How SMEs can leverage E-commerce to cut costs

“I have a shop on one of Nigeria’s online stores. I have to do that because getting a store in a city like Abuja is very expensive. So I decided to use an online platform where I know I am not paying for space. And the store is accessible everywhere in Nigeria.” These were the words of an entrepreneur, Helen Asimegbe.

E-commerce, also known as electronic commerce (EC) or internet commerce, refers to the buying and selling of goods or services using the internet via online stores, and the transfer of money and data to execute these transactions.

Today, small, medium or large companies are leveraging E-commerce to conquer new territories and acquire new customers that they likely might not have had access to.

In the last six years of E-commerce in Nigeria through Jumia, and many others afterwards, many businesses have been created, and those existing before the debut have grown bigger, better, and more profitable. Although, some big businesses are hesitating to embrace E-commerce because it conveniently breaks all the structures that they have, the business of buying or selling of products on online or over the Internet has become big in Nigeria.

An entrepreneur and CEO of Stylemark hub, Helen Asimegbe, explains why she uses E-commerce: “The framework for E-commerce operations is pretty simple: the seller shows interest in listing his products/wares on the platform, the E-commerce platform verifies the authenticity of the products and checks if the seller has all the legal prerequisites to sell, especially for products sold only if recommended by an expert. And then a transaction is done,” she said.

There is a remarkable influx in the number of businesses and entrepreneurs signing up daily to have their products listed on the E-commerce platform.

Unknown to many, there is no fee - either hidden or expressly charged - required from any business owner who is looking to speed up the growth process of his business. You can also sell anything, just anything - from products as small as a tissue paper to items as big as a refrigerator, or even perishable items, such as fresh tomato, onion, and so on.

Pretty much, anything can be listed on the E-commerce platform.

For many businesses, E-commerce has become the fastest route to reducing overhead, breaking even and becoming profitable.

The Head, PR & Communications, Jumia Group Nigeria, Olukayode Kolawole, says there are four major reasons to justify the claim above.

“Marketing Investment:

All the funds required to promote a seller’s products are borne by the E-commerce platform. Such marketing costs include, but not limited to, online and offline advertising, PR, search engine optimization and social media.

“Promotional and special campaigns are created periodically to drive sales; they also come at a cost. Marketing requires a huge investment, and many SMEs today do not have sufficient capital to combine marketing costs with overhead,” Kolawole said.

Furthermore, Kolawole said selling on E-commerce platform helps SMEs to have a lean workforce.

“Limited Workforce:

Selling on E-commerce platforms helps sellers to keep their workforce very lean, because only a few people will be needed to carry out the day-to-day running of the business. The largest chunk of the efforts required to drive the business to profitability rests squarely on the E-commerce platform. They ensure the seller’s products are: delivered to the customers on time and in good shape; packaged with the right material to protect the products during fulfilment.

“The overhead costs for hiring qualified individuals to implement these tasks are borne by the E-commerce platform,” he stated.

Also, rent an important consideration for most businesses. Most businesses need space to showcase their products, especially those that sell high value items. The cost of rent is high in most urban areas and cities.

The CEO of SmartCraft shares her experience thus: “Spending money on rent was a big challenge for me. As a young business, I could not afford a million naira rent in Abuja but showcasing my wares in an online store has cut off that cost for me. Again, I do not have to hire a sales girl to stay in the shop either,” she said.

The CEO of JustaskSaisy Enterprise Limited, Esesua is Henrietta Adeyemi said Ecommerce has helped SMES break trade barriers. “Local products and services here in Nigeria have been able to break into international market. It gives SMEs a global reach and it is cost effective. Again, it helps in the area of revenue collection. Revenue collection is easier because most payment are made prior to delivery.” She said.

Most E-commerce companies have large warehouses in almost all the major cities.

Again E-commerce platform gives your business digital visibility. Mr Kolawole captures it this way:

“Digital Visibility:

Most of the big E-commerce platforms have hundreds of millions of customers. There is no amount of capital offline businesses can have that will expose them to millions of views in just a week. Businesses benefit incredibly from the cloud and exposure that these platforms offer, and at no cost to the sellers.

“Today, Jumia is regarded as the No. 1 shopping destination in Nigeria, and Africa at large. The visibility it provides for sellers on its platform are the major prerequisite most businesses today need to grow and prosper. Millions of dollars are expended on driving traffic to the site - all to the benefit of the sellers,” he stated.