Last month when Jumia parent company released its performance for the first six months of the year, the matter trended for many reasons.
This time around, Kinnevik said it further devalued the worth of its investment in Konga. The rate of the write-down is slowing down on a quarterly basis but it is still significant. This further means the two eCommerce companies are not in any better shape when compared.
It is fair to say their misfortune is not totally their making. I am of the opinion that these two companies will find their way out one way or the other. I am not sure if it will be IPO, equity sale or merger. The last option seems very unlikely to me.
I think people need to understand that in Nigeria,we have a large population(large market but with less buying power(purchasing power) to be frank big tech companies cant come out of Nigeria because our market is small even though we have a large population
A small economy and population like Finland is better than a large Nigeria market.Finland population has a higher purchasing power than the whole Nigeria Market.
reason why shoprite and spar are successful is because it is a bricks and mortal retail shop(i can see,feel and touch goods there),they stock what Nigerians need daily, food,drinks,fruits etc and those are recession proof also i do not need a mobile phone or be literate(speak and read English) for me to access shoprite or spar also they target all classes of consumers compare to konga and jumia.
MMM was successful in Nigeria because they came during the period of recession promising all classes of Nigerian fat interest if you invest with them,their deal was too good to let it pass away in other word an investment opportunity you might regret after if you missed out:)
I tried e-commerce a few years back. The only thing that drove good sales numbers was steep discounts on in-demand items. If you price normally, you would have less sales volume than a kiosk. We work with the assumption that e-commerce is a business who’s time is guaranteed to come in future, but I think with the market dynamics of sub Saharan Africa that @jamesbond outlined, I fear e-commerce was just not meant to be in these parts
I was actually referring to this statement, especially the “Purchasing power bit”.
Anytime I go to spar I look at people’s hands and it’s funny how they all have smart-phones and most times they are on their phones even while shopping, but most don’t buy from Jumia/Konga and I really can’t say why.
I got my laptop from jumia and after two months I had to take it to computer village for repairs and my friend who repairs laptops laughed at me when I told him where I got it and he showed me a better version of my laptop, I’ve gone back 3 times since then. I’ll never buy a laptop online again and still on the fence on other stuff.
The reasons those guys arent using eCommerce is trust,most Nigerians do not trust sellers on eCommerce sites,it is strange that in Nigeria online shopping is more expensive than buying in a shop which is not suppose to be.
Sellers/merchant like online shopping because it favors them and not the buyer,they know you cant bargain or feel the product on konga/jumia,so they put over priced goods and low quality product online while if you would have gone to Alaba,or any big market,you would have gotten that same goods for half the price.
I also notice the black sales event they do on the sites are mostly fraud from sellers,sellers are not reducing the prices and sometimes the discount does not work always because sellers are over valuing their goods to make more profit and minimize their loss when giving discount infact the system of giving discount is strange to a Nigerian seller/merchant except you buy from a big recoginsed seller…
I think the model that will work in Nigeria for eCommerce is the bidding model just like ebay does,it encourages bargaining.
When Jumia takes as much as 15% per item sold how will it be cheaper? Or the fact that someone will order your clothes and return it with perfume smell and sweat marks. Did I mention you pay for the packaging materials jumia uses (and it must be theirs) and you also take your item to their warehouse and pick it up when it’s returned. All they practically do for sellers is nationwide delivery and they still charge users for that. How can it be cheaper or even the same price?
I believe MMM grew fast because of word of mouth and not even the promise of 30% return. Imagine if most of the early users of MMM had bad experiences, it wouldn’t have gone far but it worked as promised till it didn’t. Even CBN couldn’t stop them with their warnings, they actually helped them grow.
Who will you trust? A failing government or your friends/colleagues telling you something works, a giant billboard in Lekki promising you cheap and authentic goods or your friends who tell you how bad their services are.
The problem is not Nigerians or lack of internet users. It’s the company.
If spar or shoprite act like Jumia/Konga nobody will buy from them too.
my point is online shopping is cheaper all over the world except Nigeria and Africa,many sellers on eCommerce sites are fraudulent because the companies are not verifying prices and products also companies need to recover loss to make them competitive since Nigeria doesn’t have the infrastructural support for eCommerce.
For MMM,you need to give value for word of mouth to work.
How are they behaving in such a shark-like manner towards merchants and still recording mind-boggling losses? Something is not adding up in this story.
To start with, I think the e-Commerce model needs a critical re-evaluation to work in Nigeria. First and foremost, the odds are not in favour of both e-Commerce companies.
Let’s start with logistics and supply chain management. Buying from wherever they buy from (China for electronics, Dubai for jewellery), importing, clearing, warehousing and distributing to other parts of the country is a pain in the ass. Especially when you need to stock products across different categories.
In my opinion, both companies (Jumia and Konga) did not nail this part of the business and are projecting their losses from this part of the business into how they charge merchants of their marketplaces.
Then there is the issue of quality control and customer service.
I once had this experience with Amazon. Someone (X) needed to buy a computer part and contacted a friend (Y) because he (X) had someone who was leaving the UK for Nigeria in 2 days. Y told me and asked me to make the purchase on behalf of X because I had a Dollar Master Card. I could not fund my dollar account that day (Wednesday) but went ahead with the purchase because Amazon usually does not charge an account immediately a purchase is made.
By the time I woke up Thursday morning, I had an e-mail from Amazon saying my bank declined the transaction. I went to the bank and funded the account immediately. I was worried that Amazon might not reinitiate the transaction again since it did not go through the first time and that the item was not going to get delivered on Friday because I selected free shipping which usually takes at least 2 days.
So I called their customer care. Explained what happened to the representative. The rep asked me some security questions and I told him I needed the item to be delivered that same Thursday since the person was travelling Friday morning. Right there and then, the rep reinitiated the transaction. About 5 hours later, I was called that the item had been delivered. Around 9pm, I got a debit alert.
That is customer service. And I can say boldly that Jumia and Konga don’t have this.
It’s sad that most companies use customer agents as “decoration”, Since they need to have that department. In the example above , most Nigerian agent would say:
"apologize for inconveniences and say sorry, your card was declined. Please send the transaction yourself ".
Because they don’t equip the reps with enough authority or model to properly resolve issues.
A colleague got a good deal (prize wise) on Jumia couple of months back. When the generator was delivered it was broken, apparently it is a refurbished generator, hence the low price. Since he paid in advance, he got his refund and walked into a Gen merchant near his house , the old man took the Gen Home for him, bought fuel together and tested it at home. OK if that’s not a pleasant experience, tell me what is?
