High data, operating cost challenge e-commerce growth in Nigeria

E-commerce popularly referred to as the fourth industrial revolution, the age driven by the digital space, which includes online business, transactions, activities, and interactions is challenged in Nigeria by a myriad of issues including ease of doing business, infrastructure deficit, culminating in high data and operating cost.

The e-commerce success story of Amazon has inspired the evolution of new firms in the Nigerian and African market. From Jumia, Konga, Dealdey, Wakanow, Jiji, OLX and Payporte, Nigeria had its fair share of companies driving the e-commerce service in Nigeria, providing jobs to a young vibrant population in the country while seeking to bring a shift to online shopping in the country.

However, the impact of the sector is waning due to inhibiting challenges to operations, including ease of doing business, respect for contracts, infrastructure, and broadband deficit, and a host of others that have left some of the startups either exiting the country or selling out.
As at 2017 the e-commerce market industry in Nigeria, according to reports was valued at $13 billion (N4.5 trillion). The National Bureau of Statistics (NBS) is projecting that in 2018 it could hit N10 trillion.

These are promising projections, but there are challenges and concerns at the moment. OLX, Efiritin have since left and lately investors in Konga have sold out, all because of operating challenges.

However, Zinox, which acquired Konga, has assured that the acquisition of the company will boost the e-commerce ecosystem. But the OLX development raises concerns over the impact of the business model in Nigeria.

Analysts say there are great potentials for the e-commerce segment to thrive in Nigeria and position it as a market leader in Africa, from a huge population, a ready market of over 180 million, an increased adoption of mobile technology, the spread of telecommunications coverage to an increase in internet data usage.

“The challenge of the e-commerce industry in Nigeria seems huge and enormous but surmountable,” they said, adding that the pathway is in collaboration, strong ecosystem, viable reforms, and policies, deploying new technologies, respect for contracts, improved broadband penetration, infrastructure, cost of doing business and the repositioning of NIPOST.

“We believe the e-commerce industry has a bright outlook in Nigeria, but the spate of businesses shutting down operations raises concerns, but if the aforementioned issues are addressed there are prospects of sustainability instead of the survival race for the businesses,” one analyst told business a.m.