With strong connections to Nigeria’s creative community, Paystack Commerce is offering a social commerce product to help them receive payments.
On June 23, Paystack became the latest payments company to enter the e-commerce business. “We’re thrilled to announce Paystack Commerce, a toolkit that helps African creators bring ideas to market, beautifully,” the company tweeted.
With that announcement, the startup joins Flutterwave, Remita, GTBank and OPay which have all developed social commerce products over the last six months.
In an email to TechCabal, Paystack explained that it has been studying the e-commerce experience of Africans for the last two years. “We spent a lot of time talking to our users to learn and understand what tools they need to succeed,” the company said.
“After a lot of consultation, we realized that although a number of commerce platforms exist, they were sometimes not optimized for African creators.”
Some platforms are costly to operate for many African sellers who are just starting out, while other platforms simply lack an African payment processor.
“And then in 2020, COVID-19 upended the world, creating even greater need and urgency for a new generation of tools to help African brands sell online,” Emmanuel Quartey, Head of Growth at Paystack wrote on the company’s blog.
Indeed, the pandemic has forced more businesses including traditional retailers online. Government lockdown measures between March and May restricted commercial activities to essential services.
Interest in e-commerce platforms, Woocommerce, Shopify and Wix, spiked during this period. Google Search queries related to the three platforms have grown above average in Nigeria since April 5, according to Google Trends. This indicates more people may have been looking set up shop online.
“The number of business owners signing up weekly to use Paystack to collect online payments has tripled in the last two months,” Paystack disclosed to TechCabal.
Merchants quickly switched to digital commerce. Some created their own websites and while e-commerce platforms like Jumia and OMall continued to on-board vendors. However, the majority of sellers remained on social media and used third-party logistics, recognised as essential services, for deliveries.
These trends were not restricted to small vendors.
In April, SPAR, one of Nigeria’s largest retail chains, introduced online shopping and deliveries in Lagos and Abuja. It uses Kwik logistics for deliveries, while the payment is powered by Paystack.
According to one speculation, Nigerian Breweries, Nigeria’s biggest beverage company, launched an on-demand drinks platform during the lockdown.
In the same period, Eko Hotel and Suites, described by Stears Business as “Lagos’ most famous and conservative hotel”, made a radical turn. It now offers food deliveries services across the state using the OyaNow logistics service.
“Not everyone has the time or resources to build out and maintain an ecommerce website or store,” Paystack told TechCabal.
Paystack Commerce solves this problem, the company believes.
The product is baked with different integrations that “provides a super simple way for anyone to sell online with the least amount of effort.”
The product caters to SMEs but Paystack is also focused on creators, “people who you might not consider ‘merchants’ in the traditional sense,” it explained.
“We set out to create a collection of simple and powerful tools that would let anyone, from brands to writers, designers, musicians, artists […] share their creativity and get paid when they do so.”
Like Remita’s Paylink, Paystack Commerce offers Product Link, “a way for social media merchants to sell online [with] no website required.” Merchants can use the new Paystack Merchants mobile app to track orders and payments.
Since the original announcement, the company has completed an integration with Wix, which was highly in-demand during the lockdown. “Paystack is one of the first African payments gateways to do this,” the company told TechCabal.
The integration allows merchants on Wix in Ghana and Nigeria to accept payments globally in the local currencies, Cedis and Naira.
Paystack’s publicly available Commerce Roadmap reveals that more integrations will follow. 41 items on the roadmap are still “ideas”, 5 are items are currently being developed. However, on June 23, “Wix integration” was labelled “idea”. It was labelled “done” two days later, hinting that progress could happen quicker than expected.
“We don’t seek to be Shopify or Jumia,” Paystack told TechCabal. “But what we are excited about right now is to lower the cost and technical bar to online retail significantly.”
Paystack Commerce and the new e-commerce competition
Paystack’s foray into social commerce is validation for an understanding of the e-commerce market has changed. In a recent article, TechCabal explained that the composition of the market – payments, logistics, and changing merchant visibility expectations – has changed.
Payments companies – Paystack, Remita, Flutterwave, GTBank, OPay – recognise this change and have launched separate e-commerce services to win the market.
This puts the spotlight on Jumia and how it is reacting to the new competition.
Jumia is equally matched against these companies. Like the other companies, it operates its own payments service; JumiaPay, and has the advantage of an already famous marketplace. It also has a slight advantage on the logistics front with its network of providers across the country.
Social Commerce in Nigeria
However, Jumia’s biggest challenger is merchant/customer behaviour. More small businesses and one-man shops are opting to sell their products on social media rather than a dedicated e-commerce platform like Jumia. They want visibility and the hope of higher conversion rates.
Social media “is where the customers are,” notes a 2012 article in the Harvard Business Review. Nigeria has 138.7 million internet subscribers, according to April industry statistics. In 2019, Jumia estimated that 24 million of them were active on social media.
Selling on social media is a huge trend that has blown up in Nigeria over the last few years. Today, sellers typically go on Facebook, Twitter, Instagram and even Nairaland looking for customers.
“My customers may be on your timeline” is a colloquial call-to-action for shares and retweets on social commerce. Without ads, such posts could still reach thousands of users in minutes as social media users reshare out of the goodness of their hearts.
Other social sellers pair this with paid advertising and influencer marketing, creating an even greater opportunity for sales conversion.
But at the heart of these practices is the visibility sellers crave for their brands and a direct connection to their customers. Flexibility with logistics providers is also a top consideration for sellers.
This “parallel e-commerce” approach has always been a competitor to Jumia’s model. But it has gone one step higher with big payments companies creating more tools for social commerce.
How is Jumia reacting?
At a virtual press conference on June 17 to celebrate Jumia’s 8th anniversary, TechCabal asked how the company is reacting to the social commerce trend.
“I think it is important to stress out that Jumia is a platform that wants to help vendors make better business and from the customer side we want to satisfy the needs of users online and make life better,” Massimiliano Spalazzi, Jumia Nigeria CEO, explained as he attempted to answer the question. “This is why we exist.”
He continues: “vendors are finding Jumia as a place where they can reach many customers and customers find the platform as where they can shop safely with a great customer experience,” he added.
Spalazzi hinted that Jumia recognised the social commerce trend. But he also hinted that Jumia views that space as an opportunity for partnerships, not necessarily competition.
“I think vendors today will naturally come on Jumia,” he said. “[And] I also think that if vendors want to offer a proper shop while having a Jumia shop, Jumia can also help their business.”
He explained that Jumia Logistics supports social commerce and provides delivery services to third-party vendors outside the Jumia ecosystem.
“If you shop on Jumia, social media or vendor’s own websites, we do help them deliver these items through Jumia Logistics,” Spalazzi said. “So when a vendor gets an order on their shop they can then deliver it through Jumia.”
So competition or cooperation? We will find out in the coming months, if not weeks.