Doing business in Nigeria is not beans. Each time you read the success story of one brand just know that there are 99 similar brands that failed.
Last year we woke of to the news of YES MOBILE being bought over by YUDALA for 300 million naira. I saw that as a win-win situation for both brands because it will be difficult to predict how YES MOBILE will compete if they fail to cash in. And just last week you heard about Zinox acquiring Konga for about $10m (a company was valued at $383m), that is massive for Zinox. The news also filtered in that both Efritin.com and OLX has closed shops in Nigeria.
You need to rethink your model.
I have always maintained that Yudala has the best e-commerce model in Nigeria. Jumia and Konga may have pioneered it, but Yudala has stood by the side to study and restudy their performance before coming up with a model I considered to be superior and more adaptable because they run online and offline at the same time. You see, Nigeria is still more offline than online. This is the time to watch out for Yudala even as you are rethinking your own model.
Let me share with you few reasons I think e-commerce is still struggling in Nigeria.
1. Nigeria is more offline than online The biggest e-commerce market in Nigeria is Lagos and perhaps the only thing that encourages online shopping in Lagos is traffic, otherwise the city is just small and it is easy for people to walk into the malls and do their shopping on a daily basis. A good example of the fact that offline is still triumphing over online is the success recorded by Shoprite so far. There may not be any empirical proof to this, but I won’t be surprised if Shoprite makes 5X the sale of all the online stores in Nigeria joined together daily. You need to rethink your model.
2.The cost of internet is still high. The highest users of internet in Nigeria are undergraduates and fresh graduates. But no matter how cheap you think internet is most students still can’t afford to do more than the basic with their data plans. The average undergraduate has a budget of 1,000 for data monthly and some people still rely on that 10Mb MTN give them on each recharge. That is why you see them turn off their data once they finish checking WhatsApp and Facebook notifications or updates. More so mobile phone is not exactly the best device to use in accessing some of these services oftentimes, but how many of them has a computer system or tablets except for the slay queens. You need to rethink your model.
3. The Middle Class are not internet freaks. E-commerce is a sector typically driven by the middle class, but those that are middle class today grew up when internet was not common. Most of the middle class you see in Lagos know that there is a place called Alaba International where the can go and get the best electronics at a very cheap rate, so Konga and Jumia can wait. They know that there is one place called Balogun or Idumota where any type of designer shirt, perfume or wrist watch can be gotten at a cheaper rate. These men know Computer village, they know Vespa, they know ASPANDA and Ladipo, so they prefer to go to these markets or malls, compare different specifications and prices before making their choices, so you see that apart from air tickets and recharge cards these men hardly buy online. You need to rethink your model.
When we wanted to launch HTS Shuttle Services I was under serious pleasure by many to go completely online if I claim that I want to do something different. I insisted that was not the model for the now, some members of my launch team said that I should at least have tickets and maintain that boarding will be purely by the use of tickets, the team insisted so much on that to the point that we actually printed tickets, but on the morning of our formal launch I changed my mind. My point was simply that Owerri is not yet ready for that. We wanted to start from what people know and grow into what they don’t know. We want to be innovating gradually.
Don’t get me wrong, I am not saying that e-commerce cannot or is not working in Nigeria. That is surely where the world is heading to and very soon if your business is not online then you have no business. But my point is that we are still growing into it. In my opinion, it will take another 5 to 10 years before we will begin to have more online than offline payments and transactions. By that time these young graduates of our generation would have been the ones with the money and since we are in love with internet we will be spending it online, but until then you need to rethink your model.
And for some of you who don’t know Leo Stan Ekeh is the founder of Zinox and his son is the founder of Yudala, if you are into tech business you had better start following that man from today.