The Nigerian e-Commerce sector is a much-touted lucre that has attracted a number of players.
The growing interest is buoyed by the rise in a youthful population, growing smartphone and internet penetration, the aspirational mind-set of the average Nigerian and expanding consumer power. At present, e-Commerce spending in Nigeria is on the rise. Research estimates indicate that current spend on e-Commerce is at $12 billion, with the figure expected to rise higher and even projected to reach $75 billion in revenues per annum by 2025.
Despite the allure, the reality of cracking e-Commerce in Nigeria and in Africa, by extension, remains a task far removed from the exertions of the faint-hearted.
Indeed, making a success of e-Commerce, as
the experience of many players who stumbled in Africa’s biggest market has
shown, demands not only deep pockets but also a huge dose of street-smartness,
a keen understanding of the Nigerian market, a determination to stick to ethics
and play by the rules, as well as sheer bloody-mindedness in overcoming many of
the frustrating infrastructural and institutional encumbrances that have
hobbled many in this industry.
Till date, the strides of Konga remain a
template for many to follow.
In tracking the current laudable strides of
this e-Commerce behemoth, it is imperative to recognize and appreciate the
efforts of many players who have toiled but found the Nigerian e-Commerce
market too high a mountain to climb. The likes of Jiji, OLX, DealDey and
Efritin, among many others, have a tale or two to tell about the hard nut that
e-Commerce in Nigeria represents.
Though it also has a thing or two to share
about the pitfalls of playing in a difficult terrain such as Nigeria, Konga has
transformed itself, under the management of its new owners – the Zinox Group –
into a much sought-after entity, the beautiful bride of potential e-Commerce
investors and global stock markets. Recently, Konga was reported to have
fielded interest from the New York Stock Exchange as well as the London Stock Exchange
over a purported listing, as interest swirled in the company from near and far.
Also, feelers in the industry indicate that many are looking to buy into the
business and if Konga were to list its shares today, it would probably not only
get oversubscribed but also result in a unicorn valuation.
The submission of a recent panel of experts
on the Konga brand is worth recalling here, with Prof. Bouba Yankubah, one of
the panellists, painting a picture of a thriving e-Commerce brand during the
session which held in Accra, Ghana.
Prof. Yankubah was quoted as saying: ‘‘It
is strange that not much has been said of how much impact Konga has had in the
Nigerian, nay African e-Commerce ecosystem. But lest we forget, that is the
brand that pioneered the marketplace structure in Africa which was widely
replicated by other brands, not only in Africa but also by the likes of Amazon
as well.
‘‘The…case of Konga as the jewel in the
crown of African e-Commerce is further justified by its thriving business
entities which include a licensed mobile bank, online travel agency, its
omni-channel strategy, the ease with which it has resolved the thorny challenge
of logistics as well as its hard-earned status as a trustworthy brand.
‘‘It is interesting that, despite the huge
investment by its new owners, which from reports in the Nigerian media, are
highly credible and experienced entrepreneurs, the brand is yet to follow
through on rumoured intentions to list on the international stock market. If
and when this happens, Konga’s valuation may exceed well over $2.5bn and we may
see the emergence of a true African unicorn.
‘‘But I wish to urge the owners of Konga
not to be tempted by greed and to stay true to their strategies and long-term
vision for the business,’’ he had stated.
In my line of work as an analyst covering
the African e-Commerce market, I have seen many promising e-Commerce start-ups
flatter to deceive. Konga has stayed the course and currently enjoys the
confidence of a growing number of Nigerians as the biggest player in the
market.
But what is Konga doing right?
First, the management of Konga has
demonstrated an extensive understanding of the market – an advantage that
continues to help it navigate policy somersaults and other risks associated
with the peculiar Nigerian market. This is mainly due to the experience of the current
owners of Konga who are widely reported to be credible Nigerians who have been
in business for over 30 successful years. Today, Konga is better equipped, more
than any other e-Commerce player to take on and successfully deliver large
projects or find a solution to the most difficult infrastructural challenge in
Nigeria. Even if Amazon or Alibaba were to expand their operations to Nigeria,
they would struggle to beat Konga and may have to settle for a partnership with
them.
Two, Konga has strategically invested in
building a world-class infrastructure from the ground up which has equally
elevated its many offerings. In the area of technology, Konga boasts perhaps
one of the most advanced technology suites in Nigeria, ranging from the
multiplicity of apps driving its day-to-day operations and a reported
robotics-enabled multiple warehouse deployments. Closely aligned to this is its
investment in massive regional warehouses – a project that has conveniently
positioned it to retain huge inventory, significantly boosted its carrying
capacity, as well as its orders fulfilment capabilities.
In addition, one of the major advantages
that Konga holds in its war chest is the fact that it has seemingly resolved
the challenge of logistics – one of the biggest obstacles and pain-points of
e-Commerce, not only in Nigeria, but in Africa, as well. Konga, I understand,
has its own internally owned logistics company which, from reports in the
media, has the capacity to handle deliveries to the last mile for Konga as well
as for external parties. Kxpress, as the company is known, is said to have in
its arsenal a growing fleet of trucks, buses, motorcycles and other vehicles
which it puts to use in serving the market and navigating the
traffic-challenged nooks and crannies of the major cities and hinterlands in
Nigeria.
Furthermore, there is a sense that, with
Konga, ethics can never be sacrificed on the altar of selfish gains. The
travails of another well-known player in the industry further justifies the
Konga hallmark of ethical rectitude. There is no place for cooking the books or
falsifying figures to paint a deceptive picture to customers or potential
investors. This is a quality that has put the business on a sound footing,
especially in its dealings with all of its stakeholders.
Worth mentioning as well is the fact that Konga
has remained an example of reliability and responsive customer experience. From
the personal experiences of myself, professional colleagues, other industry
acquaintances as well as the majority of opinions sampled, Konga stands heads
and shoulders above its peers in terms of its approach to meeting the
expectations of customers. There is zero tolerance for fake or substandard
items on its platforms, with the company holding high its promise of making
available only genuine products which it sources directly from manufacturers.
Merchants who trade on its platform, by extension, also key into this
tradition. Defaulters are blacklisted while issues are handled swiftly by an
internal unit which has a deadline for resolutions.
Aligned with KongaPay, a Central Bank of
Nigeria-licensed mobile money platform, a growing chain of brick-and-mortar
stores dotting Nigeria’s landscape and accounting for the many who still wish
to experience e-Commerce the traditional way; as well as a number of thriving
entities under the Konga stable, there is no looking back for this powerful
retail giant.
It is only a matter of time before the
management of Konga caves into the huge pressure of hitting the global stock
market.
The world awaits with bated breath…
Dr. Aje Boluwatife
is a visiting research scholar from the United States
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