Despite unhealthy competitions which have held e-commerce outfits down and occasioned a drop in the growth trajectories of the sector, there are strong indications that consolidation is gradually happening in the industry and the fortunes are likely to look up.
This signal followed recent announcement of a merger between two giant e-commerce outfits, Yudala and Konga.com at the weekend. The decision emerged after Zinox technologies, owners of the Yudala brand, acquired Konga in February. Konga, before it was acquired, was one of Nigeria’s largest online malls and Yudala, pioneer composite e-commerce company was also a strong offline and online retail shop.
The merger will kick off officially from Tuesday, May 1st 2018 and will see both companies operate under the KONGA brand name. It is expected to facilitate operations that can see them effectively become the biggest organized retail and e-commerce/marketplace outfit on the African continent. Already, before acquisition by Zinox, Konga was said to worth over $34 million, has 184,000 active users which is 80% mobile based.
The strategic decision will see the new company leverage the combined strengths of both platforms to broaden the scope of organized retail and e-commerce in Nigeria and deliver more value to customers and merchants. Chairman of Konga, Mr Olusiji Ijogun, while announcing the merger, stated that: “Combining forces to power the new Konga will enable us effectively achieve our goals of platform expansion and accelerated growth, as we embark on an ambitious journey to redefine the retail ecosystem with the industry’s most advanced technology,” “Effective from May 1st, Yudala will now operate under the name KONGA, with dual CEOs in the persons of Nick Imudia who will be in charge of online among others and Prince Nnamdi Ekeh who will be responsible for offline.
This merger will further strengthen our position in the Nigerian retail market as we creatively position Konga as the first profitable e-commerce company in Africa” he added. He said “the efficiency of Konga’s cutting-edge online platform, access to thousands of merchants and Yudala’s expansive network of fully stocked offline stores is poised to give our customers the best shopping experience imaginable.
The CEO in charge of offline, Prince Nnamdi Ekeh said: “We are very excited about the operational merger between Yudala and Konga into the new Konga. A merger of this magnitude has never been experienced in Africa. We will be leveraging on Konga’s strong technology backbone and online experience as well as Yudala’s offline experience, network of retail stores and operational efficiency. In the near future, we plan to have a Konga store in every local government area in Nigeria”.
The Konga Business platform will now include two fully integrated aspects including Konga Online, the e-commerce/marketplace platform and Konga Retail, the offline arm of the business. Both will be supported by Konga Pay, a CBN-licensed mobile money platform and Konga Express, a world-class logistics company with advanced delivery capabilities for internal and external customers. From all indications, the boost such consolidation will bring to the sector, will see Nigeria considered a major partaker in the fortunes and massive growth anticipated in the next four to five years as Global statistics of e-commerce is looking up.
Globally, the electronic commerce market is worth around $22.1 trillion, according to latest UNCTAD estimates. In 2017, only retail e-commerce sales worldwide, was valued at $2.829 trillion while e-retail revenues are projected to grow to $4.48 trillion by 2021. Here in Nigeria, the e-commerce sector has an estimated worth of over $13billion which is approximately N4.01trillion, and could rise to over $50 billion by 2027. A London based Economist Intelligence Unit , EIU, released a report in 2017 which identified three Nigeria based online retail platforms; Jumia, Konga and Jiji, as leading the African e-commerce space to compete among world technology-based retail businesses. The report, described the three as serving a mass-market clientele, despite reduced patronage, witnessed among Nigerians in the last few years, due to lean pockets during the recession.
Analysts say that merging Yudala, which itself was servicing requests worth almost N5 million daily with Konga, already listed among the three top ecommerce companies, represents a new dawn in the country’s e-commerce sector Growing Africa’s ecommerce If the merger eventually helps in reviving a moribund BuyRight Africa.com, which parent company, Zinox technologies began the ecommerce experience with, the tendency for Africa’s ecommerce fortune to improve from Nigeria is highly expected.
Immediately after konga acquisition by Zinox was announced in February. a Lagos based financial analyst, Godwin Eboighan said: “this acquisition is not only for Zinox as a company, but a pride to Nigeria as a country and Africa as a continent. Although Konga started in Nigeria, foreigners eventually took over a larger share of the firm has put in so much money. So getting it back is a national pride! “Besides, the firm is about one of the biggest online retail platforms in Africa. What this acquisition means is that a combined effort of Yudala and BuyRight Africa .com owned by the same Zinox group, will eventually make it the biggest.
The resultant effect is that a Nigerian platform owned and run by a Nigerian, is leading Africa’s online retail business pack and promises a good showing in the world stage. That is also something to celebrate,” he added.
Role of technology, if there is any sector of the economy that the telecom revolution of 2001 has benefitted most, it must surely be the e-commerce sector of the business economy. The revolution opened the Nigerian banking sector to new trends in banking and set up digital financial transaction models that enabled other economies to develop. These include the digital payment and electronic banking platforms which have given rise to cashless Nigeria initiative being implemented in phases across 27 states of the federation.
At present, most transactions are conducted electronically, as Nigeria’s economy is gradually becoming cashless. The cashless policy has resulted in increasing demand for ATM services deployed in major cities and commercial centers across Nigeria, The demand for electronic transactions has boosted online commerce and financial technology in Nigeria and strengthened by fast-growing youth populations, expanding consumer power, and increased smartphone penetration.
The current Ecommerce spending in Nigeria is estimated at $12 billion, and is projected to reach $75 billion in revenues per annum by 2025. The successful adoption of electronic payments in Nigeria has also attracted payment facilitators from Europe and Asia who are investing in Nigerian electronic infrastructure projects.
Payment service providers such as Visa and MasterCard, now see Nigeria as a promising market. Debit cards from many local banks such as Citibank, Zenith, UBA, and Fidelity, are now used to make payments on online platforms run in Nigeria and other countries of the world.