E-commerce, Still Vast Room for Growth

Monday, February 24, 2020 / 09:44AM / FBNQuest Research / Header Image Credit: Brand Communicator

Thegrowing appetite for mobile data usage and increased network coverage togetherfeed into the expansion of e-commerce. Based on data from the NigerianCommunications Commission (NCC), mobile network coverage is currently estimatedat 93% on the basis of a population size of 198 million. However, data releasedfrom the same source show that internet subscriptions stood at 126 million inDecember, representing lower GSM data penetration of 64%.

The rise of e-commerce has supported product placement and distributionfor several companies across numerous industries in Nigeria. These companiesare spread across retail, content distribution, travel and tourism among othersegments.

The FGN has made laudable steps with its cashless economy agenda.However, Nigerians still prefer cash transactions when it comes to payment fortheir online purchased items. For some consumers, it is more convenient. Toaccelerate online retail platform usage, consumers must be open to makingpayments with e-payment solutions.

The latest data from a series of the National Bureau of Statistics,produced in collaboration with the CBN, reveal that 800 million transactionsvalued at N43trn were recorded on electronic payment channels in Q3 2019.

We understand that Jumia's 2020 targets include engaging at least 10,000new vendor partners in Nigeria. Jumia has eight major vendor categorieson its online retail market. The company has succeeded in creating adiversified shopping experience for its customers. As at Q3 2019, it had3.5 million active users.

E-commerce has supported the expansion of the global marketplace. Mallfor Africa has positioned itself as a leading e-retail platform, championingthis global market connectivity.

Last year, eBay collaborated with Mall for Africa. This partnership isexpected to expand inventory to the United States. Residents within the U.S cannow purchase locally produced goods (particularly original artefacts) fromAfrica.

The e-commerce industry is still affected by several challenges. Thehigh cost of sustaining internet subscriptions, low internet penetration inrural areas, logistics (primarily poor road infrastructure) and data securityfeature on the laundry list of challenges.

E-commerce exposes businesses to a larger market base. Additionally, itreduces operational costs which should translate into increased profit margins.The expansion of this industry also requires a supportive legal and regulatoryframework that can protect consumers and guard against cybercrimes.