Gloo.ng, Nigeria’s online grocery store, says it expects to hit the $1 million revenue run rate by December, riding on the back of growing repeat business on the firm’s portal.
Olumide Olusanya, chief executive officer, Gloo.ng, who made this known at media briefing in Lagos, weekend, said the online retailer grew its revenue year-on-year (YoY) 97 percent, which is twice the figure generated last year.
“Our financial year end september 30, and 80 percent of our revenue comes from repeat business”, he said. By virtue of this, the cost of acquiring customers has become cheaper for Gloo.ng, compared to what’s obtainable in the industry currently. “Jumia, konga, spend about $400 to $500 acquiring a customer.
We spend $14 acquiring a customer”, he further explained. “In terms of customers base, we have grown 600 percent over the past one year. Month-on-Month, we are growing by 50 percent”, he said.
Gloo.ng says it is planning to expand its footprint across the nation, in order to boost growth and profitability. According to the Gloo.ng CEO, the company will roll out services in Abuja and Portharcourt, other two tier one cities, by the last quarter of 2015. “Currently our major focus is Lagos. We have covered 50 percent of Lagos from 25 percent last year”, he added.
The company has ploughed in significant amounts of financial resources into logistics, which according to him, put Gloo.ng, in pole position to meet the needs of customers. In view of this, the company has recorded 95 percent success rate in terms of same day delivery. Olusanya said residual distrust for online commerce due to cybercrime remains a huge drawback to the development of the industry.
Omobola Johnson, minister of communications technology, earlier disclosed that the country’s e-commerce market had a potential value of $10 billion with about 300,000 online orders currently being made on daily basis.
He said the potential of the industry remains largely untapped. Though e-commerce firms have changed tactics in recent times by encouraging Cash on Delievery (CoD) payments to bridge the lack of confidence in the system, Olusanya said that this option still poses some level of risk to the industry’s growth and viability. Market observers are of the view that fear of online fraud further cascades into the the financial services industry as many banks currently clogg their payment channels with a myraid of security layers and processes in order to forstall cyber attacks, which is simply not convenient for Nigerians online buyers. “Abroad, online shopping is a one-click process.
“In Nigeria, before you can conduct an online transaction, you have to provide your card number, TVC 2, card expiry date, PIN (Personal Identification Number). “After that, you are asked to supply a one-time authentication code.
“It is just too cumbersome for a customer to consummate an online transaction”, said Olusanya. According to the Gloo.ng CEO, payment systems are yet to pecolate down to the masses. “Mobile money is not as ubiquitous as it is in Kenya with MPESA. “Debit and credit cards are still tied to bank accounts”, he further added. The entry of PayPal, US-based online payment process, into Nigeria, was expected to provide seamless payment experience, but PayPal account holders can only pay for goods and services abroad.
According to a recent survey, the local online shopping sector grew from N49.9 to N62.4 billion between 2010 and 2011, and from N62.4 to N78 billion between 2011and 2012 representing a 25 percent increase in each period, says Phillips Consulting.
The World Bank says the country’s middle class has risen by 28 percent while its GDP based on purchasing power has increased by 21.67 percent in the last four years.
Ben Uzor
