e-commerce Growth: Experts, Customers and Professionals Debate Decline

The decline in business faced by major e-commerce companies like Jumia and Konga was a major bone of contention on a social media forum, as experts, professionals and customers sparred on what was behind the decline.

The discussion started on LinkedIn with a post from Austin Okere, founder of CWG. “How do we crack this: Jumia and Konga showed very early promise in the ecommerce space, especially Jumia, who seemed in line to become an early African Unicorn. Both have significantly plateaued, while Amazon and Alibaba are beakring all growth and revenue records. Does fintech effects have anything to do with this, a la Alibaba in China? What is Jumia doing wrong that Alibaba and Amazon are doing wrong?”

Many experts, professionals and customers took the opportunity to air their views on the subject.

Experts say: Infrastructure, ecommerce policy

Many of the experts who posted their comments blamed poor infrastructure, unavailable ecommerce policy, culture etc.

Bunmi Jembola a sales consultant and CEO African Startup Festival said “This is mostly about the market in which they operate. The economic woes of this country in the last two years have had a telling effect. People only make purchases when they have more discretionary income.

Dapo Sanwo, a procurement manager, highlighted factors such as selling price, quality and quantity of options, operations and logistics cost, staff salaries and the advancement of robotics in warehouse management.

“Operations and logistics cost is very high. We have poor road infrastructure making distribution difficult coupled with security issues for products etc,” Sanwo said.

Ifeoma Uddoh, COO of Sasware pointed out that one cannot underplay the role of bad and inadequate infrastructure; road, air, payment and human.

“To manage some of these issues most of these companies have spent time and resource to own infrastructure and it has cost them a lot and continues to distract them from their core,” Uddoh said.

Boma Braide, a business development strategist said the challenge could lie in the ecommerce companies’ inability to engage in customer development and continuous learning like Amazon and Alibaba.

“Amazon is so good at predictive analytics that they can predict what a customer should buy in the future. In fact it is the very reason they are so successful,” Braide said.

Henry Aisuelinmhen, a delivery manager noted that Nigerians have a long standing culture of going to the shop physically, seeing touching what we want to buy and either negotiating the price or choosing to pay the price tag on the product.

“This culture is what the likes of Jumia and Kon.ca are facing and dealing with. Aside this, as one comment mentioned that Jumia and the likes are customers to Alibaba and Amazon contributing to their export market share; then coming to sell to a market whose customers also have the liberty to procure from same Amazon and Alibaba due to the price competition,” he said.

Customers say: Customer satisfaction, low quality, high price

There was a consensus among the customers who joined the discussion that a lot needs to change in terms of customers’ satisfaction for the ecommerce giants.

Bob Ononuju said “Amazon and Alibaba have gotten their processes right. While we would be quick to blame the Nigerian government, in terms of infrastructure et al, the Jumias and Kongas have a lot to learn in terms of putting the customer first. (At) Ali Express buyer protection is second to none and that continually brings repeat purchases for them.

Henry Essien Nelson another customer noted that the “buying experience” of many people with ecommerce companies is unsavoury.

“Call it customer satisfaction if you like, which is much weaker with the local brands than an Amazon for example. I order from Amazon et al who deliver to my daughter who brings it when she comes on holiday. 99% of the time, the quality matches the product advertised. I order from local online (platforms) and get the wrong sizes, delayed delivery, poor quality. So I don’t even bother any more. They must ramp up the buying experience if they want to see real growth,” he said.

Marina Osoba also shared her experience buying from an online store. “I bought expired tyres from one of the them. Last year (2016) I was sold two tyres that expired in 2010 and nearly had a very bad accident as a result. I reported the issue to the company and still have not heard anything from them. I will never buy anything online again. I have learnt my lessons.”

Professionals say: High return rate, High cost of operation, pay-on-delivery model

There were also inputs from players in the ecommerce space. Olayinka Aminat Olohunlana an executive at Crossover Microfinance Bank said “We run an online store and some of our products were returned simply because the dispatch could not get through to the person that requested the product. Also in another scenario, our operations manager sometimes puts a call across to the person to confirm that ordered they are ready to receive the product they will say they are no longer interested. To worsen the matter, they will not go back to cancel the order.”

Olufemi Longe, a professional in the industry said “Alibaba has the same problems of not sending out the right specification of goods sometimes. I think the major problem is the high cost of runnig business in Nigeria. Then the second is the pay on delivery model, a lot of people just make orders for fun when they know they won’t have anything at stake. Nigeria has a peculiar problem and they will need all the innovations and regulations to overcome these problems.

Business Day

Leave a Reply