Payment inadequacy reduces sales in Nigeria’s E-commerce

The fear of electronic fraud, which gave rise to the ‘Pay on Delievery’ (PoD) service, to bridge lack of confidence in the system, is severely hindering the pace of development of e-commerce which has a potential value of $10 billion per annum in Nigeria,stakeholders say.

Various arguments have risen on the issue of payment inadequacy, where customers on online retail platforms like Jumia, Konga, Deal Dey, Kaymu, Payporte and Yudala, among others, have insisted on either paying cash on delivery or having the retailer bring the PoS machines physically to the point of delivery.

The essence of this procedure is to bypass the cumbersome process attached to paying online, where the card has to first be registered at the bank for access to online transactions and then  all the card details including the card pin and a one-time token pin has to be imputed for payment to go through online.

Lanre Akinlagun, Chief Executive Officer of drinks.ng, said at a news conference that the payment on delivery system, prevalent among online retailers in Nigeria, is one of the greatest obstacles in the growth of e-commerce.

“Nigerians are indecisive and some people have no regard for other people’s businesses or time. Why give those people the privilege to order something without paying? Our delivery is sometimes left waiting because the customer says he is not available at the time of delivery.

“Meanwhile, if payment had been made online, the items would have been left with a neighbour or anyone at home at the time, or an alternative arrangement can be made for redelivery,” Akinlagun said.

“We are generally choosy, which means that when a delivery arrives at your house and you don’t like the item, you send it back at the cost of the company. So I just think that because of the indecision of the consumers, payment on delivery is not a good idea.

“Also, there is high cost of logistics. And there is also the issue of inconsistency in fuel delivery, including lack of time keeping by consumers,” he added.

Speaking on the issue of Payment on Delivery, Gideon Ayogu, Head, Corporate Communications at Yudala, told BusinessDay that it is one of the most popular payment options among Nigerians, as the percentage of buyers paying online currently represents a negligible portion.

“This is understandable, considering the fact that the e-commerce evolution is still at a nascent stage in the country and trust remains a major issue. This option currently accounts for over 80 percent of sales; it is also responsible for the highest proportion of returned items, especially since the customer knows he can simply reject the item.

“Owing to the composite strategy we have in place at Yudala, we have been able to find a way around some of these issues. This because our nationwide chain of experience stores also affords customers the opportunity of experiencing the product or item before making online purchse decision,” he said.

Some stakeholders further say that cash on delivery is contradictory on an e-commerce platform, as it hinders the growth of digital products in Nigeria.

This, they say, is because web service providers, game developers, subscription payment services and other non tangible products cannot do cash on delivery.

Sade Akinyemi, an avid Konga Customer told BusinessDay that contrary to the belief that Nigerians are scared of their card details being compromised online, she trusts the online payment platforms to secure all payments made via their channel.

“Although I trust the online payment platforms to protect my account details, I don’t trust the retail sites to deliver as promised, so I use cash on delivery because I know I can easily cancel my order without any liabilities.

“If they work on customer service and can respond swiftly to complaints and refund as possible, I’m sure people will feel more comfortable making payments online,” she said.

On the issue of trusting online retailers and the poor customer service rendered by some of them, Rose Dike, a DealDey customer told BusinessDay that she only pays on delivery because the option is available and if it weren’t, it wouldn’t stop her from purchasing online.

“Although I pay on delivery for goods bought on DealDey, payment online is not a worry for me. What I am most worried about is that some terms and conditions are hidden. I ordered five different things from the same website and upon delivery, I was asked to pay for all courier services for the five vendors separately. I was not aware of this when making purchases online,” she said.

Nigeria’s internet subscriber base rose from 48.2 million in June

2013 to 67.2 million in July 2014 and in February 2015, The Nigerian Communications Commission (NCC) said the number of internet users on the country’s telecom networks increased to 83,362,814.

With this rapid growth of internet users across Nigeria, the country has become an attractive hub for both local and foreign online businesses, which has contributed to making it Africa’s largest economy by GDP, industry observers say.

Stakeholders however foresee that the solution to secure electronic payments will come on the back of the conclusion and harmonisation of the various electronic identity data bases being compiled in the country, which will make identity theft or forgery almost impossible.

These include the National Identity Card Project, the drivers license project, as well as the Bank  Verification Number (BVN) and mobile networks Subscriber Identity Module (SIM) card registr.

Jumoke Akiyode