We look at the e-commerce struggle from the economic perspective.
Efritin.com shut down this year. Konga and a bunch of companies had layoffs. All of it points to one thing; E-commerce is hard in Nigeria and we need to talk about why.
In July 2016, Kinnevik, a company which owned 34% of Konga at the time, released a report that showed that Konga had only 184,000 active customers. This is tiny, for a country with a population estimated to be at 180 million.
So any pitch deck you see for an e-commerce site or even internet company, that says their target audience is “180 million people yen yen yen”, be rest assured it’s bollocks. So, why is this e-commerce market not as big as you’d expect?
Disposable income is the money left after deduction of things like taxes. When total income is low, savings are low. It’s a vicious cycle of lows. Bear in mind that the past two years have been quite tough on the pockets of Nigerians.
A potential user is probably thinking, “why would I wait for a product to get delivered to me, and risk the chance of it getting to me late. And then still probably get what exactly I didn’t other for?”
When you don’t have that much disposable income, you don’t get the luxury of trusting too much.
“Interaction with the product is dull,” an ex-Konga developer said. “Going to a store, you can try for fit, hold an item before buying it.”
And it’s not just a Nigerian problem. Some e-commerce companies outside Nigeria have decided to adopt the omni-channel formula; where you create physical locations for your online stores.
One startup that seems to be pushing for this the most is Yudala. Many users of e-commerce sites visit with the intention to only check prices, and then go ahead to make an offline sale.
The problems of e-commerce in Nigeria is mostly driven by an economy that doesn’t push its people to enjoy even better standards of living. Will there be better days? Maybe. Hopefully, when the standard of living legit gets better. Till then, e-commerce companies will have to worry about building for a minority.