money on the table available for the taking.

What's Next?

With different payment services springing up, and being integrated with online stores, I foresee an era where e-books, fitness training, consulting, and other physical goods will be sold over the internet on a large scale by individuals and companies in Nigeria soon with payment not being a hassle.

If I can easily send money digitally to you, why do I have to make the journey to the bank?

E-commerce purchases shhould not be reserved to those who have set up a bank account or those that have a Credit/Debit card.

Apart from payments, buying and selling online will still be a challenge until delivery can be properly sorted. It is a good thing to observe, as e-commerce in Nigeria is about to leave the teething phase.

Cover Image Credit: Bob Mical