Running an e-commerce business in Nigeria can be a gruesome task. Business owners will boldly say “it’s not an all-comers job”. This article shall be touching on the challenges of running an e-commerce business in Nigeria and how it has been for startups in the gift card business.
This is a sector that is fast growing the world over, and in Nigeria, the difference is not the case as we have quite a good number of e-commerce platforms already established in Nigeria, i.e. Patricia, Konga, Jumia, Payporte, etc… thus we shall be focusing on the challenges of running an e-commerce business in Nigeria.
If you are thinking of getting into this space in Nigeria then you really should consider reading this first to prepare your mind before you make up your mind. The core of the challenges faced by e-commerce businesses in Nigeria is pretty standard. I won’t mention funding as that is a standard challenge for any business.
The challenges include but are not limited to:
5. Product Sourcing
Let’s break them down in more details:
1. Trust – Nigeria is currently fighting corruption, and the issue of online scams remains a big factor, hence, trading online becomes a misrepresentation. A place where phishing is regular, individuals are distrustful about listing their private information online. Some customers are yet to figure out how they can trade online, while others are concerned about being scammed, and the lack of trust from Nigerian consumers is a huge hindrance for e-commerce business in Nigeria.
2. Marketing – Most of the players in the space are relative newcomers, they are unknown. To create awareness in a new market, especially the gift card market, you need to market your brand and your offering to consumers in a way that has never been done before; we can see an example of this where Payporte single-handedly sponsored Big Brother. The cost to do this for small players can be very prohibitive. E-commerce players need to be ready to be in it for the long haul as the market isn’t matured enough for them. One big mistake many of the players make is thinking online advertising is all that’s needed.
3. Technology – Apparently technology remains a big issue these days. Everyone uses the same underlying technology. While not a problem, every site looks just like the other and user experience is just not top notch. You will know what I am talking about if you have shopped on some international sites. Building an e-commerce site on WordPress and installing plugins is excellent for a start but several of the biggest players in the world develop their proprietary platforms and continue to tweak it based on user feedback. For a stable hosting requirement your best bet is a scalable host like AWS and Azure.
4. Payment – This one na die. Patricia.com.ng probably invented instant payment here in Nigeria. They had to. Nigerians don’t trust online sites with their gift cards and cryptos. This model is extremely tough to sustain. It’s costly to maintain too but they made it work. This is an advantage they have over others in the industry. The experience of paying online and quickly can be very frustrating, as the process is not a stable one, especially the banks. The online payment space is improving, I must confess, with several new players getting involved. Interswitch now faces fierce competition from Unified Payment, Paga, Eyowo, PayStack, SimplePay, CashEnvoy, and VoguePay.
5. Product Sourcing – How do e-commerce players get their products? Do they get them directly from the manufacturers, a major distributor or in most cases do they just rely on a seller in the iTunes store for example? Many players don’t have a reliable source of getting the right cards/products at a reasonable rate and on time.
In spite of the difficulties and challenges facing e-commerce businesses in Nigeria, especially regarding gift cards trade and cryptocurrencies, one stand-out company that deserves a mention in this regard is Patricia. They have in one year penetrated the gift cards market and defied the odds of trust with the invention of quick and instants payment system, technology and network-which is the major bane of communication in Nigeria-has also been defied.
For e-commerce businesses to thrive in Nigeria, relevant government agencies need to put in place policies and infrastructure that will enhance the growth of the sector as the sector is the future of business in the continent.