Yudala Online-Offline E-commerce Model Goes Global
There is a cold cross-border war out there in the global e-commerce bourse. Two giants, Alibaba of China and Amazon of the United States are locked in a contest for the soul of the world’s e-commerce projected to hit $28.3 trillion by 2018. So, how does this connect to Nigeria and Africa? Much, in many ways! Africa’s foremost truly composite ecommerce outpost, Yudala, launched barely a year ago, precisely last August, seems to have provided a rare business model which now drives both Amazon and Alibaba in their quest for market dominance.
Yudala was birthed as the first true composite retail platform in Africa. What the continent has seen prior to its entry was at best a window-dressing of what modern, competitive e-commerce retailing should be. It is the first to combine a world class e-commerce platform with an offline chain of retail stores. This innovative model immediately set it apart from competition.
Founder of Nigeria’s Yudala, Mr. Nnamdi Ekeh, remembers how it all began as a mere idea. “I was about 19 then and was still in school when the idea of Yudala came. I kept it in my head and was mentally nurturing it and even at that time I could see the limitless possibilities of e-commerce and on-line retailing.
“Yudala was a vision which I began nursing in my penultimate year in the University of Lancaster. I was quite familiar with the pioneering moves my father had made in e-commerce with Buyright Africa which was an idea ahead of its time as there was a glaring human capital deficiency at the time. I had always considered the need to expand access to the unreached, so to say; the millions in the hinterlands and without ready access to the internet to enable them take advantage of e-commerce. I was also motivated by the need to innovate and offer the consumer more options, hence the Yudala composite retail revolution which fuses a real-time e-commerce platform with mega Experience Stores located in major cities”, he said.
In a matter of months, Yudala has transformed from the vision of a teenager to a national movement and the preferred channel for shoppers with eyes for quality, real time delivery and after-sale support. Yudala started with ICT products, it has since diversified into a one-stop online and offline retail outpost.
When young Ekeh conceived the strategy of real-time delivery and take-it-to-theconsumer concept as the unique selling point of the Yudala brand, little did he know that this model (online-offline) would turn out to be the catalyst that would drive global e-commerce. Yudala’s model of being a true composite e-commerce “everything store” has driven it to phenomenal growth. To achieve this, the company has made huge investments in capacity-building, payment systems, matchless customer care service, logistics and pervasive point-ofpresence (Experience Stores), which is at the core of its ability to achieve on-the-minute delivery of any order, making it the ideal next-door-shop. Leveraging on its logistics success, it has forayed beyond electronics into consumables, households and life style goods.
Yudala combines B2C (Business-to-Consumer) and C2C (Consumer-to-Consumer) models through its trademark Mobile Monday and Neighbour to Neighbour campaigns. These market-deepening strategies are now being deployed by Alibaba and Amazon to cut deep into the global e-commerce markets.
Alibaba is a Chinese company but it is doing mega business in the United States. It is adopting the principle of increasing pointof-presence in America neighbourhoods much the same way Yudala is planting outlets across Nigeria, a fusion of online and offline. This gives Yudala the head-start to serve the under-served rural communities with limited or no access to internet. With 15 Experience Stores nationwide, Yudala’s offline-online model of e-commerce has attracted investors from Europe and this has given Yudala more impetus to push for market share expansion. The company is set to add three Experience Stores before year end and if all goes well, it will make foray into the sub-region with Ghana as next destination and an ambitious target of 60 Experience Stores in the next two years.
Ekeh sees Yudala’s new push as the tipping point for e-commerce in Nigeria and a vision that fits into the Change mantra of the Federal Government of Nigeria to create jobs.
“We are looking to keep creating jobs for young Nigerians; not just any job but jobs that would ultimately turn them into global citizens and creators of wealth. We are working hard at making ICT products pervasive and affordable to more Nigerians including students. We believe that the strength of the youths of any nation lies in their ability to innovate and one way to encourage innovation is to introduce the young minds to ICT early in life.
“But beyond this, we are humbled by the fact the offline-online model we initiated in Nigeria has become the trending global model for major players in e-commerce. It is a model we believe would bridge all the gaps that have limited e-commerce in recent years by connecting business to consumers in a more direct manner”, he said.
In its latest comparison of both Amazon and Alibaba, AdvisoryHQ, the world’s fastest growing financial review and ranking portal said: “In terms of performance, it is important to remember the differences between the platforms offered by Alibaba vs Amazon. In the last fiscal year, Alibaba had revenues of $14.4 billion, with profits of $10.5 billion. After opening with the biggest IPO in history, the market capitalization of Alibaba currently stands at $193 billion.
“While still less than Amazon, Alibaba employs 35,000 workers and is looking to expand dramatically into the global market. But the stock performance has dragged, with a five per cent drop in the past calendar year”.
The financial review also compares the net-worth and style ofthe men in charge of Alibaba as against the men in charge of Amazon? “Alibaba founder and chairman Jack Ma has a current estimated wealth of $33 billion, making him the richest man in Asia. As a significant portion of his wealth, Ma currently owns approximately 6.3 per cent of total Alibaba shares.
“Amazon’s financials are very different. With a $329 billion market capitalisation and $113.4 billion revenue, one might think that Amazon ecommerce dwarfs Alibaba. So where’s the competition? Well, despite the gap in revenue over Alibaba, the Amazon empire only turned a profit of $1.2 billion, which is only about a tenth of what Alibaba does on much lower revenue”.
In essence Alibaba runs lean and mean and focuses on profitability. On the other hand, Amazon ecommerce has never focused on profitability, instead it attempts to snap up market share and provide the best possible experience for customers, even if it means a loss in potential profit.
“Amazon founder Jeff Bezos and his 231,000 Amazon employees are playing the long game. As Amazon reviews this strategy, it is obvious that it has paid off in recent months. Amazon stock is up 59 per cent in the past year, a huge increase, especially when compared to Alibaba’s decrease.
This increase in Amazon’s stock price has rocketed Bezos into 5th place on the list of the richest people in the world.
Bezos’s fortune is estimated at over $60 billion, placing him behind only Bill Gates, Amancio Ortega, Warren Buffett, and Carlos Slim.
At the moment both Amazon and Alibaba are in a hot contest for India and China markets. Alibaba is currently the world’s most profitable web marketplace. To compete favourably with Amazon, Alibaba recently announced it will pay $4.6 billion for a 20% stake in Suning Commerce Group of China, which operates more than 1,600 electronics stores in China. Best Buy runs close to 1,800 worldwide.
The move by China’s biggest—and the world’s most profitable—web marketplace signals the necessity of having immediate delivery options in place for even large, unwieldy merchandise. According to a press release announcing the deal, Suning will provide that capability to Alibaba’s third-party sellers via eight national and 57 regional distribution centres covering 90 per cent of China. It operates some 1,700 last-mile delivery stations.
“This new alliance brings forth a new commerce model that fully integrates online and offline,” said Alibaba Executive Chairman Jack Ma in a statement.
“This collaboration signals a new trend in the Internet age: Strengthening China’s traditional industries by leveraging the power of Internet,” stressed Suning Chairman Zhang Jindong.
Whereas Ma calls the online-offline model a new strategy, it has been in existence in Nigeria courtesy of Yudala, and propounded by a Nigerian teenager.
Online retail offers simplicity and makes it possible for consumers to shop on the go but it takes away the traditional see-feeland-touch option which offline gives to consumers. In spite of the glut and clutter of gadgets and the very fact that you can order it and receive it from one spot, many people still prefer actual visit to the stores to shop offline. Alibaba is furiously deploying the combination of these two channels (online and offline) to give Amazon a run for its size and turnover in India and China markets, the two over one billion marketplaces in the world.
It is in view of this that analysts see Yudala dominating the Africa e-commerce market in the coming years using the composite online-offline marketing model. On whether Yudala would be listing at the stock exchange Ekeh said “we will do so when the time is right”.