• Sunday, July 21, 2024
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BusinessDay

Awful Lagos traffic a boon for online retail

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There are two main reasons people shop online: it’s cheaper or they can’t be bothered with a trip to the store.

And in Lagos, a city of 21 million people, a trip to the store can kill your entire day if you lose the traffic lottery.

“The e-commerce model is extremely relevant for Nigeria, because of all the hassle everyone can experience every time they go to a shopping mall,” Jeremy Doutte, co-CEO of online retailer Jumia, said at  the Reuters Africa Investment Summit.

Jumia has 100,000 Nigerian customer accounts and sales are increasing by 15 percent a month, Doutte said on Thursday.

A visit to The Palms Mall in the prestigious Victoria Island shows why. A shopper can spend 45 minutes on a bad day in a queue of cars pushing and shoving to try and gain entry to the parking lot. Then you have to find parking.

If you have a driver, you can get out and walk, as long as you don’t mind acrid car fumes and sweltering humidity.

Lagos is the main commercial city of what is now Africa’s biggest economy, since a GDP rebasing exercise pushed it ahead of South Africa. Yet it has only three shopping malls, all of them packed to bursting point during peak hours.

This is where retailers like Jumia, which is 33 percent owned by South African phone operator MTN and their competitors – Konga, gidimall, fill a niche as Internet penetration grows among Nigeria’s 170 million population.

“On Saturday, instead of spending two hours in traffic at the mall, people can just shop on their couch,” Doutte said.

Jumia, which also has operations in Morocco, Ivory Coast, Egypt and Kenya, aims to be Africa’s answer to Amazon, although e-commerce remains in its infancy on the continent. It is not yet profitable but spending heavily to grab market share.

In emerging markets outside Nigeria it is usually price comparison that entices shoppers onto the web, Doutte said.

“Nigeria is one of the only emerging markets where people shop online for convenience, and are ready to pay the price.”

Co-CEO Nicolas Martin says traffic’s success in delivering customers far outweighs the headache it causes for deliveries.

“It’s extremely painful for us to navigate through the traffic, but with our logistics, it’s easier than for the Nigerian customer, especially on a Saturday,” he said.

It isn’t only Lagos where the firm is seeing fast growing sales, Martin said, declining to five absolute figures. It has 10 centres throughout several cities in the south and the capital Abuja, and plans to open in the main northern city of Kano, where Shoprite just opened a store in a new mall, this year.

Challenges remain, not least abysmal infrastructure, port delays, other supply chain woes and getting people to trust websites with their bank card details.

But Doutte said online retailers are slowly overcoming fear of another thing that Lagos is famous for: online fraud.

In the early days, delays to a delivery would have customers calling up in a panic, convinced that they’d been swindled. Such calls are much rarer these days, Doutte said.

Wires