As the founder and CEO of e-commerce firm RedViolet Company in Nigeria, I can testify how the internet has propelled digital innovation to a whole new level, and one of the resultant business models is e-commerce.
Though RedViolet Company cannot be compared to giants such as Amazon and AliExpress, e-commerce penetration happened rapidly in the West, Europe, and Asia. The same isn’t true for Africa yet. Let’s focus on Nigeria, There are many challenges facing e-commerce, but there are benefits too.
The benefits of E-commerce has made shopping easy for many Nigerians, the access to shops 24/7 from anywhere, the convenience of buying stuff not sold in your city or country.
Traffic is one of the reasons I do not get excited to get on the roads, and my time is certainly worth more. It is cheaper to shop online and get it delivered to you than travel to the seller. Ever wondered why there is heavy traffic during the festive period? SHOPPING! Major Nigerian cities affected by traffic congestion can benefit from improved e-commerce penetration in the country.
Beneficial to sellers and buyers alike, according to the real estate firm, Savills, in 2016, Lagos is the most expensive city in Africa. Many businesses fizzle out within their first five years. Some never recoup their rental costs; however, the e-commerce model can eliminate or reduce this cost depending on the circumstances. If retail businesses reduce their overhead costs by adopting e-commerce, they avoid rental charges associated with the brick and mortar model. Perhaps survival rates for such companies will be higher.
Through e-commerce, sellers are now able to sell to consumers outside their local reach. My experience as a business owner, who has engaged both models; your market is limited if you are physical location-based. There’s a broader market beyond your reach; people outside your locality are looking for your product or service. You need to cast a much wider net, and e-commerce helps you do just that. The first time we moved RedViolet Company to the e-commerce model, our revenue improved. Today, Nigerians are shipping from Aliexpress, Amazon and Wayfair. With better e-commerce penetration, e-commerce companies in Nigeria will have foreigners also shopping from them.
With an e-commerce store, sellers have a virtually unlimited space to showcase their products. Every product on your warehouse can easily be represented on your online store using text, images, and videos. Sellers can even list products and ship directly from producers and suppliers, thus minimising or eliminating their need for physical storage space. Brick and mortar stores often face space limitations if you have a varied stock list like ours.
When last did you visit an electronic or furniture store to buy a specific product, only to be told it’s not in stock because of space limitations?
As with all things, many challenges are facing the Nigerian e-commerce sector. Many of these issues are rooted in at least three underlying causes: Poor infrastructure, corruption and lack of trust among Nigerians. Running the e-commerce model requires an excellent internet service, a steady supply of electricity, and a well-developed logistics plan for shipping and delivery. Unfortunately, it’s no longer news that our infrastructure suffers from these inadequacies.
According to Ranker in 2018, Nigeria is the 31st most corrupt country in the world, and Google describes corruption as “dishonest or fraudulent conduct by those in power…”.
The banking sector is integral to the development of e-commerce in Nigeria. According to Guardian.ng, only 43% of Nigerian adults are banked. That’s 57% of Nigerian adults who don’t have a means of paying for products online. Imagine if our policymakers were to get over corruption and make substantial efforts to improve the situation by creating a conducive and inclusive environment to bring the unbanked into the banking space.
Corruption in Nigeria has also led to over 89 million people in the country living below $2 per day. That nearly half of the country’s population living in extreme poverty. How does this affect e-commerce? People won’t shop online if they don’t have enough to feed themselves. They will not buy online if they cannot afford a connected mobile phone or computer. Do we then conclude that e-commerce is an elitist model in Nigeria?
If you are Nigerian, then you have probably bought into the fear that everyone is out to defraud you of your hard-earned money. Even the police can not be trusted, I often hear. Now imagine trusting an entity you haven’t met with your money in the hope that they will send you a product you have only seen in a picture on your phone or computer. Crazy, right? Worse, the whole Nigerian online scam isn’t helping matters, the reason why in Nigeria and beyond, online stores are prone to more scrutiny than their brick and mortar counterparts.
Occasionally I take the place of customer service and glean from what customers have to say about having to shop on our website. It would be scary to share the thought process of most of our customers, from the fear of identity theft to other issues that are incredibly valid. There needs to be a shift before Nigerians can begin to feel comfortable about shopping online in impressive numbers. Let’s not get carried away by existing traction, its nothing compared to what can be.
The Way Forward
I earnestly believe the Nigerian e-commerce sector can thrive excellently despite existing challenges. For that to happen, all stakeholders need to work together to improve infrastructure, build trust, tailor innovation to meet our cultural inclinations. These solutions need to include subverting corruption and fraud and make information easily accessible.
Building Trust in the Nigerian E-commerce Sector
As established earlier, mistrust is endemic, and it’s highly unlikely that e-commerce will achieve optimum penetration without innovative solutions that build trust. For instance, Jumia led the way using options like cash on delivery to inspire confidence and encourage people to shop online. The strategy worked for some time until the associated risks began to manifest. Some of these risks include:
Homicide and theft.
Probably why Jumia has revamped their payment on a delivery strategy to now include MCash and POS, which eliminate theft by delivery assistants. Other options some small sellers are using to encourage consumers to buy online is bank transfer and confirmed before delivery. With many Nigerian banks offering mobile banking app, money transfer in Nigeria has become very seamless and instantaneous. Even when payment is pre-made, bank transfer gives buyers and sellers a sort of documentation for their transaction.
Mutual Buyer-Seller Protection Through Access to Information
As a seller prioritise information, make your return policy concise and easy to understand and put it where buyers can easily find and read it on your online store.
If your company arranges scheduled delivery, enabling buyers the opportunity to decide and return orders quickly, make the information clear on your website.
Prioritise customer support to answer customer queries.
Ensure proper description of products on your online store; this should include specifications like product colour, size, material, and other relevant information.
Buyers will be able to make informed purchase decisions, and sellers also avoid unwarranted bad reviews from customers who feel misled.
As a buyer, READ! Unfortunately, tagged as our culture, we are not so into reading. We had received bad reviews such as wrong product size delivered when the buyer did not read the product description. Read the seller’s return policy, product-specific return policy, and seller’s terms and conditions before buying online. As they say, the devil is in the details.
If you receive a delivery, check that it lives up to your expectation and that you want to keep it before you damage the packaging. Otherwise, the seller may not accept a return.
Be aware that most companies will not allow the return of perishables.
Often, when returning a product, the buyer is usually responsible for the shipping cost.
To avoid disappointments that you cannot blame on the seller, always read product descriptions and specifications to make sure they fit your need.
Ask customer service questions whenever you are unsure of anything.
Building Trust Through Transparency and Accountability
Policymakers and sellers have this responsibility; equip bodies like Consumer Protection Council (CPC) to maximise protection for Nigerians who shop online and make the Nigerian e-commerce sector a safer avenue for buying and selling.
Sellers, make sure your business is transparent by avoiding practices like hidden charges and policies. Turn on reviews for each product as a gesture of accountability.
Buyers, research an online store before buying from them; check their social media presence, read reviews about their products online, and join forum conversations about the store to find out what others are saying about them. If a store fails to deliver the value you paid for, don’t hesitate to approach the right author miities like the Consumer Protection Council, call them out on social media.
Final Thoughts
E-commerce has dramatically changed the way brands reach consumers, making the process faster and easier for the two parties. With my experience with RedViolet Company, the advantages outweigh the challenges. We stand to gain more than lose by embracing E-commerce.
Written by; Mofoluke Ayoola