Konga, Jumia battle for Nigeria’s online billions

It’s 2013 people and the world has indeed changed, thanks to technology without a doubt making living easier, especially when it comes to buying and selling. Who would have given a ‘third world’ country like Nigeria a chance? Back in the 90s, the giant of West Africa made up a small percentage of electronic consumers let alone determine how the market swayed. But with the advent of the internet available for commercial use in the late 90s and mobile telecommunication introduced in 2001, things changed, rapidly. With mobile companies like Blackberry, Samsung, Nokia and lately Huawei already admitting that there is a strong market here, it’s almost clear to see that Nigeria is a ‘tech gold mine’ which will be ripe to harvest in a few years.

TO THE INTERNET PROPER

As at 2010, sourcing the World Bank, several reports revealed that the percentage of users of the internet in Nigeria was about 25 per cent, that’s over 40 million Nigerians with access to the world wide web. Two years after, Minister of Information Labaran Maku says we have over 48 million users. It’s a sharp increase if you think about it: in 2000, Maku says, there were only 200,000 internet users. And now more investors are trooping in, not just the mobile or media companies like Iroko (who have already started cashing out after setting shop in the country), but interestingly, a few multinationals in e-Commerce also ready to invest.

SAY HELLO TO JUMIA AND KONGA

Some of those companies include two major online stores JUMIA and KONGA who are doing just about anything to win over the average Nigerian’s heart towards them – the end game being that they’ll make billions in the future. JUMIA which was formerly known as Kasuwa (the company rebranded) launched in Nigeria, June 2012. It is headed by Tunde Kehinde, and Raphael Afaedor with major financial backing from a US leading asset manager for institutions, individuals and financial intermediaries worldwide J.P. Morgan Asset Management. In less than a year, JUMIA has become the number one online retail store for Nigerians to access with ease and shop for just about anything ranging from home appliances to clothing.

KONGA on the other hand launched less than three months later; it is a sister company to another blooming online store DealDey (set up in 2010 and runs on an alternate selling scheme). Both companies are owned by multi-billion Naira multinational ‘e-Motion Advertising’. Also in 2012, it was reported that e-Motion Advertising had acquired fashion online retail store 3 Stiches. The 3Stiches.com website now redirects to DealDey.com.

It’s interesting to see how all these power moves are being played; buy outs and mergers. It’s evident the stores are all modelled after Amazon, the world’s largest online retailer and arguably the most successful internet empire on planet earth. ‘They’ve seen the potential in the Nigeria, they know money can be made, they’ll plunge everything they’ve got into it’, Sola Fanawopo who is the Editor-in-chief at Financial Technology magazine, explains.

LEARNING FROM OTHERS’ MISTAKES

Why did Naspers shut down Kalahari.com.ng in 2011? Why did 3stiches sell to DealDey? It’s also evident that Nigeria is still a growing country, nothing can be predicted and therefore making long term decisions can be costly. While other online companies like clothing online store Tafoo are barely hanging in there, JUMIA and KONGA have excelled, with the latter catching up fast. They both however look quite confident about it. ‘They learnt for the other companies’ mistakes. They know what not to do, what to invest in, resources like man power, location, other factors too. Jumia and Konga are the newest brides in town. People will want to do business with them’, Fanawopo also explains.

THE BIG BUDGET INVOLVED

According to inside sources, JUMIA spends about N300,000 on online advertising, daily. That explains its omnipresence on the internet for the last few months. Add that to the many billboards splattered across Lagos, the commercial nerve of the country. KONGA we are told spends less but still a very huge amount, on online advertising. Both companies use the easiest form of advertising on the internet – Google Adwords.

POWER MOVES AND COMPARISON

Both companies are now seen as rivals and are competing for the number one spot – to be the Amazon of Nigeria (possibly West Africa) in the nearest future. KONGA boasts of about 130 staff, JUMIA slightly more. JUMIA have already kicked off a charitable campaign ‘Jumia feeds Lagos’ which involves a handful of celebs giving out food supplies to impoverished communities in Lagos. Konga on the other hand is still settling down and working out new strategies. Just last week, they unveiled singer Omawumi as a brand ambassador.

In April 2013, Onyeka Akumah, former Head of Marketing and Partnerships at JUMIA joined rival firm Konga as VP, Marketing, in a move that many say, is symptomatic of the growing rivalry between both retailers.

With JUMIA and KONGA doing increasingly well (neither is profitable yet, but experts and insiders who have access to information on their revenue say the future looks very bright) and with more and more Nigerians shopping online, what will be the fate of physical retail stores like Shoprite and the many others at the city malls? ‘Well, I think it’ll take some time before we can say give a clear statement for that’, Fanawopo explains. ‘What’s helping these online stores is that most of the products they sell don’t have stores of their own in the country. Why would I go to JUMIA or KONGA to buy a GUCCI wristwatch if GUCCI had an online store in Nigeria?’.

PROBLEMS, PROBLEMS, PROBLEMS

Delivery: While JUMIA tells us it’ll take them 1-5 days to deliver, KONGA says 1-3 days – but there have been issues on several occasions, according to a quick street poll NET conducted last week amongst 20 people who live in the Ikeja environ of Lagos, and have shopped from both stores shows. Eight persons think JUMIA is better; another eight preferring KONGA and two giving major complaints about both; referencing delivery time, payment and customer support.

Payment Method: Joseph (not real names) says he had major issues with JUMAI earlier in February when he bought from their store a blouse for a friend. JUMIA sent him a mail days later that the dress was out of stock and that he should pick another one – this went on for weeks and he then noticed it might have had nothing to do with the product item but that they were having issues clearing debit card payment with the Bank where the money was to be deducted from. ‘They kept telling me to reorder. It was frustrating but after I did thrice, my item was delivered to me’, said Joseph who admits it was quite different when he bought a BENQ camera from the same store but this time paid cash into their account.

There are few more Joseph’s out there but the occasional hiccups are bound to occur, other than that it looks like these online retails stores are here to stay. Question is: who will last? And who will fall by the way side? Time, and other factors like internet penetration, mobile money, influx of global big brands and others will determine…

By Osagie Alonge