Monday, February 24, 2020 / 09:44
AM / FBNQuest Research / Header Image Credit: Brand Communicator
The growing appetite for mobile data usage and increased network coverage together feed into the expansion of e-commerce. Based on data from the Nigerian Communications Commission (NCC), mobile network coverage is currently estimated at 93% on the basis of a population size of 198 million. However, data released from the same source show that internet subscriptions stood at 126 million in December, representing lower GSM data penetration of 64%.
The rise of e-commerce has supported product placement and distribution for several companies across numerous industries in Nigeria. These companies are spread across retail, content distribution, travel and tourism among other segments.
The FGN has made laudable steps with its cashless economy agenda. However, Nigerians still prefer cash transactions when it comes to payment for their online purchased items. For some consumers, it is more convenient. To accelerate online retail platform usage, consumers must be open to making payments 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 transactions valued at N43trn were recorded on electronic payment channels in Q3 2019.
We understand that Jumia's 2020 targets include engaging at least 10,000 new vendor partners in Nigeria. Jumia has eight major vendor categories on its online retail market. The company has succeeded in creating a diversified shopping experience for its customers. As at Q3 2019, it had 3.5 million active users.
E-commerce has supported the expansion of the global marketplace. Mall for Africa has positioned itself as a leading e-retail platform, championing this global market connectivity.
Last year, eBay collaborated with Mall for Africa. This partnership is expected to expand inventory to the United States. Residents within the U.S can now purchase locally produced goods (particularly original artefacts) from Africa.
The e-commerce industry is still affected by several challenges. The high cost of sustaining internet subscriptions, low internet penetration in rural areas, logistics (primarily poor road infrastructure) and data security feature on the laundry list of challenges.
E-commerce exposes businesses to a larger market base. Additionally, it reduces operational costs which should translate into increased profit margins. The expansion of this industry also requires a supportive legal and regulatory framework that can protect consumers and guard against cybercrimes.