The Nigerian online retail industry is growing at amazing speeds. In a This day study, the ecommerce sub sector in Nigeria is expected to be worth $13b/2.5 trillion Naira by 2018. THISDAY checks also showed that the sector is attracting a lot of foreign investments as two of the leading players in the sector, Jumia and Konga received $50 million (N8.25 billion) investments in the last one year. Since 2012 till date, the sector has attracted $200 million Foreign Direct Investment (FDI).
The report further noted that as at 2012, orders per day stood at 1,000 with a market size of $35m/5.6b Naira but with internet penetration and increased used of electronic payment methods, this figure rose to 15,000 orders per day thereby pegging the market value at $550m/88b Naira.
Much of this growth is largely driven by foreign direct investment (FDI) which now stands at $200m/39b Naira. Last year Konga alone received about $40m of investment to expand its engineering operations.
There are many smaller and upcoming online retail giants in Nigeria but much of this investment was received by the big names like Konga, Jumia, DealDey, Checki among others.
Nigerian tech companies have in recent years been enjoying high patronage due to increased embrace of technology within the banking sector and broadband services which now stand at a national average of about 4.7mpbs.
Hotels.ng is the latest of Nigerian Tech companies to receive investments to boost its operations and expand abroad with online platforms like Jobberman being acquired by non Nigerian companies as well.
In a recent article, I identified billing as a major reason why internet services have not reached a lot of people despite its availability these days. Recent developments within the Nigerian online retail industry should be sustained with better policies from the authorities. At a time when the big names in Tech globally have started focusing on mobile because of the growth in sales of smartphones, Nigerian online retailers should invest more. 50% of YouTube traffic is now from mobile with Facebook and Twitter reporting close figures as well.
The major success though in the Nigerian online retail industry can be attributed to retailers allowing Nigerian pay on delivery thereby bridging the trust gap between companies and card holders who have been sceptical about providing sensitive information online. The regulators should provide standards for this to further encourage more Nigerians pay online for services. One great example would be to have a fraud investigations unit within the Consumer Protection Bureau to investigate online payment fraud cases and if there’s proof someone has be defrauded, how does the victim get compensated?
Overall though, this is a welcome news even as the industry now employs over 20,000 people.