Though the retail segment has largely driven the Nigeria’s ecommerce market, financial experts see exponential growth of the $13 billion current market value to over $50 billion in a decade on expansion beyond retail merchandising to including wholesale high-end products like property, auto and professional services.
“E-commerce platforms are now expanding beyond online shopping malls selling high-end consumer products, like Konga or Jumia, to including Wakanow, an online travel agency, Paypal, e-finance company, PropertyInsider, an online real estate agency, Carmudi, an online car listing, etc, an analysts told businessamlive.
Specifically, in the last five years, there have been shifting consumer preferences, rapid advances in technology and ongoing disruption to business models, that have spurned two main e-commerce transaction modes – merchandise (selling and buying of goods and services) and e-finance (online financial services).
According to the African Development Bank, Nigeria’s emerging middle class with per capital of about $1600, which accounts for 23 percent of the population, is mostly responsible for the drastic increase in the growth of consumption, just as a sporadic adoption of the Internet as a platform of transaction has seen the emergence of e-commerce.
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The Nigeria Communications Commission (NCC) recent data indicate the number of Internet users in the country has increased to 91.6 million as at June 2017. Similarly, the National Bureau of Statistics (NBS) has also indicates that with an annual growth rate of 25%, e-commerce is still experiencing its exponential growth and providing business opportunities.
This has seen other businesses aside retail moving into the niche, like real estate, tourism and financial services e.t.c.
Carmudi, an online car listing released a report on the booming automotive industry in emerging markets, stating that Africa, Asia, Latin America and Middle East have shown stronger market base and regional growth since 2011 unlike their developed counterparts namely UK, USA.
According to McKinsey in a 2013 report, year-on-year growth for online car queries on Google in Nigeria is a staggering 89 percent.
Wakanow, the largest online travel agency (OTA) has expanded its operations by launching Wakanow Kenya, making its regional hub for East Africa.
The need for secured online payment platforms has made new openings for companies like Interswitch and Paypal and financial institutions like GTBank and Stanbic IBTC to take advantage of the openings in the new but viable market, creating platforms like GTPay and BluePay.
The industry is particularly competition driven, as companies try to outbid themselves in pleasing their clients with promotions done monthly like Yakata by Konga, Black Friday by Jumia when prices are slashed and customers are encouraged to increase purchases.
However, the challenges plaguing these companies are numerous and not going anywhere anytime soon, cybercrime is a major reason. Other reasons include infrastructure challenges, ineffective transportation and logistics systems.
Despite the challenges posed, e-commerce industry is still flourishing with over 100,000 daily visits on some sites like Jumia.