BusinessDay
NigeriaDecides2023

Amazon puts Jumia, Konga on notice as it sets April 2023 launch in Nigeria

Amazon, American multinational technology, is set to disrupt the Nigeria e-commerce market as it plans to launch in April 2023 competing with Konga, Jumia and others in the e-commerce space.

The company will be expanding to five countries across Africa, Europe, and South America while maintaining its base in the United States. The five countries are Belgium, Chile, Colombia, Nigeria, and South Africa.

According to Stanley Awelewa, Advanced seller key account manager at Jumia said, “Amazon is a big player with a very big budget so their market entry will definitely disrupt all existing players as they will need to step up. Some may be acquired by Amazon.”

He added the other e-commerce needs to consolidate what is winning and capitalize on their 10 years of market journey experience to offer value delivery to customers. The biggest problem with e-commerce is logistics.

Amazon’s revenue for the quarter ending March 31, 2022, was $116.444 billion, a 7.3 percent increase year over year. Amazon revenue for the twelve months ending March 31, 2022, was $477.748 billion, a 13.99 percent increase year over year. Amazon’s annual revenue for 2021 was $469.822 billion, a 21.7% increase from 2020. Amazon’s annual revenue for 2020 was $386.064 billion, a 37.62% increase from 2019 according to macrotrend.

Following the state, it is clear that Amazon’s entry into the country will put some businesses under pressure.

Amazon is a web services business like Jumia, Konga, and Jiji, that sells housewares, electronics, books, music, movies, housewares, electronics, toys, and many other goods, either directly or as the middleman between other retailers.

Report shows that the likes of Jumia, Konga, Jiji ruling the e-commerce industry in Nigeria has dominated the market with a larger customer and vendor base, Amazon entering the country will give the e-commerce sector a lot of competition.

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“Amazon will not enjoy wide patronage because there are existing local companies. There is this reserved and divine likeness and interest Nigerians have for anything foreign and beyond that but Amazon is a big name who wouldn’t want to associate with a big name to enjoy safety, trust and seamless operations,” Temilowu Olowoyo, Legal practitioner, said.

He said Amazon still has a lot of work to do because certain e-commerce businesses currently operate in Nigeria and are familiar with the legal framework, giving them an opportunity to compete with Amazon.

Data shows that through technological innovation and broad distribution, Amazon has earned a reputation for upsetting well-established industries. In terms of revenue and market share as of 2021, it is the biggest online retailer and marketplace worldwide and has a track record of raking up significant market shares in new markets it has launched, but there is usually an end goal.

According to a report by Nairametrics, Jumia is currently the clear leader in terms of Gross Merchandise Value (GMV).

Meanwhile, in 2019, Konga reported having achieved an increase in turnover by over 800 per cent, and a huge reduction in losses over the past 18 months of acquisition.

The company has doubled down on its Pay on Delivery (POD) option, extending the service to more cities across Nigeria after initially scaling back on it after the acquisition.

Babatope Makun, group chief financial officer at Konga, said ecommerce in Nigeria will be impacted by Amazon’s arrival. However, since the information regarding Amazon’s arrival is still not clear as to which of their services they will launch first. If starting with Amazon Web Services and possibly Amazon Prime, there won’t be much of an effect on online commerce.

“The issue with e-commerce is not seeing other e-commerce companies as competitors; rather, it is all of the other supporting institutional, infrastructural, and operational requirements that are negatively impacting e-commerce, as well as all other businesses in Nigeria” he added.

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