E-commerce platforms- Jumia and Konga- are poised to consolidate their position in the Nigerian online shopping market with a planned listing on the New-York Stock Exchange (NYSE).
Jumia is planning an Initial Public Offer (IPO) of $1.5 billion in New York Stock Exchange (NYC) in 2019.
Experts are of the view that the strategic plans are expedient to the firm as it will provide the leeway to acquire broadband facilities, expand branch network across the globe and tap into Nigeria’s population craving for consumption.
For instance, the World Bank forecasts that the country’s population – now at 200 million – will hit 400 million by 2020.
Also the e-commerce firm can leverage on the adoption of mobile technology and spread of telecommunications coverage, and increased internet usage to bolster earnings.
Currently, the e-Commerce market in Nigeria is worth about $13 billion, according to a report by London based Economist Intelligence Unit (EIU).
Experts in the Nigeria financial service sector have also estimated that Nigeria’s e-commerce market value could rise to $50 billion (N15.45 trillion) over the next 10 years.
Experts say for e-commerce to reach its maximum potential, infrastructure bottlenecks will have to be removed.
Logistics problems across the country have been causing delay in delivery of products across the country.
According to Konga, the e-company has a customer pool of 750,000 online shoppers. However, there are only 200,000 active customers.
Another challenge that beset the industry is low internet penetration in the rural areas.
A recent report released by Jumia on the Nigerian Mobile Sector has revealed that 70 percent of Nigerians preferred the cash on delivery option to other forms of payment (like the credit/debit cards payment, and the mobile money option).
Nigerians are getting poorer as 87 million people live below $1.90 baseline, almost one out of every two national (44 percent) lives in extreme poverty, implying many do not have money in their pockets to make online purchase.
While GDP expanded 2.38 percent in the fourth quarter of 2018, population is growing faster than the economy as evidenced in a per capital income.
Inflation for the month of January stood at 11.37 percent, but the figure is lower than the central bank’s 6 percent and 9 percent range.
The myriad of challenges have forced some e-commerce firms to close down.
Efritin an e-commerce firm and subsidiary of Saltside Technologies in 2017 shut down its operations citing high cost of data and harsh economic conditions.
OLX, a subsidiary of Nasper, equally ended operations, resulting in loss of jobs. However, it claimed the decision was in line with plans to consolidate its footprint across the globe.
Konga a $34 million valued company was recently acquired from Naspers and ASB Kinnevik by Zinox Technologies one of the strategic tech companies in the nation.
BALA AUGIE
