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Published On: Fri, Dec 19th, 2014

Effects of e-commerce on Nigeria

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E-Commerce-Growth-In-NigeriaE-commerce may be affecting you more than you think even if you have never shopped online.

Permit me to give a simple example. If you go to Computer Village to purchase a phone, the tendency is that the retailer will give you a standardized price. This is because he expects that you may have

already checked the internet for prices of the phone before coming to his store.

E-Commerce stores are known to offer goods and services that are equal in price and sometimes even cheaper than those found in traditional stores. Essentially, e-commerce stores are now contributing to the democratization of prices in Nigeria.

According to a July 2014 report from the Business Advisory Division of Phillips Consulting Limited online shopping in Nigeria increased from N49.9billion in 2010 to N78 billion in 2012. With consistent year-on-year growth of 25% in this sector, it is expected that online shopping will hit N152.3 billion by 2015.

Data obtained from the National Bureau of Statistics shows that the Fast Moving Consumer Goods sector (FMCG) of the economy accounted for 9% of Nigeria’s GDP which is more than the contribution of the Oil & Gas sectors to GDP and second only behind Agriculture.

The growth in the ecommerce industry seems more remarkable when you consider that only 38% of the Nigerian population has embraced online shopping.

This write-up takes a look at the ecommerce industry in Nigeria and attempts to answer the following questions:

1. What is e-Commerce?

2. Effect of e-Commerce on Nigerians

3. How can ecommerce adoption be increased?

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It should be noted that I will use our recently opened ecommerce site www.bamboonaija.com as a case study in this article (Yes I admit bias here. Where else can I get credible information if not in an organization I am involved in)

So, What is e-Commerce?

The word eCommerce seems to be one of those terminologies that technology geeks use and there is a tendency for us regular mortals to be put off by ‘big grammar’. Therefore, let’s break it down to its simplest form; understand the origin of the word, and how it is used today.

E-Commerce stands for electronic commerce. The ‘electronic’ component of it comes from the use of electronic devices to engage in ‘commerce’ activities. The English word ‘commerce’ is derived from the French word of the same pronunciation ‘commerce’, which in turn was derived from the Latin word ‘commercium’. Commercium was formed by two Latin words of ‘com’ which means ‘together’ and ‘mercium’ (from ‘merx’) which means merchandise. Therefore, from the etymology of the word ‘commerce’ we can derive that the original intention of the word is the coming together to trade in merchandise.

With an understanding of the origins of the word, I was able to filter through the many definitions of ecommerce and I have modified a definition given by Egyptian lecturer, Dr Zeinab Mohamed El Gawady and come up with this – ‘E-Commerce is the use of technology to conduct transactions; usually over the internet’.

Effect of e-Commerce on You

Nigeria is a developing economy with a huge infrastructure gap.

eCommerce is largely dependent on telecommunications infrastructure which though still has many teething problems has grown in leaps and bounds. For instance as at the year 2000, Nigeria had 200,000 people connected to the internet. However, as at 2013, Nigeria had 67.3 million people with internet access and the number is growing largely due to the proliferation of smartphones and tablet computers.

What this means is that there is a large pool of people who are able to conduct transactions over the internet using technology via laptops, smartphones, tablets etc.

So what’s the effect of e-Commerce in Nigeria? Simple…a boost in productivity for each individual and by extension a boost in the Nigeria’s Gross Domestic Product (GDP).

It means that people can actually perform more activities within a limited space of time. For example, let’s consider Funmi, a working mother who works in an advertising company.

Assume Funmi goes to www.BambooNaija.com and shops for groceries online and BambooNaija.com delivers the groceries to her house whilst she is still in the office. Now, let’s consider the multiplier effect of this online purchase.

It means less time spent in traffic by Funmi going to the market, one less car on the road, less degradation on the road or one less ‘pot-hole’, less money spent by government to fix that pot-hole, more time available to Funmi to create an awesome campaign for her client, more revenue to her advertising company, more taxes to Government, more money available to Government to build new roads and most importantly more quality time for Funmi to spend with her kids and her husband.

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With just about 35% adoption of ecommerce in Nigeria, we are seeing the following effect of the boost in individual productivity on the Nigerian economy:

1. Reduced prices on goods and services due to standardization of information

2. More disposable income to households from savings on standardized prices

3. Establishment and growth of more local organizations due to

increased market access

4. Job creation as a direct consequence of the establishment of more

local organizations.

This list is by no means exhaustive and your comments or thoughts are welcome.

How can ecommerce adoption be increased?

As highlighted above, more people need to adopt eCommerce options because of the individual and collective benefits.

To look into how to increase ecommerce adoption beyond 30% of the Nigerian population, we need to look at some of the challenges and barriers to shopping online. As stated previously, I will draw extensively on our experience at BambooNaija.com to highlight how we are overcoming such challenges.

• Internet Access: According to data from Australian research company PowerRetail, 94% of Australians (or about 22 million people) have access to the internet out of which 79% go online everyday and 60% go online multiple times a day. These Australian consumers generated sales of $37.1 billion in 2013. There is a direct correlation between access to the internet and online spending. Therefore, to increase the adoption of eCommerce in Nigeria, we need to increase access to the internet. Thankfully, access to the internet in Nigeria has grown in leaps and bounds as there has been downward pressure on the cost of devices used to access the internet as well as the cost of data. These positive developments led to Nigeria overtaking the UK in internet access in 2013.

• Variety of items available from ecommerce sites: The online stores in Nigeria today offer only fast moving consumer goods (FMCG) such as mobile phones, drinks, toiletries and fashion items. In our

organization, we put the customer at the core of everything we do. As a result, we recognize that individuals (and businesses) require both FMCG items as well as items that are required only periodically but are equally important.

• Inability to examine products personally: Sometime in future, it will be possible to hold a product and examine it using a hologram.

Unfortunately, that technology has not been developed yet. The next best thing on other ecommerce sites are pictures.

• Ease of Payment & Internet Scams: For good reasons, many people do not trust online transactions in Nigeria. To help overcome this challenge, we offer a pay-on-delivery option on most of the items on offer. This service is currently restricted to Lagos but we will expand to more cities as we continue to develop supply-chain capabilities.

• Consumer Finance: BambooNaija has partnered with leading financial institutions to offer financing for specific products you wish to purchase or general vouchers which gives you a specific sum to shop

for anything you want to purchase on BambooNaija.

• 100% Genuine Products: BambooNaija is able to offer you lower prices because we buy in bulk from the manufacturers and are able to negotiate lower prices than what is obtainable in the open markets.

Virtually all the products we sell come with a guarantee or warranty from the manufacturer. We therefore warrant that we sell 100% genuine products.

• Simple Shopping Especially For First Time Online Shoppers

The BambooNaija website has been designed to make it simple for even first time shoppers to find it easy to navigate through the site. We have developed buying guides which inform and teach users about a particular product. We’re not just shoving products in front of people. We are educating customers and allowing them make informed decisions on the things they need to buy. In addition to the buying guides, each product is described in great detail and in many cases, accompanied by videos describing or advertising the product.

(Written by CEO and Founder of BambooNaija, Mr Adebola Omololu)

 

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