A step-by-step guide to starting eCommerce in Nigeria
Are you looking to tap into eCommerce in Nigeria? If you are, then you are looking in the right direction because sales from eCommerce in Nigeria are projected to reach about $75bn by 2025.
The world has seen an increase in retail and eCommerce activities in the last two decades. This growth has consistently been fueled by increasing internet penetration, smarter phones, the millennial buying population, and the overall digitization of modern life. However, the pandemic at the beginning of 2020 has further added fuel to the fire fueling this impressive growth.
To put it in context, according to Statista, “in 2020, over two billion people purchased goods or services online, and during the same year, e-retail sales surpassed $4.2 trillion worldwide. In the year of the pandemic, global retail e-commerce sales grew by more than 25 per cent.
Statistics from Mckinsey & Company paint similar pictures. In 2019 (shortly before the pandemic), the revenue from eCommerce in Nigeria was about $25bn and this figure is projected to reach about $75bn by 2025. When you adjust this projection to the effect of the pandemic, it is easy to put the sales from eCommerce in Nigeria by 2025 figures at close to $100bn.
The confidence to buy online or from a shop without physically being there has continued to grow even in a low-trust environment like Nigeria. Suddenly a lot of consumers now know they can shop, pay and get their orders delivered.
Retailers and owners of eCommerce in Nigeria have also helped manage the issue of trust by offering alternative payment options so that consumers can opt to pay only when they receive the goods ordered from these merchants.
Despite these impressive results, the journey to a fully digital experience is still slow both from the merchant and from the buyer’s perspective.
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In this article, I will highlight some of the opportunities that eCommerce in Nigeria provides for entrepreneurs, especially retailers in Africa who can take advantage of it in this growing industry.
The African Market
In its 2021 Q3 results result released on the 19th of Nov, 2021, Jumia – Africa’s largest eCommerce company – recorded about $238m in Gross Merchandise Value (total amount of goods sold). In the quarter before this (Q2 2021), Jumia grossed $223m in sales. Applying an average order value of $28, the Q3 sales of $238m translates to 8.5million orders.
It is very likely that Jumia sales across the African continent could close at 25-30 million by the end of 2021. Other players like Konga and several others are experiencing similar growth. And more players especially in the fintech space (Flutterwave, Interswitch, Unified Payment, Paystack, etc.) are joining the fray.
However, these are still small numbers for a continent that offers a Total Addressable Market of 3.75bn orders annually. Out of this, 40% (1.5bn) may already come from sales from eCommerce in Nigeria alone.
As mentioned earlier, consumers are showing increasing confidence in making purchases without being physically in a store or market. But they also demand better and richer experiences especially the ability to choose the right products, view alternatives, bargain price, make payments and receive these products timeline. A good eCommerce today delivers all of the above and even more.
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And because the tools for building and launching an eCommerce in Nigeria are now more easily accessible, the market is available for any merchant that seeks an additional sales channel to take advantage of the growing African retail and eCommerce industry.
4 Practical Ways To Start Ecommerce Business In Nigeria
Merchants can get into eCommerce in Nigeria in the following ways:
a) SELL ON SOCIAL MEDIA: I have been told at least twice that activities around eCommerce in Nigeria on Instagram are probably far more than Jumia and Konga combined. I am not able to confirm this but indeed there is a huge level of retail activities going on in the social space.
Moreover, getting in is not difficult. All you have to do is create an account on Instagram, Twitter or Facebook, upload the picture of the product you are selling, push engaging content to your target audience, negotiate the price, the payment method and deliver offline and the transaction is completed.
b) SETUP YOUR OWN E-COMMERCE: If you are small and just starting out, then you probably do not have the technical knowledge to launch your “own” eCommerce in Nigeria.
Luckily there are free eCommerce CMS tools (such as WooCommerce, CS-Cart, BigCommerce, etc.), as well as affordable and easy to set up platforms (eg Shopify, Ecwid, Etsy, etc.) that can get you started. After setting up, you will have to promote the site in order to drive traffic to it.
c) SIGNUP TO AN E-COMMERCE PLATFORM: Typically, these are online marketplaces where the owner of the platform sells products on behalf of multiple merchants. Examples of these include Jumia, Glovo, Mano, etc.
The platform owner does the marketing of the eCommerce marketplace so you do not have to worry about traffic. Some merchants even register with multiple platforms to maximize their opportunities
How To Grow Your New Ecommerce Store In Nigeria
Now that you have an online presence, how do you maintain sustainable growth?
a) NICHE: To succeed in eCommerce in Nigeria, people have to know you for something. Research your market and find what your audience needs. Deliberately target high selling products, FMCG, household consumables, fashion, groceries, pharmaceuticals etc.
If you are on a marketplace, target products with high sales and great reviews. That may give an indication of what the market is looking for at that point in time.
b) HAVE A REPLENISHMENT STRATEGY: When running eCommerce in Nigeria, you must never run out of stock but do not affect your working capital by holding too much stock.
Collaborate with Vendor Managed Inventory (VMI) wholesale buyers who buy from major manufacturers and sell these at wholesale prices so you can also pass the savings to your customers. Some of these VMI driving eCommerce in Nigeria include Omnibiz, Supplias, Alerzo, etc.
c) SELL QUALITY: When starting eCommerce in Nigeria, you may be tempted to carry fake products, but it is only a matter of time before it costs your brand its reputation. So, buy from credible and notable suppliers and brands.
d) ADOPT INNOVATIVE PRICING STRATEGIES: This strategy ensures that your customers never feel they are paying more. You have to constantly promote discount offers and rebates.
e) ALLOW CASH ON DELIVERY OPTION AT CHECKOUT: When running an eCommerce in Nigeria, you will soon realise that Nigeria is a low trust environment. Therefore, you must approach the Cash on Delivery, COD option cautiously. There are pros and cons to implementing a CoD policy.
f) DELIVER FAST: Studies have shown that there is a correlation between the speed of delivery and the rate at which customers buy products from a merchant online. When customers know that when they order goods from your online store, they can have them delivered the same day, they tend to increase the value of their online purchases.
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A survey carried out by McKinsey in Germany, France, the UK and Sweden shows that 50 per cent of the respondents were willing to pay 10 per cent of the cost of purchase for same-day delivery.
Similarly, in another survey by Bringg, 99% of retailers will offer same-day delivery by 2025 (the figure today is about 35%). So beyond making repeat buys, at least half of your customers are willing to pay you more if they receive their purchase in good time and most especially on the same day.
Delivery same day is almost inevitable if you are to remain competitive.
Use Dellyman To Drive Same Day Delivery
“Same day delivery is tough and that is why today, it is more of a slogan than a promise. The good news is that a Nigerian logistics marketplace, Dellyman, which is essentially an “Uber-for-logistics” platform, is able to guarantee same-day delivery to facilitate fast deliveries for online retailers in Nigeria.
But times are changing and the demand for something faster than same-day delivery is gradually taking over the retail and eCommerce industry.
However, if you must win in the market, you need to be ready to beat the traditional eCommerce providers such as Jumia, Konga, etc. on speed. This speed means faster than the same day.
Whether you are selling from a brick and mortar store or own your eCommerce or selling on KeeZal, Dellyman can help you gain a delivery speed advantage over your competition.
Dare Ojo-Bello, is the Founder/CEO of Dellyman. Email: firstname.lastname@example.org