The Rise of $1bn e-Commerce Industry in Nigeria

According to Euromonitor International data, Nigeria boasts the largest online market for apparel and footwear in Africa, which is expected to grow from US$104 million in 2014 to $1billion in 2019.

The building blocks for future developments in e-tailing are emerging in sub-Saharan Africa, as a growing middle class and young population create a demand for products that store-based retail simply cannot meet, due to a lack of shopping malls and gridlocked cities.

Advancements have been most notable in Nigeria where a surge in telecom investments and smartphone purchases has fuelled growth in internet usage from 20% in 2009 to 41% in 2014. Furthermore, according to Euromonitor International data, Nigeria boasts the largest online market for apparel and footwear in the region, which is expected to grow from $104 million in 2014 to $1,077million in 2019, mainly due to the dynamic development of trusted e-tailers, Jumia and Konga.

Meanwhile, South Africa, the region’s largest apparel market overall, is expected to record a much slower pace of growth in internet retailing from $50 million in 2014 to $73 million in 2019. This highlights consumer preference to use the internet as a research tool, and purchase items in store as a result of the mature formal retail environment.

Online-only Players E-tailing in sub-Saharan Africa is currently dominated by local businesses. Spree.co.za is South Africa’s primary online player with a 10% share. The website has a similar aesthetic to ASOS, providing editorial content and offering an array of brands including Levi’s, Guess and Nike.

Mr. Price, a leading South African retail chain, has also acknowledged e-commerce as an essential distribution channel having launched its transactional website in 2012. Jumia and Konga are leading the way for internet retailing in Nigeria with 36% and 23% shares, respectively. Both businesses offer a range of products, from books to beauty, and include a number of local and international fashion brands such as Topshop, H&M and Vero Moda. Jumia, which now operates in eight African countries, found success in offering fast delivery services and establishing trust with consumers by allowing payment on delivery.

A number of start-up retailers have emerged in response to the growth witnessed in Nigeria, for example, webmallng.com and buyam.com.ng, act as “online malls”, allowing merchants to set- up- shop in one place. Although this creates a vast product offering for consumers, it appears to cause confusion regarding the management of the site, as Buyam.com.ng continued to display Christmas promotions on its homepage in February.

It is expected that e-tailing will follow in the footsteps of other developed markets. As more consumers gain access to the internet and become comfortable shopping online, growth will be driven by competitive pricing, providing opportunities for fast fashion brands appealing to the younger demographic.

Headline-worthy Growth Riddled with Challenges Clearly, e-tailing is still in its infancy. The weak transport infrastructure and lack of consumer confidence will continue to restrain growth.

Further still, in a region where many consumers do not have a credit card and in some cases no formal address, retailers are faced with a magnitude of logistical problems they need to overcome.

Although forecast growth is promising, in order to see a return on investment, strategy will need to be long-term and platforms such as Spree, Konga and Jumia, provide a route to market that minimises risks and allows brands to build customer relationships.

As businesses skip the traditional bricks and mortar retail spaces, moving straight into e-commerce, it is likely international brands will adopt a similar strategy that has been used to enter the Chinese market via Tmall: gaining the trust of consumers and generating widespread exposure.

Euromonitor International

Hot this week

Ecobank Marks 14th Ecobank Day Across Nigeria, Empowering Students with Digital Skills for the Future

Hope Fountain Foundation for the Deaf, Agege, Lagos. Ecobank Nigeria...

Leadway Named Insurance Company of the Year at 2026 BusinessDay BAFI Awards

L–R: Chief Executive Officer, Creato Urban Limited, Odion Aleobua;...

Emergency: Rising Prices Worsen Nigeria’s Food Insecurity—Orodata

Rising food prices and the high cost of nutritious...

Fidelity Bank Excels at 2026 BAFI Awards, Wins Two Awards

L-R: Mobolaji Sunmoni, Team Lead, Upstream; Abimbola Ogunyemi, Team...

Fidelity Bank: Celebration of Beauty Industry Excellence

Managing Director/Chief Executive Officer, Fidelity Bank Plc, Nneka Onyeali-Ikpe...

Topics

Stakeholders at Inspenonline Retirement Summit Advise Workers on Strategic Retirement Plan

L-R: Idu Okwuosa-Okeahialam, Group Managing Director/CEO, Royal Exchange Plc; Ibrahim...

ITU Telecom World 2015 Opens for Business

Doors opened in Budapest for ITU Telecom World 2015, the global ICT innovation event for SMEs, corporates and governments. The event kicked off with a spectacular Opening Ceremony, in the presence of H.E Viktor Orbán, Prime Minister of Hungary, ITU Secretary-General, Houlin Zhao, and a host of other distinguished high-level participants spanning government, industry and representatives of many global SMEs and start-ups.

World Pasta Day 2020: How Crown Flour Mill Boosts Consumers’Pasta Palate

Since October 25, 1995, when the international community officially...

Commonwealth Candidate, Masambu, Elected DG of ITSO

Patrick Masambu, a Uganda citizen and former chairman of...

NSE, LSE Hosts 5th Dual Listing Conference in Lagos

The Nigerian Stock Exchange (NSE), in partnership with London...

World Bank Raises 2016 Oil Price Forecast to $41 Per Barrel

Amid improving market sentiment and a weakening dollar, the...

IPEN Roundtable Targets Consumer Satisfaction in Insurance, Pension Sectors

Stakeholders in the financial services sector are expected to...

Business Journal Weekly Online Newspaper to go LIVE August 7

The Business Journal weekly online newspaper will commence publication...