Ecommerce: A key sector for diversifying the Nigerian economy from oil

Despite the uncertainties generated by the volatility in oil prices and the significant impact it has on the Nigerian economy ecommerce remains a key sector with stable projections for 2016 and one that has the potential to act as a catalyst for growth in an entire ecosystem comprising design, logistics, local manufacturing and packaging materials.

It is important thus that Nigeria’s policymakers encourage a more resilient economic model, fit to harness the country’s strong growth fundamentals especially in fast rising sectors like ecommerce.

Ecommerce in Nigeria is barely three years old. Its growth in Nigeria is encouraging, showing there is definitely potential for a stable non-oil reliant Nigerian economy. Jumia, Konga, Kaymu and Dealdey remain Nigeria’s favorites in an ecommerce industry expected to reach N2.5 trillion in gross merchandize value by 2018. The resilience of this sector albeit the difficult operating environment is worth noting as the Nigerian Government looks at ways to diversify the economy from oil.

In the wake of declining naira valuation relative to the US dollar, local ecommerce sites offer a stronger value proposition for Nigerian consumers accustomed to shopping offshore.

Based on a sample of products for instance the iPhone 6S gold sells for $799.99 on Amazon (N293,000), thus N83,000 more expensive than Jumia’s selling price (N210,000). We notice also an undeniable price difference in the computer category: the Macbook air 11.6inch for example goes for $899 on Amazon, (N330,000),  while the Macbook air 13.3inch is available on Jumia at N310,000. The comparison yields the same results in other categories such as fashion, home appliances and many more.

Ecommerce companies like Jumia are able to offer competitive prices relative to other alternatives through a combination of strong partnerships with international brands which guarantee lower prices for larger volumes. According to the Black Friday press release distributed by Jumia in the aftermath of Black Friday in November 2015, the pan African e-commerce company attracted more than 2.3 million visitors in a single day on its website, generating 25 times more orders than it does on a normal day, with a total of 135,000 orders in 24 hours..

Ecommerce also offers a valuable direct to consumer channel for local manufacturers who can provide products that Nigerian consumers need at the right quality and price.

Simone Bartlett

Simone Bartlett, VP Marketing, Jumia Nigeria.