Same as the infographic but meant to be used in a presentation or to be read like an ebook

1. The Challenges of
E-Commerce
Businesses in
Nigeria.
Stanislaus Martins

2. The Challenges of E-Commerce Businesses in Nigeria.
Content
Logistics 1
Marketing 2
Business Model 3
Technology 4
Payment 5
Product Sourcing 6
Users 7
mart ns
c m.ng#themartinsblog!
.

3. I
wrote about e-commerce as a whole in Nigeria. As
part of the article I touched a bit on the challenges of
running an e-commerce business in Nigeria. The
article got a bit of attention online so I decided to do a
follow up and focus on the problems of running an e-
commerce business in Nigeria. If you are thinking of
getting into this space in Nigeria then you really should
consider reading this first.
I am writing based on my knowledge of the industry and
also speaking to various stakeholders. I have tried my
hands out on a small e-commerce platform myself but
had to close shop pretty quickly due to all of this
challenges.
The Challenges of E-Commerce Businesses in Nigeria | i |Stanislaus Martins w w w . m a r t i n s . c o m . n gme@martins.com.ng
ImageCredits:pexels.comFreeimages.com
... a while backmart ns
c m.ng#themartinsblog!
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4. Logistics is probably the number one challenge. You hear the word “Logistics”
used to stand for just about every imaginable problem here in Nigeria. When a
platform owner talks about logistics challenges, he’s talking about how difficult it is
to get products from the sellers/distributors/warehouse to the buyers in an efficient
way. He’s talking about infrastructural limitations that are taken for granted in more
developed markets. Bad road networks makes it extremely difficult to get products
delivered to buyers. Lack of warehouse space or an efficient warehouse
management system makes it difficult to stock more items and deliver them in a
timely manner to buyers. When you talk about logistics you are talking about
everything that makes it efficient for you to move goods to buyers. Anything that
gets in your way of achieving this is a problem.
E-commerce players are taking logistics into their own hands. We are seeing
players launching their own logistics companies, launching fulfilment centres and
appointing on-ground sales reps all in the bid to end their logistic woes. The
infrastructure to power e-commerce just isn’t there right now. Government and
private players should see this as an opportunity waiting to be tapped.
Logistics1
The Challenges of E-Commerce Businesses in Nigeria | 1 |Stanislaus Martins w w w . m a r t i n s . c o m . n gme@martins.com.ng

5. Most of the players in the space are relatively newcomers, they are unknown.
To create awareness in a new market, you need to market your brand and your
offering to consumers. The cost to do this for small players can be very
prohibitive. Building a reputable brand will require working closely with a reputable
brand / Advertising agency. Brand building takes time. A brand helps people trust
your communication and proposition.
E-commerce players need to be ready to be in it for the long haul as the market
isn’t mature enough for them. One big mistake many of the players make is
thinking online advertising is that’s needed. Online advertising only reaches
people who are online. Having an integrated campaign helps plan communication
across a potential customer’s journey - From print to radio, TV and online.
Marketing2
The Challenges of E-Commerce Businesses in Nigeria | 2 |Stanislaus Martins w w w . m a r t i n s . c o m . n gme@martins.com.ng

6. The business model of many of the players makes competitiveness with the price
and quantity obtainable in the open market impossible. The open market is almost
always guaranteed to be less expensive than prices found online(Except you are
shopping on a classified ads site like Jiji and OLX).
Notice how top players have switched to a marketplace model? This helps them
address a number of the logistic issues while also being plagued with new
problems like quality and experience.
A marketplace model helps increase your offerings and also reduces your
warehousing requirements. As a marketplace, you become an aggregator of
products and this significantly increases your inventory without burdening your
warehouse.
Business Model3
The Challenges of E-Commerce Businesses in Nigeria | 3 |Stanislaus Martins w w w . m a r t i n s . c o m . n gme@martins.com.ng

7. The Challenges of E-Commerce Businesses in Nigeria | 4 |Stanislaus Martins w w w . m a r t i n s . c o m . n gme@martins.com.ng
Probably not as big an issue these days but thought to mention it nonetheless.
Everyone uses the same underlying technology. While not a problem, every site
looks just like the other and user experience is simply not top notch. You will know
what I am talking about if you have shopped on international sites.
Building an e-commerce site on Wordpress and installing plugins is great for a
start but several of the biggest players in the world develop their own proprietary
platforms and continue to tweak it based on user feedback. For a stable hosting
requirement your best bet is a scalable host like AWS and Azure.
Technology4

8. The Challenges of E-Commerce Businesses in Nigeria | 5 |Stanislaus Martins w w w . m a r t i n s . c o m . n gme@martins.com.ng
This one na die. We probably invented “pay on delivery” here in Nigeria. We had
to. Nigerians don’t trust online sites with their cards.This model is extremely tough
to sustain. It’s very expensive to maintain but we can make it work. With only
200,000 ATM cards reported to be active in Nigeria, it only makes sense to try to
include those without the cards in the mix.
Payment on delivery is not going anywhere anytime soon so we just need to get
creative with how we use it. I hear some players are planning to stop using it,
would be nice to hear how that is working out for them. Asides the payment on
delivery challenge, the experience of paying online can also be very frustrating,
sometimes it works sometimes it doesn’t. Sometimes your money is deducted and
you still get an error from the platform.
The online payment space is improving I must confess with several new players
getting involved. The “local champion” in this market is obviously Interswitch (They
like to call themselves a startup but really, who are they kidding?). Other notable
online payment players are Unified Payment, Paga, Eyowo, PayStack, SimplePay,
CashEnvoy and VoguePay. SMS and USSD are the norm in several African
countries, it would be great to see brands using this to drive e-commerce payment
on the continent.
Payment5

9. The Challenges of E-Commerce Businesses in Nigeria | 6 |Stanislaus Martins w w w . m a r t i n s . c o m . n gme@martins.com.ng
How do e-commerce players get their products? Do they get them directly from
the manufacturers, a major distributor or in most cases do they just rely on a seller
in computer village for example?
Many players don’t have a reliable source of getting the right products at a good
rate and on time. If your business model is a marketplace sourcing products might
not be your concern. When you run a marketplace it’s also difficult to totally
control quality of the same product being offered by several merchants.
Product Sourcing6

10. The Challenges of E-Commerce Businesses in Nigeria | 7 |Stanislaus Martins w w w . m a r t i n s . c o m . n gme@martins.com.ng
Read my piece on the number of internet users in Nigeria. With less than 200,000
registered debit cards in Nigeria the number of people who can shop and pay
online is limited. We simply don’t have enough people online yet. We need to
bring new users “online” to shop.
I personally think the real numbers of Nigerians online is at most 35 million.
Compare that number to the number of active shoppers on Konga you know
something is wrong.
We need to find ways to make it easier to convert more users to buyers. We need
to also focus on how to make it easy to bring more people online and also make it
easy for them to pay for what they want.
Users7

12. With over 10 years experience in the Digital and Technology space in
Nigeria, Stanislaus Martins is a solid fusion of Technology and Marketing.
He is a professional photographer and creative at heart.
Stanislaus likes to talk Innovation, Technology, Digital and Marketing.
He is currently Head of Digital at Insight Publicis, one of the top marketing
communications agencies in West Africa.
w w w . m a r t i n s . c o m . n g
me@martins.com.ng @OlusegunMartins@StanDMan
...about
w w w . i n s i g h t n i g e r i a . c o m
The Challenges of
E-Commerce
Businesses in
Nigeria.