Interview: Juliet Anammah
To what extent did the Covid-19 pandemic influence e-commerce in Nigeria?
JULIET ANAMMAH: Before the pandemic e-commerce retailers thought they were in a business of convenience by providing consumers and sellers with a platform where they could interact – which is convenient if you are not able to go to the store. After the start of the pandemic e-commerce became a necessity because of the health implications of buying in person. Moreover, due to lockdown measures and curfews, many retail outlets were not operational, and e-commerce became essential.
The pandemic triggered a shift in consumer mindset regarding e-commerce, away from largely purchasing discretionary items such as electronics, towards buying basic items that are needed on a dayto-day basis. It is when a consumer uses a platform to purchase essentials that it becomes an essential service. The consumer mindset is difficult to change, and drastic shifts often require crises such as the pandemic. It is expected that across Nigeria and Africa as a whole consumers will consider buying something online as part of their essential toolkit beyond the end of the pandemic. On the sellers’ side, we saw that retailers who were not already online when the health crisis hit were the most disadvantaged, as they lost most of their business. However, those who were already online managed to maintain at least part of their revenue stream. As a result, we have seen a significant increase in the participation in e-commerce by Nigerian small and medium-sized enterprises (SMEs), which has brought stability to an otherwise volatile economic environment.
How can e-commerce contribute to a more efficient logistics environment in Nigeria?
ANAMMAH: While there are global, transnational logistical issues that retailers face that are not easily resolved, there is a wide array of tools available for online retailers to increase efficiency. For example, data analysis can help companies understand consumer interests and fluctuations in purchasing behaviour to predict demand, as well as help secure the appropriate quantity of stock. In doing so, retailers can deploy their working capital effectively.
Many financial institutions are interested in providing loans to e-commerce retailers. However, they require historical data to offer a risk-assessed loan. E-commerce platforms can offer information that enables retailers to access capital. In that way, online retail platforms can act as a financial facilitator and bring capital to retailers. Using data to plan for the future is part of what makes e-commerce more efficient than in-person commerce. Looking to the future, it is possible that e-commerce platforms will be able to pool logistics capabilities and deliver for multiple retailers, leveraging the central position of platforms and efficiently serving a wide range of consumers and retailers with a single service.
In what ways will regional trade agreements affect Nigerian SMEs in retail?
ANAMMAH: The African Continental Free Trade Area is an opportunity for Nigeria. While there is some cross-border e-commerce, the agreement will help these transactions expand. SMEs in particular are set to benefit. While large enterprises are active in taking advantage of the opportunities in e-commerce, there remain hurdles in terms of onboarding and educating SMEs in the use of e-commerce platforms. Once smaller companies are comfortable selling online within Nigeria, they will be able to move beyond national borders and interact with consumers across the continent. Much of the work has already been done: just by joining an international platform, businesses gain international clientele. Overcoming these challenges will help unlock Nigeria’s potential as an online retail giant.
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