Re-thinking the e-commerce industry in Nigeria

With the growth of digital and communication technology around the world, Nigeria has not been left out, and the last few years have seen the proliferation of e-commerce businesses and platforms across the country. I recall that in 2010, my colleagues and I created our first e-commerce platform at a time when the only company that actually offered end-to-end E-commerce capabilities in Nigeria was an airline. We brought it down after a year or two when we realized that the market was not just ready. Fast-forward to the last couple of years with the entrance of a number of big e-commerce merchants and you will agree that a lot has changed, but in reality – all that glitters in not gold.

For some reason, these businesses and the countless others that have come after them continue to struggle. Some analysts are of the opinion that our society is just not ready for the realities of E-Commerce, and that the cost involved in managing deliveries and orders, warehousing and others erode whatever marginal profits such companies will make. Perhaps the challenge is with the business model itself – a delivery service for a wide variety of goods and services that one does not produce or own is a difficult business to be in. Regardless of the business model for doing business online – aggregating and finding services for taxis and property, recruitment services or even e-movies, e-music, e-books or e-newspapers, we all need to have a serious re-think about what it takes to create a truly sustainable online marketplace, and unleash the huge potential that the internet and e-commerce offers our economy – for the domestic as well as export market.

First simple issue will be – why do e-commerce platforms still offer Nigerians the option of paying cash on delivery? Why must we “Nigerialize” the situation and allow ourselves to continue in the dark ages? I hear customers say that they prefer to pay cash, that they don’t want to use their cards. I have even interacted with very senior bankers who are also “afraid” of using their cards online, and then I begin to wonder? The card technology and security used in Nigeria with the international as well as local card companies are in line with international conventions and protocols, so in reality – what is there to be afraid of? Why do we have to waste so much time, doing transfers to accounts, waiting to verify and confirm the transfers and then fulfilling the orders? Why remain so manual when we have all we take to be automated?

Well, another group of customers will tell you that they prefer “pay cash on delivery”. I mean what is the point of using a city cab service driven by an app, only to be counting money at the end of a trip and then looking for change with the driver – does that not just absolutely defeat the convenience of these app driven cab services? When you ask – they will say “I don’t want to use my card”. One will think that Nigeria has the highest incidence of card related fraud in the world! In fact, this is one area of crime that Nigeria does not rank in the top 10! Then the awful stories we have heard about delivery men being robbed and in one particularly disturbing case, a delivery man was killed as he delivered expensive smart phones on a ‘cash on delivery basis” to customers of one of the popular E-Commerce companies. Do we need more of such tragedies to happen before we all realize the safety and convenience that goes with truly end-to-end digital transactions? Many customers feel protected by the option to pay cash on delivery for fear that the goods may not be what they want or that they may be defective. They also feel that if they have parted with money up-front, the merchants are not professional enough to refund their monies. In the same vein, the merchants continue to suffer significant operational losses due to customers who end up rejecting the goods upon delivery.

In our own business selling e-books, e-newspapers and e-learning materials which are not physical products but completely digital, you even find some customers going to the bank physically to make a payment and then scanning physical tellers to renew their subscriptions – absolutely ridiculous. However, we too are guilty – we have succumbed to the pressure of the market and actually advertise – “Pay Directly to the Bank” as an alternative channel. We succumb because our customers keep saying that’s what they prefer. Whatever happened to the Steve Jobs mentality of selling the customers what you believe is right for them and sticking to your guns? In fact, as one analyst put it: the future of reading in Africa is digital. I just wonder, how we will achieve it if payments still need to be done off-line for a product that is completely on-line?

So, what’s the solution? Regulation: create a body that regulates the business of e-commerce in Nigeria. Don’t worry if there are international precedents or not. We have our own peculiarities: all I have mentioned plus infrastructure deficits and need to deal with them. Regulation will ensure that everyone offers only “pay on the app” options, limits or eliminates ‘pay cash on delivery”, and sets standards for ensuring that product failures and refunds are dealt with professionally, as well as focused Market Development and facilitation of improved infrastructure. Don’t say the Consumer Protection Council – trust me their hands are full, and the issues go beyond Consumer protection – they border more importantly on facilitating the growth and survival of perhaps the most important industry yet, in Nigeria. For example, imagine how strategic an industry for e-books, e-newspapers, e-movies and e-music can be to eliminate piracy in Nigeria, and how that industry is still restrained by our “old-school” approach to e-commerce.

 

Omagbitse Barrow FCA