TechInAfrica – As digital technology has rapidly grown around the world, e-commerce platforms are also adopted and have found its success in many countries, including in the United States and the United Kingdom. E-commerce platforms in these nations have become quite popular aligned with people’s reliance on online shopping.
Despite its popularity in those areas, this does not work that well in Nigeria. According to statistic, there were at least more than 500 e-commerce businesses launched in Nigeria between 2012 and 2016. A lot of people argue that e-commerce platforms, for example, Jumia and Konga have succeeded and made a lot of money. The National Bureau of Statistics (NBS) even revealed that the profit would hit N10trl.
Judging from the statistics, it seems that e-commerce businesses have fairly succeeded. However, it is not fully accurate as there a lot of challenges many e-commerce businesses have to face. Therefore, the profit might not as much as in the UK and in the US.
The challenges faced by e-commerce in Nigeria are:
- E-Commerce Suffers from Payment on Delivery Method
Many Nigeria-based e-commerce stores use a pay-on-delivery payment method to attract customers. Even though this method has brought big losses for the e-commerce companies, they have no choice as it is a highly competitive market.
The suffering from the payment-on-delivery method is that e-commerce companies have to pay for logistics even after customers cancel their orders while the items on transit. Due to the losses, some e-commerce companies, like Konga for example, had stopped this feature while other e-commerce stores like Jumia still using the method.
- Delivery Chain Issue
Normally, an e-commerce platform plays as the middleman between customers and merchants. Merchants send the ordered items using delivery men. However, there have been many cases involving delivery men and merchants who directly sell their products to customers at cheaper prices. They cut out the involvement of e-commerce stores, thus, causing loss of profitability.
- Bad Customer Service
Customer service in a lot of cases in Nigeria has been reported slow or unable to respond to customer’s complaints. Even more, when customers filed issues or complaints, customer service staffs show slow intention to respond. This bad attitude of customer service staffs decreases the confidence of customers to e-commerce stores/platforms.
- Low Quality of Product
There’s quite a lot of cases that customers complaining about getting goods with poor quality or different from what was advertised. The goods don’t match the online description, by quality, size, and look. Consequently, many customers don’t want to get back to e-commerce platforms as they fear to get poor quality products.
- Unsupportive Business Environment and Government Regulations
Nigerian laws and regulations make it hard for businesses to go smoothly. The bureaucracies are complicated when you want to register your business. In addition, there’s a big amount of tax companies have to pay once their businesses registered. This difficulty hasn’t ended there yet, companies also have to face a difficulty as running a business in Nigeria cost high as a result of expensive power and transportation costs.
- Expensive Logistics and Warehouse
E-commerce companies have to face challenges in logistics and warehouse as they are quite costly. In some cases, there are e-commerce companies that sell cheaper products but customers don’t want to pay for delivery fees at all. However the main issue here is not about customers don’t want to pay, but their locations. There are some cases where customers leave an insufficient address with no proper street names or numbers. Consequently, logistic companies lose money for fuel or vehicle maintenance whenever unable to locate them.
- Poor Internet Connection
Another major issue in Nigeria is that internet penetration or availability is low. As e-commerce platforms rely on the internet connection, this is a big deal to handle. Not to mention the high cost and the unavailability for a period of times. If the internet connectivity is poor, customers who want to order items on e-commerce platforms will find a difficulty.
- Skepticism Towards Technology
In general, technology is something that brings skepticism in Nigeria. They don’t really trust online transactions because it can lead to online frauds and poor quality of products. Many customers believe if they have to pay first before the items are delivered, they will end up getting scammed.
- Lack of Purchasing Needs
Compared to the US and the UK, purchasing power in Nigeria is considered low as lots of Nigerians don’t spend much on shopping, either it’s online or physical. Their spending mostly goes to food and other priority while online shopping is down the list.
- Infrastructure Issue
The infrastructure in Nigeria is generally poor, leading to slow delivery speed of ordered goods. It generally takes time for ordered products to get to customer’s doors. However, in three Nigerian cities like Lagos, Abuja and Port Harcourt, the delivery of goods is more efficient than any other cities in Nigeria.