Transition in E-commerce gains Traction as Operators expand Market scope

The electronic commerce industry is undergoing a process of transition, which has seen many operators move from just focusing on Business-to-Consumer (B2C) to enabling Business-to-Business (B2B) services, BusinessDay investigations show.

This development is driven by the need to deepen profit margins in a highly competitive market. Many operators are aggressively embracing an innovative business model predicated on the development of strategic mechanisms on their platforms to accommodate potential sellers and buyers of products. The implication of this innovative strategy is that e-retailers are no longer just in the business of selling, but now grant access to other businesses to trade on their platforms.

Omobola Johnson, minister of communications technology, had said that the country’s e-commerce market has a potential value of $10 billion with about 300,000 online orders currently being made daily.

Market observers are of the view that e-retailers are keen on further expanding the scope of the market beyond its current potential by targeting the nation’s 17.6 million Small Medium Enterprises (SMEs).

With the online marketplace, e-retailers are fostering entrepreneurship by positioning micro-SMEs before a large homogeneous audience to generate better sales.

“We realised that for our services to be really valuable to society, we had to build a platform for anyone, not just Konga, to sell and prosper. Konga had to build a platform that allowed every entrepreneur and business in Nigeria and beyond, equal opportunity to reach millions of customers”, said Gabriel Gab-Umoden, head of marketing, Konga.com.

Konga launched its marketplace called Konga Mall last year and within the first three months, generated a sales revenue of over N600 million, according to Sim Shagaya, the company’s chief executive officer, in an interview with BusinessDay recently.

Konga mall essentially acts as an online marketplace for sellers and buyers alike to compete against each other for a  variety of items.

According to Phillips Consulting, the local online shopping sector grew from N49.9 billion to N62.4 billion between 2010 and 2011, and from N62.4 billion to N78 billion between 2011 and 2012, representing a 25 percent increase in each period.

Local e-retailers are already engaged in a heated battle for online shoppers, with many of them providing attractive pricing, easier delivery options, as well as aggressive marketing techniques to beat the competition.

Seeking greener pastures, many e-retailers are plugging into the global trend of online marketplace which really entails the deliberate transition from Business-to-Consumer (B2C) to Business-to-Business (B2B) services.

“In the next few years, online retail marketplace will be a major success story that will contribute largely to the nation’s Gross Domestic Product”, Jeremy Doutte, managing director, Jumia.com, said in a recent report accessed by BusinessDay.

The company foresees e-commerce contributing up to 20 percent to Nigeria’s GDP, riding on the back of rising internet access, budding middle-class and a proliferation of mobile devices. Nigeria had about 74 million mobile internet users as at November 2014, says the Nigerian Communications Commission (NCC).

On the global scene, eretailers such as Amazon, eBay, Alibaba including online classifieds like Online Exchange have all created platforms that enable people to buy and sell. Recent data on marketplaces of some giant retailers like e-
Bay and Amazon show that they have over 116 to 117 million active users on their marketplace platforms.