Thursday, August 16, 2012

Kasuwa, Jumia, Konga, Kalahari and the business of making money online in Nigeria



I have always wanted to write something about this group of people for a while. They have something in common. They are e-commerce sites and they are modeled after the success of Amazon.com. Amazon is the world’s largest online retailer and one of the most successful internet empires on the face of the planet. However, duplicating Amazon’s success has been a bit of a challenge in sub-saharan Africa. Naspers closed its operations in Nigeria in 2011 after stating that its ability to make near-term profits wasn’t probable. It shut down Kalahari.com.ng in both Nigeria and Kenya at the same year. It commenced operations in Nigeria and was only alive for twenty months. It sounded like a less-strategic move as one would wonder “I thought they said Africans were consumers, why then did Kalahari fail?”. I think Naspers failed on the Kalahari e-commerce projects as it didn’t really understand the terrain it was playing in as well as logistics problems it encountered. I’ll explain a bit further. Online business in Africa, especially Nigeria is a bit of a challenge.


What is Nigeria’s problem (really)?

A lot. Not exactly a lot but Nigeria has a lot of challenges on issues pertaining to the internet. One is the speed of the internet service providers. Another is their reliability of these service providers. You won’t understand this until I illustrate this. Imagine you needed to get something important from the market  and the buses (ISP) to convey you were not available, what will you do? Sit at home. Nothing ventured, nothing gained. In this case you cannot trek (surf without connection). The way forward is to either wait for the buses or take another kind of vehicle, maybe a plane but then it is more expensive. Another problem is power and electricity. This means that the buses needed to transport you are available but there’s no fuel in it. So how do you get to the market. Yet another is the slow adaption of Africans to internet banking, credit card scam fears and the cash-carrying culture. What does this imply, I finally access the stores and I cannot make purchases because I don’t have electronic money. So, business cannot be done. The last of the major problem should have been the first. How much are people aware of your market. For God’s sake, am I a wizard? How on earth would I know that there’s a market in Nigeria called the Tejuosho market if you don’t scream about it? Please you must advertise.

Does the online strategy work at all in Nigeria?

Did you just ask that question? Are you kidding me? It does! You require strategy and money or patience and consistence? Or you require both. There are a couple of sites that have made a lot of money online. Let’s forget the information sites such as BellaNaija and LindaIkeji. Let’s leave out all the newsy, newspapery, bloggy and techie sites that are strewn all over the internet. Let’s ignore the dominance of forum sites like Nairaland and Naijahotjobs. Let’s forget the traffic-pulling service jobsites such as Jobberman and LatestNigerianJobs. We should overlook the necessary-evil sites such as the banking sites and public service sites. Let’s look a bit more at some success stories in e-commerce. I’m typing at the speed of a cheetah and might leave some important ones out by mistake.

1.     Dealdey.com: This site has with customer service, innovation, capital and media support stayed above the pack and shown that e-commerce can be  viable in Nigeria. It offers discount-buying in the likes of sites like Groupon.

2.     Buyright.biz: One of the earlybird online shopping sites in Nigeria. They had/have the Kasuwa kind of interface and were not doing so bad online. At that time mobile money payment was non-existence and it was harder to do business but they thrived.

3.     Konga: This site is niche specific (beauty and cosmetics) and is a sister company to Dealdey. They are not doing badly at the moment.

4.     Taafoo.com: And when all hope seems to be lost, while Kalahari makes its sad exit, Taafoo thrives on.

5.     3stiches.com: I have also watched this site grow and the response from people has shown that it is an active clothing store. This online clothing brand has against all odds grown. Maybe it is because Nigerians love clothing accessories. Maybe it's their business strategy but 3stitches remain nevertheless.

These sites listed above have continually evolved (not all) to fit the demands of their consumers and are all general merchandise e-commerce sites that easily and readily come to mind because of their strategic advertising.

Other categories that are not shopping sites:

Iroko TV: Jason Njoku’s brainchild will continually explode because it has a hungry market and he has been able to evolve his business as the market evolves and demands more.

Bloovue: Is an online advert publisher that is beautiful to see.
Paga: Mobile payment platform

Hello world, we have brains in Nigeria?

It’s time to stop all the unfound comparisms between African tech startups and Global established brands. Come on! If we establish Iroko TV, they will quickly say it’s the African version of Netflix. Then Dealdey is like Groupon. Spinlet is like Spotify. Adplacers is like Google Adsense. Yookos is like Twitter. SearchNigeria is like Google. The list is endless.

The truth is that most African techpreneurs think about some of these startups but funding and facilities are major issues. This is why some successful businesses online set up the site operations and management outside Nigeria and do their logistics in Nigeria.

I have thought about several ways that would enable people order for Pizza online and pick it out of the next Piz-vend machine with voice prompts (just kidding). But we have a lot of ideas brimming in Africa but investors do not see the profitability in them quickly.

Some people spend a lot of their life coding and developing a certain kind of website and then the problem becomes marketing.


Is there still space for techpreneurs?

Hell yes! There’s a lot of ground to be covered online. We need people to support, develop ideas in those capacities.

Agriculture: We need online farms. We need online farm produce distributors. People should be able to get fresh tomatoes online, delivered to their homes or offices.

Niche specific markets: You don’t want to compete with Kasuwa (Jumia)if you don’t have the logistics in place. You may just end up swallowed by competition. Niche specific markets such as justbags.com, shoedomain.com, brazillianhair.com will work in a Nigerian market.

Location-specific markets: They will work too. You don’t need to be everywhere immediately. Online businesses such as yabamarket.com will always ring  in the minds of people living around Yaba axis that they can make order and get deliveries on that site.

Online studios such as online television stations, online radio stations has the chance of blooming. We still need locally relevant money-exchange systems like Liberty Reserve. We need sports-booking sites like Nairabet that can accept payment online and stop using agents. We need . We have onlinenaira.com already. We need online cartoon sites. Spicebaby.com is doing great at west African cuisines cookery online.
I can go on and on.

Back to Kasuwa and Jumia

I wonder why they changed their name from Kasuwa to Jumai. I personally admire the name Kasuwa and I was thrilled to watch them climb out of oblivion into number 24 of the Alexa’s list of top 500 most visited sites in Nigeria. They achieved this in a space three months. It would be foolish not to acknowledge how much they have spent and how their ads are splattered on all google adsense sites in Nigeria as well as on Facebook ads. Kasuwa has grown rapidly and steadily and I have watched them increase their products catalogue with the passage of time. Immediately I read of their name-change on CP-Africa to Jumia, I facebooked the name Jumia and saw it existed in Egypt with 10,000 likes. So, I wondered if Nigeria’s biggest shopping site was in the process of being acquired by Jumia. I am a bit disappointed at the name change. I feel it is a bit too early and a bit too hasty and done probably too excitedly. The name Kasuwa goes perfectly with its sister brand Sabunta. This name change reminds me too quickly about Econet Wireless Ltd. We believe Kasuwa will continue to give its first rate service delivery however.

This was supposed to be a tweet. I wonder how it became a long story. What are you questions, comments, opinions and grievances. I’d like to hear from you.

You can follow me on twitter http://twitter.com/segunsd
Or email me on segunsd@yahoo.com

25 comments:

  1. Nice and enlightening piece sir.... I ve read through... but these piece is worth studying.... i will make more comment after my study... more grease to ur elbow

    ReplyDelete
  2. Good day sir,my names are Amusa Olaide from Abuja. It has been long since I have been looking for some one to talk about this is of several online or e commerce business. My question is how genuie are this online names,most especially jumia. And pls.kindly recommend some trusted sites for laptop computer and accessories,electronics and office equipment to me. My e-mail is amusaolaide@rocketmail.com or larredo2010@gmail.com or 07033283548. Expecting to hear from you soonest.

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  3. Segun, this is a well written blog on the state of e-commerce in Nigeria. There is only one miss. You have forgotten to mention www.ngpricehunter.com which is has become the solution to the Nigerian E-commerce jungle. As many online shops spring up, shutdown or change name, NgPriceHunter.com which is Nigeria's leadinga nd most popular price comparison website keeps shoppers updated about the best prices from different shops. Ngpricehunter.com solves the problem of which site is genuine because they vet the shops that they list their products and prices. What blows my mind is their business model.

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  5. where did you put www.ladiesshoewarehouse.com???

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  6. It all started at www.mygadgetsmall.com. I've bought from them as far back as early 2009 and they're still running. I think they showed foresight in providing the online shopping option to Nigerians, well before we got to Kalahari or more lately Jumia/Kasuwa, Konga/Dealdey and the rest.

    Got work you've done, though.

    ReplyDelete
  7. You are Not included few top listed websites like Jumia.com.ng , Mystore.com.ng and buyam.com.ng .
    They are good @ Buying Products online .

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