The retail industry is experiencing a revolution.
With the emergence of more and more tech-savvy consumers, internet services are booming in the country, which has redefined the scheme of things and has been able to make life easier and faster, leading to amazing developments for the nation’s economy.
Although e-commerce (electronic commerce) has been making rounds in the country for more than a decade, it is only in recent years that a proper ecosystem has begun to emerge.
This is because factors such as internet access, mobile penetration, and strong investments are starting to take a stronger position and if current expectations hold, Nigeria is well on its way to becoming one of the fastest growing e-commerce markets in the world.
It is no longer news that there has been a massive increase in the number of internet users in Nigeria. Along the same line, the number of online financial transactions has increased exponentially over the years. Based on data from the Nigerian Communications Commission (NCC), mobile network coverage is currently estimated at 103% based on a population size of over 198 million people.
Due to this increase as a dominant factor, the world is now witnessing the growth of ecommerce in Nigeria in many ways.
e-Commerce has Become a Game Changer for the Nigerian Economy
Businesses in the country have taken means to communicate and trade with their customers on the internet, because when it comes to convenience, the Internet seems to win. Especially for products that are easy to roll out to consumers who want to buy in bulk.
This is where a lot of established companies have thrown their hats into the ring. Many players have positioned themselves as digital retail channels and they have succeeded.
Through e-commerce, many startups in the country have revolutionized the pattern of business transactions using innovative ideas, products, market appeal, growth, strategy, management and societal influences, enabling a variety of approaches to innovate the retail industry in Nigeria.
Its impact on Small, Medium and Micro Enterprises (MSMEs) is enabling job creation and wealth generation for many individuals and especially for the more than 30 million unemployed youths in the country, according to the National Bureau of Statistics (NBS).
Nigeria’s largest online marketplace – Jumia, a company that offers one of the largest range of products delivered to its customers both at home and in the workplace, is one among the many players that has ridden on the back of the Nigerian experience of facilitating retail marketing through digitization and has expanded into 13 other African countries.
In this way, Jumia, with its presence in other countries, has promoted the growth of MSMEs, online shopping, digital payment, logistics and supply value chain as well as the fintech ecosystem, enabling not only a cashless and digital economy but financial inclusion for the unbanked population across Africa and Nigeria in particular.
Its fame and services cemented the company to becoming the first unicorn on the continent when in 2016 it achieved a $1 billion valuation.
Moreover, following the successes of e-commerce giants like Alibaba, Amazon, Jumia etc., an unparalleled innovative retail experience is being provided to Nigerian consumers, especially for the seamless supply of products to companies operating in various core sectors such as food, agriculture and pharmaceuticals.
The Many Pitfalls
While the growing e-commerce industry in Nigeria has been assessed, and evaluated, there is no doubt that innovation is not lacking in challenges.
Therefore, some of the biggest barriers to gaining momentum in the e-commerce world in Nigeria undoubtedly include the struggle for access to electricity and frequent outages, work address systems, poor delivery systems, customer trust issues, unreliable internet access, public awareness , and geography, as well as locations and other internal and external influences.
Most Nigerian communities do not use the Internet broadband as it is considered too expensive and slow. This makes the e-commerce usage in the rural communities in Nigeria very low.
According to data from Digital 2021: Nigeria Report,only about 50% of the Nigerian population in terms of internet penetration have access to the internet, among the 90% of citizens who own and have mobile phones.
Also, more than anything else, e-commerce ventures thrive on a robust infrastructure network of rail systems and a network of safe roads and waterways. As such, business success hinges on a reliable delivery service.
The Way Forward?
We rely on the Internet more nowadays than we did in the past, and the speed with which it has affected business transactions in Nigeria starting with banking and telecommunications.
Thus,the significant impact of online retail underscores the urgent need to address some of these issues facing the ecommerce industry.
Issues ranging from lack of appropriate infrastructure, tax, security issues, privacy concerns regarding the protection of personally sensitive information that may be sold to third parties, high cost of shipping goods to and from Nigeria, low credit card penetration that is usually required to shop online because debit cards are the common payment cards available in Nigeria.
Also, the high data cost for online transactions, unreliable distribution and delivery processes due to the country’s poor transportation infrastructure, network reliability, authenticity in the quality of goods and services displayed online, bridging of privacy protection laws,and residual distrust of online payments for fear of being scammed among many other challenges.
Thus, in improving communication, logistics, transportation and customer confidence, government intervention must be effectively taken into account. This is because Nigeria is a developing country, where many people still live in extreme poverty along with a poor economic situation, and many are unable to afford and participate in this enhanced innovation.
Therefore, in order to increase digital retail and online shoppers in Nigeria, these situations need to be scrutinized by the government and regarding security issues, organizations should devise sophisticated security measures so that payment channels and social security can be afforded.
It is also likely in the interest of the growing numbers of Nigerian consumers that these issues are addressed directly and quickly for the smooth delivery and expansion of this digital retail innovation.
The government can also play a role in investing billions of dollars in power generation and transportation systems, to improve its technological infrastructure, in order to offer an efficient address system to enhance the continuity of the unlimited innovations emerging in Nigeria.