Editor’s note: This opinion was contributed by Sheriff Shittu. Sheriff recently exited Konga to become COO of a fashion ecommerce startup.
5 years ago, Nigerian ecommerce websites were rare. Fast-forward to the present, and it’s now the in-thing!
My first attempt to build ecommerce was back in 2005, for a client. The client sourced for products and took the pictures. I built the website, uploaded a few pictures, and taught client how to do the rest.
Years after, no single order came through. And while I billed the client, he never paid for the website. He couldn’t afford it, and being a hustler myself, all I could do for a “brother” was to help bring his dream alive by building the site, with the hope that if he succeeded, I would benefit. Success never came. Nothing earned. On to the next thing.
How we got here
A big lesson I learnt was that ecommerce isn’t really about sourcing the products and building the website. This was our thinking, so we spent most of our days and nights and days (mostly in cyber café), hoping we would build something really big.
Three years later, a lot of other people came out with the exact same mind-set; “If you build it, they will come”. No they won’t. In fact, they didn’t and we watched site after site shut down and declared ecommerce dead.
In 2010, or thereabouts, an investor got in touch and asked that I recommend an ecommerce company in Nigeria that had 100 transactions a month. It didn’t have to be full revenue (in ecommerce there is a point where transactions are recognised as revenue), just transactions started and ended online. The investor had more than $3 billion under management and was looking to put some of that to work in emerging markets.
I searched the length and breadth of Nigeria (Enugu, Lagos, Abuja, Aba and even went as far as South Africa etc) to look for a Nigerian startup that met that criteria. I didn’t find any! So, the investor looked into other opportunities in Nigeria’s tech scene at the time. We all know the stories — $1m, $8m, $13.5, $21m. To date, the investor has committed more than $30m investment into Nigeria and other African countries.
During the tough period of setting up shops online, a lot of people didn’t learn anything. They kept doing same things over and over, and when the opportunity came to become really big, they were not ready! Konga and Jumia (powered by Rocket), on the other hand, came with a different mind-set and war chest. The rest, as they say, is history. These companies understood that ecommerce is not just about opening up a website and sourcing for products. It’s also about understanding the other details — knowing where your customers are and going for them, really hard and making your processes as agile as possible. Simply put; execute like hell. Even though these guys didn’t have all the answers, their pace of execution integrated with constant learning enabled them to discover and own the market at at breath taking speed.
What will happen in 1 Year
Customers have become aware of online shopping and are getting increasingly comfortable with the concept of buying online. So, we will see the big companies get bigger and clear winners emerge. We need to understand that whilst the entire ecommerce market in Nigeria as it is right now, is not up to 10% of the addressable market, the process is scalable only for those who have long-term plans and show commitment. Only these will “reap the good of the land”.
We will see more startups shoot off from the current players. Quite a few of these will be people who just don’t understand how to setup a website, but also what it means to execute in the Nigerian market. They’ll have the experience and hunger to go for it.
Mega sites and niches
Whether we like it or yes, only a few sites will become mega. The rest will be scrabbling for leftover crumbs.
On the other hand, we all know what usually becomes of mega companies — they leave voids for others to fill. Niche ecommerce websites will fill these voids. For top verticals (Computer, Electronics, Fashion, consumables etc), we will have startups fill them and do well. When I mean do well, they may not become a billion dollar company, but they will become big in their verticals and be profitable.
Blood on the street
Naturally there are winners and losers in business. This battle won’t be any different! As the sites (businesses) troop out in hundreds, there will be casualties. One thing is certain though, people will learn and become wiser…and as such become consultants (no pun intended).
Whatever comes out of this competition, the market will be better for it as it will create new set of people that will have “startup consciousness” (I’ll discuss this in future posts) and be good enough to start one or work productively for others.
For now, let’s wait and see or join in!
Photo Credit: CarbonNYC via Compfight cc
