E-com­merce and its chal­lenges on the African con­ti­nent

The Star Early Edition - - NEWS - Andile Ma­suku

FOR ETOP IKPE and his team at the Nige­rian ve­hi­cle mar­ket­place, Cars45.com, it is time to shake off the eu­pho­ria of clos­ing a $5 mil­lion (R64.14m ) Se­ries A fund­ing round that came cour­tesy of the Fron­tier Cars Group – a hold­ing com­pany backed by the likes of Balder­ton Cap­i­tal, EchoVC, TPG Growth, and NEA.

Given the tur­bu­lent time Nige­ria’s e-com­merce in­dus­try has had of late, the sig­nif­i­cance of this achieve­ment is not lost on me, but Ikpe and his team would do well to get on with the un­en­vi­able task of build­ing a suc­cess­ful on­line busi­ness in one of Africa’s most chal­leng­ing con­sumer mar­kets.

Ikpe is for­merly the com­mer­cial di­rec­tor of Konga – one of Nige­ria’s largest on­line shop­ping plat­forms, and be­fore that, he served as chief ex­ec­u­tive and co-MD of DealDey, a Nige­rian Groupon clone.

Doubt­less, he is an e-com­merce vet­eran at this point, and in a re­cent pod­cast in­ter­view he granted AfricanTechRoundup.com, he out­lined his com­pany’s roadmap for the next 18 months (roughly the amount of time he ex­pects Cars45 to burn through their newly ac­quired funds), and he gave his take on why Nige­ria’s e-com­merce scene hasn’t lived up to many of the heady ex­pec­ta­tions that many peo­ple had for the in­dus­try some five or six years ago. But first, some con­text.


Some would point to late July 2016, as the time when re­al­ity truly set in for even the most bullish pro­po­nents of Nige­ria’s e-com­merce in­dus­try.

That is when the Swedish in­vest­ment firm, Kin­nevik, re­leased its sec­ond quar­ter re­port de­tail­ing the per­for­mance of its sub­sidiaries around the world.

It was that sim­ple act of cor­po­rate com­pli­ance on Kin­nevik’s part that would al­low us all to get a sense of just how Nige­ria’s big­gest e-com­merce plat­form, Konga, was do­ing.

I must ad­mit that it is rather cu­ri­ous that jour­nal­ists and tech com­men­ta­tors on the con­ti­nent – my­self in­cluded – had never be­fore this thought to pore over Kin­nevik’s re­sults to check Konga’s pulse, and by ex­ten­sion, work out whether or not Nige­rian e-com­merce was grow­ing as vig­or­ously as hoped.

Nev­er­the­less, per­haps the most shock­ing rev­e­la­tion con­tained in the re­port was that Konga only had 184 000 ac­tive cus­tomers.

That trans­lated to a measly 1.1 per­cent of Nige­ria’s pop­u­la­tion. To say that num­ber was dis­ap­point­ing would be an un­der­state­ment.

That news sparked hearty de­bate both on so­cial me­dia and in the bl­o­go­sphere about why Nige­ria’s e-com­merce in­dus­try ap­peared to be stalling and re­gard­ing what in­ter­ven­tions might be re­quired to turn the sit­u­a­tion around.

Nige­rian an­gel in­vestor and eco­nom­ics com­men­ta­tor, Eloho Omame, whose elo­quent blog post on Medium en­ti­tled “Thoughts around Kin­nevik’s half year re­port and the e-com­merce in­dus­try in Nige­ria”, was one of the more bal­anced and con­struc­tive, al­beit on­line re­tail spe­cific, re­views pub­lished on the topic around that time.

While Omame found the ex­pec­ta­tion that more and more Nige­ri­ans would trans­act on­line in the long-run sen­si­ble, she wasn’t en­tirely con­vinced that the Nige­rian mar­ket had the ca­pac­ity to sup­port both Konga and its Rocket In­ter­net-backed com­peti­tor Ju­mia – op­er­at­ing at scale.


She also chal­lenged the com­monly-held over­sim­pli­fi­ca­tions that didn’t ad­e­quately ac­count for how ex­pen­sive and time-con­sum­ing it would be to carry out the tough chore of con­vert­ing a mean­ing­ful por­tion of Nige­ria’s cash-lov­ing pop­u­lace into savvy on­line shop­pers.

And with Nige­ria’s two big­gest e-com­merce play­ers miles away from achiev­ing prof­itabil­ity, Omame ar­gued that the e-com­merce sec­tor was in no po­si­tion to demon­strate, be­yond a rea­son­able doubt, its vi­a­bil­ity in the short to medium term.

What­ever your spec­u­la­tive take on the po­ten­tial of Nige­ria’s e-com­merce scene, it is now abun­dantly clear that fail­ing to take into ac­count the un­pre­dictable, com­plex and of­ten counter-in­tu­itive char­ac­ter­is­tics of African mar­kets is not a plan.

Just ask the folks at Groupon, who, af­ter six long years of try­ing to make a go of it in South Africa (the “surething” mar­ket), with­drew a lit­tle over seven months ago with their tail be­tween their legs.

While de­fend­ing the lofty ex­pec­ta­tions that were set for his in­dus­try some years ago, Ikpe ad­mit­ted that there were some reck­less state­ments, but ar­gues that given the pum­melling Nige­ria’s econ­omy has taken in the last two or three years, e-com­merce has done as well as can be ex­pected un­der the cir­cum­stances. Andile Ma­suku is a broad­caster and en­tre­pre­neur based in Jo­han­nes­burg. He is the ex­ec­u­tive pro­ducer at AfricanTechRoundup.com. Fol­low him on Twit­ter @ Ma­sukuAndile and The African Tech Round-up @african­roundup

Andile Ma­suku

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