The Nigerian formal retail industry has evolved significantly over the years with investments in the sector growing to over N205.4 billion in the last two years.
From buying and selling at open-air markets (in both cities and rural areas), Nigerians are increasingly patronising convenience stores, supermarkets and online shops.
According to a recent survey by Phillips Consulting, the fast moving consumer goods (FMCG) sector is a huge driver of the wholesale and retail markets, and it is characterised by low-cost items that usually have a short shelf-life.
Similarly, the survey said online shopping is becoming quite popular in Nigeria, due to its relative convenience and the reasonable prices of goods and services available online. Citing a recent survey, the report said online shopping sector grew from N49.9 billion to N62.4 billion between 2010 and 2011, and from N62.4 billion to N78 billion between 2011 and 2012, representing a 25 percent increase in each period.
In addition to internet penetration which has grown from 200,000 in 2000 to 57 million in 2013, online shopping and e-retail in general, according to the survey, is further driven by the Central Bank of Nigeria’s (CBN) cashless policy, which seeks to reduce the use of physical cash and increase the adoption of various electronic portals for financial transactions.
The survey released recently said the online stores in Nigeria record over $2 million worth of transactions per week, approximately N1.3 billion per month and take up to 500 business orders per day.
According to the survey, top items often purchased through online stores include fashion products, mobile phones and services including restaurants and spa deals. The findings showed that items being returned to the online stores are an infrequent occurrence.
“Presently, no more than 20 percent of delivered items are returned to the seller”.
Phillips Consulting said online merchants most often make use of their own delivery facilities and staff to convey items to customers, however, “external couriers such as DHL, UPS and FEDEX are sometimes used for out-of-state deliveries”.
From retailers’ perspective, the success critical factors in the industry include a nationwide delivery system, value for money, a wide variety of products and services and consistency. It also reports that some of the biggest challenges faced by online retailers include poor customer service culture, city navigation and logistical issues and under-stocked items.
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