In Nigeria, online businesses are booming. The country has a vibrant digital landscape that offers a wealth of opportunities to local investors and entrepreneurs. Over the past few years, growth has been impressive. The pandemic has spurred the adoption of internet-based technologies, which has contributed to the rise. However, there is still room for improvement.
Overview of Internet Penetration
Nigeria has an immense internet economy — the biggest on the continent. Its population is not only the largest; it is also relatively young. Out of the 180 million residents, youth accounts for 62%. This audience is targeted by online retailers and service providers.
The network coverage is advanced compared to the rest of Africa. Mobile connectivity infrastructure is relatively well-developed, and internet penetration is growing all the time. Mobile network coverage is estimated to include 77% of the territory.
As of this writing, the majority (60%) of the country’s population has access to the internet. Over half of all residents own a smartphone. Recent statistics show that most Nigerians choose mobile devices over desktop use. They prefer to order goods and services on the go. In 2019, over 70% of all accesses were recorded on smartphones and tablets. This percentage was even higher for online shopping.
The country has also recorded a surge in Forex trading. According to the Forextime broker, the country has the second-largest volume of daily currency trades. Residents access global financial markets using desktop and mobile software. Through a MetaTrader 5 broker, they speculate on forex, stocks, CFDs, and metals. Again, mobile trading apps are the most popular.
Marketplace Trends
A thriving market of online commerce increases the trade activity in the country. It offers a cost-effective way of connecting buyers to sellers. Clearly, this is the perfect moment for retailers who hesitated to enter the Nigerian market before.
In 2019, Nigerians used mobile devices for most of their visits to e-stores (82%). Meanwhile, under a fifth (18%) accessed the marketplaces investment from laptops or PCs. Currently, the country has 58 online marketplaces, the biggest of which is Jumia.
In 2019, over 250 million residents visited internet-based platforms. Jumia alone received 148 million. In comparison, Jiji and Konga recorded 5 million and 3 million web visitors, respectively. A third of all platforms are open to foreign sellers in Nigeria.
Experience of Jumia and Kongo Online
Konga Online stores have reported growth of their customer pool to 750,000. Active users account for less than a third (200,000), and 10% of customers reside in rural areas. This could be attributed to the current economic decline and poor internet penetration in these regions.
According to Jumia, the majority of its customers (70%) prefer to pay in cash. The cash on delivery option is more popular than credit/debit cards. Mobile money transfers are also less popular.
Effects of COVID-19
The pandemic has caused the demand for online services to evolve. Value chains are also changing. More consumers regard brick-and-mortar stores as inconvenient, as they can do all of their shopping on a single platform. Unsurprisingly, African giants like Jumia Nigeria or Mall for Africa are leading the charge to stimulate online retail growth.
Interestingly, some experts do not consider the effects to be dramatic. They note that the rise of online commerce is not causing active abandonment of conventional shopping. According to the Economist Intelligence Unit, online businesses broaden the tastes of the local population.
Overview of Challenges.
Online businesses still face challenges. The development of e-commerce is impeded by logistical issues and cybercrime. These problems must be resolved by companies in cooperation with the local government and their stakeholders.
At the moment, the shopping experience is often spoilt by slow delivery and transportation hiccups.
The Bottom Line
Nigeria offers impressive opportunities for online-based businesses. The country has growing mobile infrastructure and internet penetration. In the future, the digital segment will continue to increase.
The pandemic has contributed to its development, as millions of customers got used to remote shopping, working, and learning.
The industry has some challenges to resolve, such as logistics and data protection. These require cooperation with stakeholders and the government. Still, given the convenience of mobile tools, it is clear that online businesses will thrive.