Nigerians decry hassles of e-commerce

Nigerians decry hassles of e-commerce

One of the fallouts of the COVID-19 pandemic is the unprecedented rise in e-commerce platforms in recent times with a mixture of the good, the bad and the ugly as Nigerians recount unpalatable experiences. Ibrahim Apekhade Yusuf and Funke Cole in this report examine the twists and turns

Thanks to COVID-19 pandemic, Nigeria has witnessed a bourgeoning trade in e-commerce with the proliferation of different online platforms selling everything from groceries, household items, furniture, electronics, shoes, clothing, books, games, baby products automobile, services to mention a few.

ABC of e-commerce

The eCommerce market includes online sales of physical goods to a private end user (B2C). Included in this definition are purchases via computer as well as mobile purchases via smartphones and tablets. Excluded from the definition of ecommerceDB are the following: digitally distributed services (e.g., travel tickets), online stores dedicated to digital media downloads or streams, online stores dedicated to B2B markets, and sales between private individuals (C2C) within the eCommerce market.

In Nigeria, some of the top online platforms most of whom have collaboration with wholesellers and dealers include jumia.com.ng, slot.ng, ajebomarket.com, chrisvicmall.com, obeezi.com, kara.com.ng, drinks.ng, deluxe.com.ng, supermart.ng, drugstore.ng, hogfurniture.com.ng, pointekonline.com to mention just a few.

How COVID-19 changed the fortunes of e-commerce in Nigeria

Speaking with a cross-section of Nigerians, they admitted that online shopping helped especially as the emergence of COVID-19 variant which necessitated the option of sit-at-home directive to minimise the risk of infection.

As lockdowns became the new normal, businesses and consumers increasingly went digital, providing and buying more goods and services online, driving up e-commerce’s share of global retail trade from 14 per cent in 2019 to about 17 per cent in 2020, according to the United Nations Conference on Trade and Development.

Opportunities for Nigeria’s e-Commerce

According to a report by FBNQuest Research, the strong appetite for mobile data usage as well as increased network coverage has increased the potential of Nigeria’s e-commerce market. Based on data from the Nigerian Communications Commission (NCC), mobile network coverage is currently estimated at 103% on the basis of a population size of 198 million. However, internet data penetration via GSM is lower, at 78%. A thriving e-commerce market will improve trade activity as it provides a cost-effective method of connecting producers and merchants directly to customers.

Specifically, the report stated that the realities of the COVID-19 pandemic have forced businesses to learn, unlearn, rethink and re-strategise their models. On the back of this, e-commerce has emerged as a primary route to survival, especially for SMEs. The pandemic is moving a key component of the marketing mix to online platforms; businesses need to increase their online presence and grow sales using digital tools.

Reflecting on the powerful global and regional industry transformations recorded throughout 2020, some have predicted that e-commerce is likely to maintain its trajectory throughout the recovery from COVID-19 and even beyond.

As obtainable in other parts of the world, e-commerce has transformed the business and economic landscape of Nigeria. According to Statista, Nigeria’s e-commerce revenue is expected to show an annual growth rate of 11.78 per cent between 2021 and 2025, resulting in an estimated market volume of approximately $10bn by 2050.

Between 2001 and 2008, there was a 90 per cent increase in the number of Nigerian internet users; as of January 2021, there are 104.4 million Internet users in the country. With the growth in the number of Internet users comes an exponential increase in online financial transactions over the years.

Online commerce and financial technology in Nigeria is strengthened by fast growing youth population, expanding consumer power, and increased smartphone penetration. The current e-commerce spending in Nigeria is estimated at $12 billion, and is projected to reach $75 billion in revenues per annum by 2025 according to a report.

To survive, e-commerce businesses in Nigeria are beginning to diversify and expand their offerings. Some, like Jumia, are going as far as tweaking their business model to improve profitability.

Jumia’s recent financial results for the first quarter of 2021 showed that while it generated €27.4m in revenue, there was a six per cent drop in its earnings from the €29.3m that it reported in Q1 2020. For some reasons, the company attributed its drop to the effects of the COVID-19 pandemic.

From available information, The Nation can reveal that over 80 per cent of transactionson e-commerce  these days is done online, the bulk of which driven by social media marketing platforms including: Twitter, Instagram, Facebook, and YouTube to reach their customers, engage them as well as push sales.

With an increase of 42%, the Nigerian eCommerce market contributed to the worldwide growth rate of 26% in 2020. Revenues for eCommerce continue to increase. New markets are emerging, and existing markets also have the potential for further development. Global growth will continue over the next few years. This will be propelled by East and Southeast Asia, with their expanding middle class and lagging offline shopping infrastructure.

Digital market outlook

Market expansion in in Nigeria is expected to continue over the next few years, as indicated by the Statista Digital Market Outlook. It has been predicted that the compound annual growth rate (CAGR 20-24) for the next four years will be 16%. Compared to the year-over-year growth of 42%, this decrease suggests a moderately flooded market. Another indicator of market saturation is the online penetration of 26% in in Nigeria; in other words, 26% of the Nigerian population have bought at least one product online in 2020.

Relatedly, a report by Agusto & Co, Nigeria showed that the sector recorded a volume of $12 billion transaction on online purchases in 2020, and projected that online transaction might hit $75 billion mark by 2025.

These predictions were contained in its latest report titled: “2021 Small and Medium Sized Enterprises (SMEs) Report,” that covered three key segments, namely the e-retailing, cement distributorship and apparels.

The report stated that the growing surge in e-retailing would continue to see an upward trend and would be buoyed by the uptick in digital payments that have been growing, “on the back of the spread of information technology with internet penetration increasing to 46.6 per cent in 2020 from 23.7 per cent in 2015.”

It said: “Consumer spending on online purchases is estimated to stand at $12 billion in 2020 and is expected to reach $75 billion by 2025. Through e-commerce, players enjoy a wider customer reach with the ability to simultaneously connect to millions of consumers locally and globally.

“We note that the emergence of COVID-19 positively impacted the sector, with players recording a gush of customer orders particularly during the lockdown period.

“We expect this trend to continue into the emerging post COVID-19 era premised on the rising rate of adoption of online shopping by consumers on the back of the relative convenience it offers.”

Tales of woes

What is however instructive to note is that for many Nigerians who are patrons of this new rave of the moment, the experiences have been varied as well as a mix grill of some sorts.

While sharing her ugly experience, our respondent, who simply gave her name as Stella, recalled that, “On that fateful day we had run through the Instagram page of someone who was mentioned to us as meticulous for handling a project. It was myself and a friend that had needed to make contacts for clothing and accessories for an upcoming event. It was to take place barely a week after our interaction that we had suggested that she supplied the materials. She had insisted on pay before delivery which was met with a little bit of stiff resistance from my side. I was skeptical about paying when we were yet to see the materials, but, my friend insisted that we paid since most online sellers tow that path. Fine, we eventually did. Then, after two days, it dawned on me that we could have been scammed as she had promised to make delivery possible on the eve of that day. I quickly put a call across to her to remind her of our agreement. Initially, she apologised for the delay, and pleaded with us to allow her deliver the following day. We agreed with the hope that she would keep to her promise, only for us to start pursuing her with phone calls again.

“My friend became apprehensive at this juncture that we began to suggest various means to get a refund from her. So, I went visiting her page again to see if we could get any address to trace her to. Fortunately, there was one there indicating that a solution was imminent. We didn’t bother to call her again, and unsuspectingly, we visited her shop. It was the same image that sat in front of us as shown on the page. Apparently, it is possible to be deprived of rights to getting value for your money as presented in this narrative. Someone said to me that, oftentimes, you get to buy those prices at exorbitant prices, while you are left with little or no option of haggling the prices. It is as kaleidoscopic as that.”

Another buyer, who pleaded anonymity, said “It has also been observed that most sellers use this online platform as a medium to defraud unsuspecting buyers with their system of operation otherwise seen and known as ‘Pay before delivery’, although, this can be debated. A seller told me that it was one way of committing buyers to purchase methods because some of them could avoid picking calls when delivery van gets to them. But then, isn’t it another way of leaving buyers with no option of making demands for refunds if goods delivered are either not in good condition or exactly not as advertised?”

Also sharing a fresh perspective on the incidence of credibility crisis affecting the sector, an analyst who asked not to be named, recalled the scenario involving an artist’s daughter who collected a huge sum of money from potential buyers with the promise of giving them wigs. The buyers have paraded her ‘stand’ with no luck.

“We need to look at way of appropriating disciplinary measures to sellers who flout marketing deals like this. Most times, it is the buyers that are usually at the receiving end when such demands are not met. This is not to discredit the fact that buying online help ease the issue of having to deal with the stress of going to the store physically to get them, transportation exercise inclusive,” the respondent noted.

Challenges of e-commerce from a seller’s perspective

In the view of experts, some of the major challenges of e-commerce in Nigeria are high cost of shipping of goods, cybercrimes, issue of safety involved in online business, lack of acceptance, inability to examine the products physically, problem of lack of awareness, low profit margin, to mention just a few.

While reflecting on the happenings within the sector, Miss Aderonke Adebowale, CEO, M.O outfits, a clothier and couture company in an interview with our correspondent recalled that initially but she was doing pay before delivery until she realised that people don’t agree to terms of condition after products get to them.

According to CEO of M.O outfits, “Most of the prospective customers more often than not try to change the prices and some give wrong addresses, some reject products and so on and so forth.’

On whether she belongs to any association, she responded in the negative. “No, I don’t belong to any association and am not aware of any o such association.”

E-commerce still an emerging sector

It was revealed that the industry is not fully regulated yet as to be expected.

Further investigation however showed that the majority of digital marketing practitioners operating in the country today, most of who service the sector belong to an umbrella body known as the Association of Digital Marketing Professionals, Nigeria (ADMA).

lt was also revealed that the Association was set up shop in 2018 and registered under the Corporate Affairs Commission (CAC) as a private enterprise.

Speaking with Mr. Tóbi Adekunle, who is a member of the Association, he disclosed that the body deals with strictly digital marketing and don’t deal with seeking redress of any sorts.

On how the Association reprimands members who err on the line of duty, he was noncommittal.

He was however quick to express that the Association has its rules of engagement and modus operandi of sorts.

Specifically, he said, they carry out background checks on their members, especially prospective members by pretending to be one of the customers so as to authenticate the genuineness of the business.

“We also verify the phone numbers of their members with network providers to ascertain their genuineness too,” Adekunle stressed.

As a precautionary measure, he further advised that potential buyers could also test their sellers by pretending to have paid if they insist on pay before delivery to see how they react.

Points to ponder

According to the ADMARP member, there are factors that could be red flags like pay before delivery.  For instance, he said, selling products way lower than actual cost prices should be a bad signal for any potential buyer.

He said that the only way they can help customers who have been scammed by their members is to ask them to send the name of their pages and post on social media platforms with their numbers by calling them out.