- Written by Adeyemi Adepetun
THE growth profile of Nigeria’s electronic commerce (e-commerce) industry, with a current value of $35 billion, has been assessed as being driven by the middle class group.
Today, Nigeria can boast of about 300 e-commerce sites running, including Jumia.com; konga.com; gloo.ng; buyam; OLX; mygizmostore.com; mystore; buyrightafrica.com; kaymu; dealdey; wakanow.com. and others.
According to analysts, the last two years had witnessed investments to the tune of over $15 billion with a projection that in another five years, online businesses in Nigeria would have moved from the present $35 billion worth to about $200 billion.
e-Commerce refers to the use of communications technology, particularly the Internet, to buy, sell and market goods and services.
According to analysts, e-commerce offers a level playing ground for large businesses, as well as small and medium-scale enterprises (SMEs) to operate in the global marketplace and for regional businesses and communities to participate in social, economic and cultural networks seamlessly across international boundaries.
With the growing successes recorded in the country’s e-commerce space attributed hugely to patronage from the medium class of the economy, the low-income group has also been described as huge future potential for Nigeria.
Although, the World Bank puts Nigeria’s population at an estimate of 160 million, the African Development Bank (AfDB) said that the middle-class makes up about 23 per cent of the Nigerian population.
Managing Director of DHL Express, South Africa, Hennie Heymans, said with Nigeria’s population of over 160 million and an already thriving e-commerce market, the country is becoming a game-changer in African e-commerce.”
Indeed, according to statistics from the Nigerian Communications Commission, Nigeria currently has about 56 million Internet users and about 32 per cent penetration.
In an interview with The Guardian, the Founder and Chief Executive Officer of Gloo.ng, formerly Buycommonthings.com, Dr. Olumide Olusanya, said online business requires time, tonnes of investment and supporting infrastructure development for new technology-enabled industries such as this, to reach the levels of other climes.
According to him, electronic commerce firms should be given ample time to evolve and scale up their businesses.
“You also need to be aware that new technology adoption has a typical adoption curve where you have early adopters and late adopters. Characteristically, what you see, as was demonstrated by recent evolution of telecoms and e-payments industries in Nigeria, is that the early adopters are typically the middle-class, before these new services percolate to the general populace, who are generally more circumspect about adopting them.
“The brick-and-mortar player with the largest market share had 0.6 per cent of the market in 2012. Gloo.ng is aiming for a one per cent market share in five years time and ultimately vaunt to a 15 per cent-market share position in the long term. The entire market size in 2012 was $33.34 billion but is growing at a yearly clip of five per cent”, he said.
The Chief Executive Officer of Konga.com, Sim Shagaya, in an interview, also said the long-term vision of any e-commerce firm in the country is to reach all Nigerians across all economic strata.
“But think of it, we are an Internet company. We distribute our catalogue on the mobile devices and personal computers. These mobile devices must be in the hands of people along with the Internet connection to enable them shop on Konga, in addition to payment channels, among others. To some degree, our capacity to serve the lower income Nigerian depends on the affordability and availability of mobile devices and Internet connectivity,” he said.
With the Nigerian Retail Market put at about $115 billion, the Managing Director of Morpheus Limited, parent company of buyam.com.ng, Emeka Mordi, said the size of the online retail market in Nigeria is about $35 billion, adding that the country’s businesses are yet to capitalise on the opportunity provided by the Internet.
Just like others, Mordi, who said the e-commerce growth in Nigeria is being fuelled by the middle class, noted that concerns relating to the reliability and security of business transactions online are still staring the business in the face.
According to him, sectors currently driving e-commerce in Nigeria include airlines and the financial sector, adding that the lack of efficiency in current e-commerce portals in the country is still a limitation.