Tuesday 17 May 2011

Ecommerce – Nigerian goldmine?

Ecommerce – Nigerian goldmine?
Electronic commerce, normally called ecommerce, is the buying and selling of goods and services over electronic systems such as the internet.

Oluniyi Ajao in his blog post titled ‘E-commerce in Nigeria: We’re back to the stone age!’ pointed some of the major factors militating against the take-off of ecommerce in Nigeria, internet fraud, poor security by card issuers and e-commerce website owners, poor communication between card issuers and card owners, he rounded up by saying “The Interswitch system needs to be thoroughly revamped. The system must necessarily come with advanced security features”

As a developing economy, the importance of e-commerce to the growth of Nigeria’s economy cannot be over emphasized. As more Nigerians use the internet, we will see more ecommerce activities pop up. Many countries such as Thailand, China, the US and Britain have continuously focused on the internet as a major aspect for growth and development, Research News Daily in an article titled “How e-Commerce is transforming Britain’s Economy”  analysed Google’s ecommerce research report which put the UK’s ecommerce to be in excess of £100bn a year, the research also found that the internet accounts for 7.2% of Britain’s GDP, meaning that If the internet was a separate economic sector it would be the UK’s fifth largest producer of income.

Internet Usage
The Goldman Sachs 7th Annual Consumer Behaviour survey conducted in 2009 found that global e-commerce spending increased by 2% and number of buyers increased by 12%, mobile e-commerce was found to be an area of opportunity, as shopping was found to be one of the most important factors for site selection, ranking 4th in terms of priority with almost 50% of respondents saying they will like an experience similar to what obtains on their pc on mobile especially with two ecommerce giants, eBay and Amazon.

Nigerians have increasingly embraced the use of the internet, even the president now has a facebook fan page, Nigerian youths which make up a large percentage of the population have increasingly embraced the internet, this trend is mainly due to the availability of the internet via mobile devices. The Internet World Stats (http://www.internetworldstats.com/) estimates that as at December 2009 Nigeria had 23,982,200 internet users , about 16.1% of the population of about 149,229,090 (Census Bureau population stats).

However, the use of home broadband internet is still not fully embraced as most options are expensive, slow and unreliable, most people prefer to stick to their mobile devices since it offers mobility, it is cheap and it is comparatively reliable. Nevertheless, the acceptability of e-commerce is Nigeria is still very low. Most people lack the trust in the security of online applications, and there is even a dearth of options, very few platforms available for you to shop, as most Nigerian cards are not acceptable for shopping on international websites due to fear of fraud, I have even seen products for sale on eBay that clearly state ‘I WILL NOT SHIP TO NIGERIA SO DO NOT ASK’.

It is important to point out though, that significant consolidation has occurred in Nigeria’s Internet and broadband sector, the second international submarine fibre-optic cable (Glo-1), launched in 2009 broke the monopoly of Nitel’s SAT-3/WASC cable and is revolutionising the market. This might see use of home broadband internet increase rapidly in the very near future.

The role of government
The speed, the quality, the reliability and the cost of the internet are very important factors that can either enhance or obstruct progress of ecommerce. The Nigerian government should take more responsibility in providing necessary infrastructure for the proper enablement of internet technologies in Nigeria.

The American government, for example, “aims at the provision of on-line services to the majority of American households not only through desktop computers connecting to the Internet but also through devices such as television, cellular phones and portable digital assistants” (US Department of Commerce,1998), the government realises that ecommerce is essential to the growth of its economy.

Nigerian SMEs and Ecommerce
China SMEs E-Commerce Development Report (2009) indicated that in 2009, Chinese SME’s newly increased value from e-commerce accounted for 1.5 percent of China GDP, raking in up to 1.99 trillion Yuan, a comparative growth rate of about 20 percent, creating over 1.3 million new employments in 2008. In a nation like Nigeria with over 150million people, the opportunities are immense, so why are SMEs not embracing ecommerce? Could it be because:
  1. There are no strong SMEs – We currently do not have the brand awareness big enough for the SMEs, there is no single Nigerian supermarket with a national identity and recognition.
  2. Diversity of products - There is no Nigerian products store with the diversity of products strong enough to pull through a strong ecommerce presence, it could even be one product, but with enough diversity and market base to pull customers.
  3. Good mobile internet platforms – Even Amazon and eBay are still struggling to get it right when it comes to presenting good user experience for customers on mobile platforms.
  4. Trust – Users do not trust the security of the systems enough to put in their card details online there are still many sceptics.
However, taking the case of the airline industry as a pointer, you can argue that given the platform and availability, Nigerians will quickly embrace ecommerce, as many people now buy their local flight tickets online instead of going to join long queues at airports and ticketing offices.

What do Nigerian customers want in order to embrace ecommerce? Nothing out of the ordinary, consistent, reliable, and easy-to-use internet service, secure platforms to carry out ecommerce activities, good ecommerce applications that give good user experience, ease of use and ease of product  selection. With the speed at which Nigerians have embraced mobile devices like blackberries, ipads, and iphones, I see a huge market, untapped, and virgin, who will be bold enough to take it?

The way forward?
  1. The government needs to get more involved in the growth of the internet in Nigeria, no amount invested is too much, the opportunities are immense and almost unlimited.
  2. The SMEs need to take the bold step and start venturing into this almost barren land, there are loads of opportunities to take advantage of, and I bet the first few who take the bold steps will reap bountifully.
  3. Awareness must be increased, telecommunications companies can take the front row in this regard, pushing out information to users, working in partnership with ecommerce website owners and the government to form partnerships.
  4. SMEs should start outsourcing some of their services to ecommerce providers, stores like shoprite, park n shop, and game can outsource their online sales to companies like PerrySolution (http://www.buydirectfromusa.com/)who currently give their customers the opportunity to buy from USA and ship to Nigeria.
  5. International cooperation with bigger ecommerce giants in Europe and America.
  6. The banks need to step up their game, and provide secure and efficient means for funds transfer, an awareness campaign to increase confidence in card online usage should also be aggressively embarked on.

Written by Ifeoluwa Adebayo

References:
Small Medium Developing E-Commerce Pulled GDP Growth of China -  http://www.pressabout.com/small-medium-developing-e-commerce-38716/
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