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Online sales boom as Konga, Jumia lure shoppers


News » Editorials
Nigeria

Dec.6.2013

 

Last week, Konga.com’s website crashed for an hour as demand for its Black Friday sale went through the roof. By the end of the day however Konga, a major player in Nigeria’s e-Commerce industry had broken its largest single-day sales record.

“We had more sales on our website last Friday than in all of December last year,” a source within Konga.Com, tells BusinessDay in a recent interview.

“The demand side is there, aided by the significant investments Konga, Jumia co’s have made in new fiber optic cables.”

Nigeria’s online retail business popularly known as electronic commerce is booming as Africa’s largest cell phone market converges with increasingly cheaper internet access.

Nigeria had 120 million active cell phone lines and 56 million internet subscribers, as at September 2013 according to data from the Nigerian Communications Commisssion (NCC) while International bandwidth brought by undersea cables, has increased about 26 times to more than 9,000 gigabits per second (9 terabits) over the past four years.

One market research firm suggests that Nigeria, which is Africa’s most populous country, will have almost tripled its online purchases in just three years to more than $1 billion by 2014.

This compares with South Africa, whose e-commerce sales were just 4 billion rand ($409 million) last year, according to research firm World Wide Worx estimates.

Online retailers are succeeding in luring shoppers like Olivia Oloketuyi, 26, away from brick and mortar stores due to its perceived convenience.

“The last time I did an e-transaction was to buy my son’s football jersey,” said Oloketuyi, who says she shops online once or twice a month while spending an average of N16000.

“A company like Jumia delivers your goods right at your door step and payments are made immediately,” she said.

Because of the security issue of online transaction, which is a major concern, most Nigerian online shoppers prefer to pay cash on delivery, although electronic payments are growing.

The number of payments in Nigeria made by mobile phone’s more than doubled to 2.4 million in the first half of 2012 from the same period a year earlier, while Internet payments rose 9.3 percent, according to data from the Central Bank of Nigeria (CBN).

The improving connectivity and increase in businesses done online is also providing impetus for  data centers to spring up.

MainOne Cable Co Ltd., which operates an undersea cable connecting West Africa to Europe, plans to open a $25 million data center in Nigeria by June, 2014.

The center will provide reliable Internet access and host information for clients such as banks, phone companies, government bodies, and a growing number of dot-com businesses, MainOne Chief Executive Officer Funke Opeke said at the center’s construction site in Lagos, last month.

Analysts say they expect the licensing of a new 2.3GHz spectrum by the Government to “be explosive,” for broadband growth.

Nigeria plans to grow its mobile broadband access to 80 per cent of the population and fixed broadband access to roughly 20 per cent by the year 2017 from 4 percent now, according to the National Broadband Plan 2013-2018.

“With this goal in mind and with the credibility and the composition of the nominees to this council… I have no doubt that we can achieve the objective of the broadband plan,” Minister of Communications Technology, Omobola Johnson, said during the inauguration of the National Broadband Council in Abuja, last July.

While online commerce continues to boom, industry stakeholders sound a note of warning about the looming capacity shortage in the industry.

“We now run IT support for the website from Stockholm and Cape Town, due to a dearth of qualified computer science graduates in Nigeria,” the Konga source said.

“Centres of excellence need to be built in our universities or else in a couple of years, it will be a problem for the whole industry.”

Article Credit: BusinessDay Newspapper

Updated 5 Years ago
 

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