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E-commerce Market

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E-commerce Market

 Overview

Internet technology has been tremendously improving in the world and likewise in Nigeria. This development has generated opportunities in major walks of life. The impact of the internet is felt both culturally, socially and economically. Today, individuals, institutions, communities and nations are vastly embracing novel ideas such as e-commerce, e-learning, e-governance among others.  In essence, the emergency and development of internet technology has created exhilarating opportunities more especially in the area of industrial revolution. E-commerce has proven to be a pulsating source of economic development for developed countries such as parts of Asia, America and Europe.

In this 21st century, e-commerce has witnessed tremendous growth in African countries including Kenya, South Africa, and Nigeria which is the focus of this paper. According to a media analysis, the present market potential for e-commerce in Nigeria is more than over N255 billion per year. This market is also growing at a consisted rate of 25 percent per annum (Nigerian Law Today, 2017).

Adapted from amazonaws.com.

From the table above, the penetration rate of the internet in Nigeria is approximately 38% while the total market size is $210.08million. The current number of users is 67, 102, 452 with a growth rate of 25% per annum. Therefore, the e-commerce platform is a significant sphere to reckon.

 Nigeria’s Global Ranking

Despite e-commerce showing remarkable growth in the Nigerian perspective, the country is ranked 100th out of 137 nations by the United Nations Development and Trade Conference (UNCTAD). The top performers according this survey were from North America, Asia-Pacific and Europe. These statistics indicate that on the African perspective, South Africa is the leading, followed by Mauritius, and the Tunisia (The Guardian, 2016). Nigerias Mobile Social Media Penetration is only 8% (Kemp, 2017).Therefore, Nigeria’s global ranking on e-commerce is generally low and there is a need for the government to do something to improve the situation.

Market Characteristics

According to Toesland (2017), the development of Nigeria’s e-commerce market has been hampered by infrastructure challenges. There are longstanding issues to do with patchy power supplies, poor roads, and inefficient telecommunication networks among others which have limited the potential for country’s promising e-commerce market. According to a report by McKinsey, security is the major issues that have made Nigerians to retract from making payments online and instead paying for goods or services on delivery. In addition, the low number of debit and credit cards in the nations has also contributed in curbing online purchase.

Unlike in developed nations, Nigeria does not have inclusive address records, a factor that has been attributed to high rate of delay packages and mistakes in delivery.  Affordable and timely deliveries are crucial to any business model. Consequently, Nigeria’s unreliable power supply and transport infrastructure have been an impediment to realizing this aspect.  In light of this, e-commerce entities find it challenging in operating under these environment alongside the regular “toothing” challenges.

Nonetheless, major firms including the Jumia and Konga are developing innovative solutions with an aim of overcoming the unfavorable working environment. Konga, which is the largest online mall in Nigeria, established an ambitious project of warehouse infrastructure with a focus on addressing the prevalent infrastructural issues. As part of this endeavor, Konga has engaged itself in increasing the size of its key distribution centers in Lagos to over 12000 sq ft in 2017 as well as establishing other centers in Harcourt and Abuja.

Figure 1.2 points out that the E-Commerce spending by Nigeria is very much far below the rest of Africa. This is a confirmation that e-commerce and inline trading activities in Nigeria is still behind the rate witnessed in many other African countries at the world at large.

From this table, it is clear that the number of internet users in Nigeria has been shifting upwards since 2000. This is an indication that despite the prevalent challenges, there is a significant growth of the industry that is probability fuelled by international market forces.

Popular Product Groups Traded Online

As earlier noted, Nigeria’s e-commerce market is dominated by two giants, Jumuia and Konga. These companies are consistently competing to bring online sales to the populace.   In its online marketing endeavors, Konga deals with a diversity of items ranging from microwaves, gaming consoles, electronics, and food items. On the other hand, Jumia, which has also extensive reach focuses on real estate, employment services, apparel and fashion. Other services include car services and thirty party logistics, food items, travels services and other deals (Bright, 2016).  According to experts, there is need for the government to work towards promoting products that are made in Nigeria in order to actualize the country’s pursuit of self sufficiency and economic development. Furthermore, this will have a positive influence on the economy of the nation (Nkeji, 2017).

Internet connection, speed and costs

In 2000, the speed of internet in Nigeria’s capital city to the extent that the popular entertainment entrepreneur Jason Njoku could opt to take Nigerian films to London on hard drives for uploading. However, the development of the undersea cable has led to fast internet with a significantly low cost. Despite this, most Nigerian internet users including the same Njoku are not able to stream films and other heavy documents online, owing to poor infrastructure.  Furthermore, the digital dividend spectrum is yet to be freed by the Nigerian government and is yet to build reliable infrastructure to enable fast internet (Abigail, 2014). Nonetheless, the rate of mobile phone adoption in the country is astonishing with 70 per cent in a decade and is set to change the nation’s economy especially in the jurisdiction of online marketing (Egbuta, 2013). Figure 1.3 presents mobile phone capacity in Nigeria

 Conclusion

From this analysis, there is no doubt that Nigeria is experiencing a tremendous evolution of e-commerce. This aspect has subsequently affected the economy, culture, and social aspects of individual, community and the nation at large. Nonetheless, the lacks of stong legal framework on e-commerce have hindered further progression of the platform particularly due to security threats. There is therefore, a need for a stronger legal framework that can guarantee a robust and secure e-commerce platform.

References

Abigal, S. (2014). Poor infrastructure holds back Nigeria’s broadband revolution. Available from

  https://www.ft.com/content/ec7bb008-bb16-11e3-948c-00144feabdc0

amazonaws.com. (2017).  E-commerce growth in Nigeria. Available from

https://s3.amazonaws.com/Landing_pages/seller_academy/E-COMMERCE+TRENDS+IN+NIGERIA+(1).pdf

Bright, J. (2016). Nigeria’s Black Friday sales test the e-commerce models of startups Jumia and

Konga. Available from https://techcrunch.com/2016/12/02/nigerias-black-friday-sales-test-the-e-commerce-models-of-startups-jumia-and-konga/

Egbuta, O. C. (2013). Mobile Money Technology and the Quest for a

Cashless Nigeria. Asian Transactions on Science & Technology

1 -5

Internet Live Stats. (2016). Available from  www.InternetLiveStats.com

 

Kemp, S.(2017). Digital in 2017 Global Overview. Available from https://wearesocial.com/special-reports/digital-in-2017-global-overview

Nigerian Law Today. (2017). Internet technology. Available from http://nigerianlawtoday.com/e-

commerce-evolution-in-nigeria-opportunities-and-threats/

Nkeji, I. (2017). Promote Made-in-Nigeria Products To Develop e-Commerce Base, Experts Tell

Operators. Available from http://leadership.ng/2017/05/21/promote-made-nigeria-products-develop-e-commerce-base-experts-tell-operators/

The Guardian,  27, April. (2016).  Nigeria ranks 100th in eCommerce growth index. Available from

https://guardian.ng/technology/nigeria-ranks-100th-in-ecommerce-growth-index/

 

Toesland, F. (2017). Nigeria’s e-commerce infrastructure challenge. Available from

http://africanbusinessmagazine.com/region/west-africa/nigerias-e-commerce-infrastructure-challenge/ 



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