Efritin made a grand entry into the market in 2015, but it breathed its last in September of 2017.
When people or things die, the first question everyone asks is “how did this happen? It was here just yesterday”.
But the truth is, Efritin died a long time ago. Since January 2017, when it was announced that the company was shutting down. What followed, according to reports, was an auctioning of company property at the Efritin Office. While most of the team was laid off, the website was kept up. Just the way you’ll put an almost dead person on life support.
An old Uncle Steve once said, “ “You can’t connect the dots looking forward; you can only connect them looking backwards.”
In 2015, Efritin began operations in Nigeria, putting in a lot of work (and marketing spend) to find their place in the tightly contested e-commerce space in Nigeria. Just like everyone who touches down in Nigeria with a big pocket, they found their footing quickly, hiring massively. By the end of 2015, they bought Ringier’s ady.ng, mostly for the data.
They crowned it with a badass office in with cool room names like Balogun Market (The Main Office), and Computer Village (The Server Room).
One office name you couldn’t find anywhere in the Efritin building was Murtala Muhammed Airport. That’s the busiest airport for people exiting Nigeria.
Back to the shutdown of operations at the Efritin office. Nils Hammer, the CEO of Efritin’s Swedish Parent company, Saltside Technologies, said after the January downsize:
“We have a long list of KPIs to evaluate how things are performing. Compared to other markets, we didn’t see the same progress in Nigeria.”
Tonaton is one of Saltside’s products in emerging markets, alongside Bikroy.com in Bangladesh, and Ikman.lk in Sri Lanka.
Clearly, the numbers weren’t adding up. For a country of over 180 million people, they felt they’d given much, but were in fact getting very little.
If you throw a stone in the Nigerian Internet startup space, it’s going to land on a company saying they are “building X that will change the way Y works for 180 million Nigerians.”
But the Internet market, as we’ve come to understand, is way smaller. For context, Konga, which is one of the biggest e-marketplaces in Nigeria has just over 187 thousand active users, according to Techcabal.
A quick math shows you that online stores are still a “one percent” affair. More context, Konga launched in 2012, 5 years ago.
Even with the 2017 Mobile Trend Report saying internet penetration is at 47% of Nigerians, it still doesn’t put into account another important factor; spending power. The culprits here, are a weaker currency, and inflation.
Konga and Efritin are quite different (Konga is B2C, a company selling to a consumer, while Efritin was mostly C2C, a company creating a place for customers to do business together). But it is still in competition for the same thing; attention.
This leads us to the bigger e-commerce scene. Layoffs aren’t a new thing in Nigeria’s e-commerce space. In 2015, Jumia laid off 300 workers, about 30% of its workforce. Dealdey? 60% of its workforce. Even Konga laid off 10% of its workforce in January 2016, about 80 people. Then Konga rounded off the year with another layoff of 60% of its workforce.
Sim Shagaya himself, former CEO of Konga and Founder of Dealdey, said in an interview:
“These headwinds will likely last through 2016. Consumption growth has slowed for a number of reasons and I believe this is the reason for the layoffs you are seeing not just in e-commerce but in many sectors across the economy. The larger, savvy, global investors understand that e-commerce is a marathon and I’d be surprised if the short term bumps we are experiencing deter continued investment,”
He was right, and Efritin’s death is itself a validation.
Death by a thousand cuts. From mismanagement of funds, to bad timing in the Nigerian economy, the final cut that sealed their fate, was most likely the moment where someone thought;
“Damn, we’re putting in so much and we’re getting so little”
We spoke to a former employee of Efritin who asked for anonymity:
“The major problem we had was that the funds weren’t going to the right places. Some people got kicked out for mismanagement of funds. And I think the final nail was that, the people at Sweden kept comparing us to the Ghanaian sister company, Tonaton.com. Their argument was that they were spending less in Ghana and getting more returns than in Nigeria.”
The cardiac arrest followed. And they tried to make it as gradual as possible, first laying off staff. Then keeping the website alive, scaling down operations. Then pulling the plug so quietly, eventually, that very few people noticed.
Moral of the story: E-commerce in Nigeria is still very hard, and no one appears to has figured this thing out. But the Nigerian e-commerce space is still quite underdeveloped, young, and clearly in the difficult formative years.
Perhaps one day, it will find its footing, get up, and stand tall.