Lagos is Nigeria's commercial capital. But it is impossible to shop there. There are only handful of shopping malls for a city of 20 million people. On top of this, most of the branded products present in shopping malls are fake. People who are rich enough, go New York or London to shop.
In order to overcome these challenges, Jumia introduced cash on delivery (similar to Indian market) and they have built a large delivery force.
Things are made difficult by the fact that commercial rent is very high. So traditional retail formats become unprofitable because of high rents. This presents an opportunity for e-tailing in Nigeria.
Jumia is the only online shopping business in Nigeria. Such e-tailing businesses present a solution to the problem of vast demand supply gap. Road to creation of this bridge is made easier by the fact that Nigeria is smart-phone crazy. So access to internet connectivity is not an issue. But challenges do exist:
- Providing original branded products with reliable delivery times.
- Overcoming resistance to pay online without having received the products.
In Nigeria e-tailing is not just conversion of a brick and mortar business model into e-commerce. It provides solution to Nigeria's problem of shopping. As a result they don't need to play on prices and discounts.
Source: Economist
Regards,
Rahul Sharma
12DM-110
E-Bus, Section-B
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