The rising number of orders being processed by online retailers in Nigeria, along with the attendant need for efficiency in delivery, is opening up fresh business opportunities for Nigeria’s postal and courier industry, market observers say.
Konga, leading electronic retailer in the country, says, during its version of ‘Black Friday’ sales, it processed N50 million worth of orders every hour. With an estimated growth rate of 25 percent yearly, the sector, which when examined in 2012 was worth $35 million, is currently valued at $550 million and projected to have a $10 billion potential if well harnessed, according to the ministry of communications technology. With the population of internet users growing rapidly, reaching 48 million, according to the National Information Technology Development Agency (NITDA), online transactions in Nigeria are expected to reach N1 trillion by the end of 2014.
Local and foreign courier operators are already positioning themselves to tap into the huge market potential. The emerging e-commerce ecosystem is fraught with numerous challenges, one of which, is the inefficiency of Nigeria’s postal system. Market observers are however of the view that the Information Communication Technology (ICT) revolution, which has given rise to the use of emails, Short Message Service (SMS), among others, has reduced traffic on the postal services.
This has led to massive reduction in revenue generation. BusinessDay gathered that many postal and courier businesses are now forging stronger ties with e-retailers, building new capabilities and putting in place strategies to overcome barriers in order to meet customer demands.
“We are partnering more with courier service providers. With e-commerce, I think there is a bright future for the courier and logistics business in Nigeria”, said Wale Adisa, director, fulfillment operations, Konga, in an interview recently.
An informed source close to courier operators, who spoke on the condition of anonymity, told BusinessDay that some local industry players are already thinking of building international shipment capabilities even as e-retailers gradually prepare to move to the next level of cross-border e-commerce.
The Global E-Tailing study for 2025 initiated by DHL, shows that over the next 10 years, online retail will continue to gain popularity in both developed and emerging markets and as a result, courier and logistics companies will play a critical role in providing vital supply chain management solutions that are able to evolve with consumers’ shopping habits. Sumesh Rahavendra, head of Marketing for DHL Express
Sub-Saharan Africa, said,
“Currently, e-Commerce already makes up 8 percent of the overall trading volume in Europe. Depending on the scenario, this share could rise up to 40 percent in developed countries and up to 30 percent in today’s emerging markets. In a dramatic twist, some courier operators have resolved to diversify into ecommerce business as the number of firms rendering services in the country increase.
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