Online Business, The Potentials Of A Growing Market

OnlineBefore now, Nigerians depended on local real time stores for their shopping, moving from one shop to another for the best bargain. It was tedious and time consuming. Shopping continued in that pattern, until the introduction of Automated Teller Machine (ATM) cards.

Initially, the trust was not there for its adoption, as many Nigerians were reluctant to use their credit cards or give their personal information, while paying for their purchases. The advent of online shopping however changed the perception.

The entry of Jumia and Konga into the online business, in 2012, followed by aggressive enlightenment campaigns by online retail stores in 2013, caused a revolution in that business platform. Today, Nigerians are not only surfing the web, they are also selling and buying.

Small and Medium online businesses are emerging in their numbers. This is helped by growth in Internet penetration.

As estimated by McKinsey and Company, Nigeria’s Internet subscriber base rose from 48.2 million in June 2013 to 67.4 million in June 2014. This represents a density of 40 percent, placing the country above the African average of around 16 percent.

According to mobilemediainfotech, in 2014, Nigeria recorded over $2million worth of online transactions per week and close to $1.3 billion monthly. Nigeria’s e-commerce market is developing rapidly, with an estimated growth rate of 25 per cent annually.

Chief Executive Officer, Mile12 Plus, an online replica of the Mile12 market, Soji Adeola, said the rise of e-commerce in Nigeria could be attributed to the proliferation of different brands of smart devices. Busy professionals or executives, who ordinarily do not have much time on their hands, a click online and prompt delivery by responsible firms, are attractive to them.”

The Managing Director, Carmudi Nigeria, an online site that provides platform for the sale of vehicles, Amy Muoneke, said the growth in the online business is as a result of affordable services by internet service providers, who cut down the cost of internet data plans, and the availability of affordable smart phones.

“Carmudi has attracted lot of user acceptance and our platform has cars listed by over 1,200 dealerships from across the nation, ” he said

E-commerce and online retail provides availability, convenience, an array of (cheaper) options to choose from, and discounted prices compared to physical retail stores.

The growth of online business is also impacting other lines of business, including logistics, according to the co-Chief Executive Officer, Africa Internet Group (AIG) Jeremy Hodara.

He said; “ the growth of e-commerce in Africa is also offering unprecedented opportunities for logistic companies. Realising this, Jumia launched a joint initiative with AIG to integrate existing logistics providers into a single network to meet the growing needs of online sellers across the continent. International brands are also planning to come into Nigeria, so we launched a programme in June, to enable international brands enter Africa the safer way, via online retail.”

Online business operators, who narrated their experiences to The Guardian last week, described it as lucrative, adding that it takes nothing to start the business.

According to Mr. Soji Adeola of, “the cost of starting an online store depends; you can start with almost nothing; you can start from your room, without much asset; receive orders and simply run to the next shop when it is time to deliver. However, online shops cost a lot if you want to do it properly. To succeed, there has to be structured agreements in place with suppliers ensure fair prices, prompt delivery, and other things that will lure customers to your website. If you consider the number of Nigerians online today, and the number of people that shop online daily, you will realise that we are nowhere near the potential of online business in Nigeria, he said”

Despite the growth, it is not without associated challenges. One customers who was not satisfied with the services by an online stores, Mrs. Betty Adepoju, a jewellery designer said, “ I ordered a table from a certain online store and waited long enough for it, only to be told that the table was no longer available. They didn’t bother to inform me. I had to chase them with my phone before I was told to settle for something else. Sometimes, the pricing isn’t right. I was pained when I saw the bathroom items I bought online displayed at Lagos market, which was even cheaper.”

Modupe Gbolahan, a branch supervisor of an interior design company in Victoria Island, said her experience with some online stores has been quite unpleasant.

“ I ordered a size 12 dress, and the representative brought size seven, and I was told to try it on. I have had to squeeze myself into several dresses and my feet into ill fitted shoes. When they don’t have my size, they will bring other sizes for me to try on. The Ideal thing is for me to know the real situation before hand, so I can decide whether to replace it with another item or demand for a refund. Sometimes, they are not upfront when they have delivery issues, and if you don’t call, they won’t call to inform you on the progress of the item for delivery. But for household appliances, I don’t have issues with them.”

Apart from customer’s related challenges, online business operators are also lamenting; saying the lack of unified identification system in the country has been an impediment to the rapid growth of online transactions in the country.

County Manager, OLX, Lola Masha said, “ there is no national identification system in Nigeria; so, it’s tough for me to know who really you are. If we had an ID system of some sort for me to know who you were and I had a sense of your reputation through various ways, we will be able to make better decision about who we should or should not allowed on OLX platform. Unfortunately, we don’t have that in Nigeria. So, we had to take up the task of building a database to verify users. It’s not trivial at all, because everybody now needs to be verified; we need to capture who you are and decide if we should allow you to continue using the site or not.”

A lecturer at the University of Lagos, Odumuyiwa Victor said, “the emergence of online stores is because someone tried it and it worked, so others followed. More will still join. Also, the middleclass appreciates the of use online stores because they find it difficult to drive down to a shop.

“Although it is becoming cheaper to acquire data and make online purchase, but comparatively it is still expensive, when looking at income.”

The problem most often is that we fear things won’t work; the communication network providers should also work on their server, to mitigate issues. The market has not reached its full capacity, although many people are yet to learn the use the computer and modern day devices, but that shouldn’t be much of a problem.

More people will key into making purchase from the online markets over time.

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