Online stores, such as Konga and Jumia have achieved about $2 million turnover per week (about N1.5 billion monthly), FBN Capital, an investment and research firm, has said.
In a report on the subsector released at the weekend, the firm said one roadblock in the online retail market is data security, reduces the frequency of online purchases. It regretted that many Nigerians still prefer the traditional retail channels because of this.
It said the retail industry has become sophisticated, evolving from open-air markets to modern malls and online shops.
“Small and medium-sized enterprises (SMEs) are now primary drivers of growth for e-commerce. Cost reductions and improved marketing reach are two of the main advantages which electronic platforms offer. Future growth will very much depend on the evolution of internet penetration.
According to the Nigerian Communications Commission (NCC), active internet subscription via GSM was estimated at 83.2 million in February, equivalent to a penetration of 49 per cent,” it said.
It explained that based on reports, countries with highly successful e-commerce industries, such as the United Kingdom, the United States and Norway have correspondingly high Internet penetration rates of 87 per cent, 81 per cent and 95 per cent.
It said recently, online retail platforms, such as Konga and Jumia have been seeking ways to incorporate SMEs into their marketplace to drive business. This, it said, has assisted in bridging the gap between consumers and access to products.
It explained that the Central Bank of Nigeria’s (CBN’s) cashless policy encourages electronic-based transactions and has been of great benefit to online retailers, given that they rely on e-payment portals to secure order placements.
The investment and research firm said further steps by the CBN could drive financial inclusion which would increase the retailers’ customer base.
“In the medium term, we expect e-commerce’s contribution to Gross Domestic Product (GDP) to grow to a mid to high single digit percentage (from approximately one per cent based on 2013 data).
However, the FGN will need to provide stable and high-speed broadband. For now, broadband speed remains low. The communications technology minister, Omobola Johnson, recently disclosed that the national average broadband speed stood at 4.7Mbps,” it said.