E-COMMERCE GROWTH IN NIGERIA

These days, Nigerians are not only surfing the web, but are also marketing and buying on the internet.
With the introduction of online retail stores like Konga, Alibaba, Jumia, and an endless list of
new stores, Nigerians though initially skeptical- are embracing online shopping.
For one, e-commerce and online retail provides four major solutions to Nigerians availability,
convenience, an array of options to choose from, and discounted prices compared to physical stores.
This industry is one of the most promising in the continent, reaching out to the whole world as an
attractive investment opportunity. Involvement in African ecommerce holds the promise of huge
potential results against little investment.
As the next frontier, Africa is seeing some good investment from credible investors, which is helping to
drive growth, says Daniel Guasco, Head of Groupon South Africa. He reckons that if you compare brick
and mortar as your starting point, an e-commerce company is easier and quicker. You dont need retail
space and shopping centers. (Featured in Venture Burn)
Nigerias e-commerce market was recently valued at 225 billion Naira, or US$1.3 billion due to the 25%
in e-commerce growth. The reason for this growth isnt far-fetched as Nigeria is the most populous
nation in Africa boasting of 48 million internet users.
In recent times, more than 32.88% of the Nigerian population already has access to the internet and the
rate of mobile phone usage increased to 87 million representing an attractive market for mobile
commerce. And regardless of 419, yahoo yahoo, and online scams, the industry will continue to
experience growth.
Below is the present statistics in relation to e-commerce in Nigeria.
E-commerce in Nigeria
Absolute market size

$ 210.08 million

Sales per inhabitant

$ 1.50

Growth

25%

Internet Users

67,101,452

Internet Market Penetration

37.59%

SEVEN TRENDS TO WATCH IN NIGERIAN ECOMMERCE

Growth of Online Malls
As the saying goes, when there is a gold rush, sell shovels.
Many of the early operators of online stores in Nigeria soon discovered that rather than being burdened
with inventory, they could set and provide ecommerce as a service to traders. And the growth of the
number of these online malls would have value if they are providing a useful service in helping traders to
go online.
Konga.com, an established local brand that is taking up this laudable business model is a clear model in
this regard. Banks, like UBA and GTB have also launched their own stores.
Ease of Payment Integration
As recently as five years ago, a major Nigerian payment switch was charging $1000 to integrate
merchant accounts. Now it costs about $450, but there are signs that prices are falling. Some banks even
waive integration fees all together. A new startup and license payment processor, SimplePay, is also
offering free website payment integration. What is still missing is the provision of payment extensions to
popular open source software like Magento, Oscommerce, PrestaShop and WordPress/WooCommerce.
Credit Easing
Easy credit, in the form of credit cards, is the grease that lubricates online commerce, allowing buyers to
act on impulse and buy now, pay later. A few years back, Ecobank introduced such a product but later
rolled it back. While the challenges of managing small credit is noted, this market is a whale sized
opportunity that perhaps small loan lenders like Ren Money, One Credit can address.
Beyond Lagos
While local tech press celebrates Lagos as a key hub, the opportunities for ecommerce are growing all
over the country, beyond the main cities of Abuja, Port Harcourt and Warri. Now, there are online stores
as far north as Maiduguri.
The trust deficit that hindered initial ecommerce growth plus customers demand to pay cash on delivery
is creating advantages for ecommerce stores beyond Lagos.
Outsourced Delivery
The greatest single factor affecting customer satisfaction is the timeliness of deliveries. While the bigger
ecommerce stores and malls are investing in their own vehicles, smaller ventures have to depend on
courier companies that are not very efficient and not designed to cope with the operations of
ecommerce. Additional services like accepting payment on delivery, expediting returns, insurance and
authenticating effected deliveries are late in coming.
Currently, courier companies are making some of these arrangements on a bilateral, ad-hoc basis. In the
near future, we may see tailored products being rolled out that target ecommerce stores and offer
lower cost based on expected higher turnover volumes.

The Coming Legislation

Nigeria does not have a specific ecommerce law, although many sections of current legislation arguably
cover adequately most aspects of online business operations. As is often the case, the legislature is
taking a top down approach to work on a cyber-security bill with more inputs from foreign funded
NGOs and lobbyists than actual local operators.
Conclusively, it is apparent that E-commerce in Nigeria, and Africa as a whole, is experiencing
exponential growth. It is safe to also say e-commerce is here to stay and will undoubtedly experience
more growth. The Nigerian e-commerce industry, only second to South Africas on the continent, is
projected to take the top spot in the coming years.
Though Nigeria still struggles with ensuring safety on all online payment platforms, as well as proper
provision for global payments, E-commerce is definitely not just a fad but the future.

Content & Image Sources

Michael E. (2014) ECOMMERCE IN NIGERIA
NO COMMENTS http://streettoolz.com/blog/the-future-of-e-commerce-in-nigeria/
Leke A, (2014) SEVEN TRENDS TO WATCH IN NIGERIAN ECOMMERCE
http://techcabal.com/2014/03/18/coming-trends-nigerian-ecommerce/
Osasere ECOMMERCE TRENDS IN NIGERIA
http://citewire.com/e-commerce-trend-in-nigeria/