Innovation
The biggest barrier to unlocking Nigeria's huge e-commerce potential? Convincing people it's not a scam
The Amazon.com of Nigeria is tackling challenges to get more people to shop online. Its reward? A huge potential market.
At first glance it wouldn't be surprising if you confused Jumia.com for Amazon.com. Both have advertisements pushing the latest electronics, both are promoting holiday deals, and both offer an exhaustive list of shopping categories. But while Amazon has been around since the mid-90s and brought in about $61 billion in revenue last year, the 18-month old Jumia is finding its way in Nigeria, a market that's new to -- but quickly taking to -- online shopping.
The young online supermarket has already grown to 600 employees with $75 million in seed funding and is seeing sales growth in the high teens. But the real challenge to growth hasn't been getting people online -- Nigerians are embracing the smartphone and expect to have 40 percent of all African smartphone shipments next year -- it's convincing skeptical shoppers that their website isn't a scam. As Bloomberg Businessweek points out, that means Jumia couldn't exactly replicate Amazon's business model, it had to do things differently.
With many of the country’s 160 million residents suspicious of paying online—yes, they get those fraudulent e-mails, too—the Lagos-based retailer wins over skeptical shoppers by accepting payment on delivery and offering free returns. “It’s very important that people know it’s not a scam,” says 29-year-old co-founder Tunde Kehinde. “Even though they want to buy, trust is still a very, very big issue.”
In addition to payment on delivery, the company goes offline with a team of about 200 that travel with tablets throughout Nigeria's cities to educate people on online shopping and try to convert the skeptics.
The hope for Jumia is that all that extra work now will have a major payoff later on. That's because the potential for online shopping in Africa's most highly populated country is huge, with estimates that online spending could account for half of all the country's retail sales. And with broadband Internet penetration expected to reach 80 percent by 2018, the e-commerce industry is expected to have a multi-billion market in the coming years. Already the market is experiencing annual growth of 25 percent.
But it isn't just Jumia, others are also taking notice of Nigeria's e-commerce potential.
Read more: Bloomberg Businessweek
This post was originally published on Smartplanet.com