By Nkechi Isac, Abuja
As forex continues to bite hard on importation, experts in the ecommerce sector have frowned at the import dependence of the nation, urging Nigeria to develop its e-commerce base by promoting quality locally produced products.
In exclusive interviews with LEADERSHIP Sunday, e-commerce experts said promoting made-in-Nigeria products as the new economic frontier for the actualisation of the country’s pursuit of economic development and self-sufficiency will have positive impact on the nation’s economy.
In a chat with our correspondent, an engineer at an online platform, Woocommerce, Luminus Alabi, said Nigerians should look at developing and promoting quality locally made product in its e-commerce platform instead of trooping into an already over-populated foreign- based products.
He said, “Big stores like Konga and Jumia already have foreign investment in them,so they have access to forex, it’s not that a big problem for them. But for new entrants who are heavily dependent on imports, they have a big challenge because it is going to affect their bottom line.
“If all the products you’re selling is coming from outside Nigeria, then you can’t escape Forex. But we’ve got really smart and creative people in Nigeria. We have people that make fantastic stuffs with their hands, if those people get a chance to compete in the market place then you’re keeping the money circulating in the local economy.
“So, if you’re buying materials and charging customers in naira, then there’s no forex demand there. But if you have to import what you need, then the challenge now is to see how to shift our balance because there are already a lot of people importing phones. Do we really need people to be in the same business again? There are enough people importing phones and other electronics.
“If you want to go into that, then you’ll have to deal with the forex. If you feel that it’s the most profitable business for you to go into, then you’ll have to deal with the forex burdens and concerns”.
According to him, “there are local products. We should stop being an import dependent nation because we’re doing ourselves a great disservice.
“We can develop our local products and export. We do have local products that we can promote. You can buy local to grow the naira but it has to start from us as individuals”, he added.
Speaking in the same vein, the chief executive officer of WaveTek Nigeria Limited, Ken Spann, said new players in the e-commerce sector will be successful if they can include more locally made/produced products since the forex will have a significant impact on imported goods.
He, however, noted that e-commerce is not a get rich quick scheme which would yield profit spontaneously, saying it gulps huge capital and yields low but consistent turnover.
Spann said, “While one e-commerce firm, Jumia has invested over N24 million, it spends N40 million per month in advertising and only recently, became profitable in February of 2017.”
He added that investors must realise that e-commerce is not a get- rich quick scheme and that over time, the high turnover and lower returns will generate a sizeable profit.
“In some ways, it is similar to the grocery industry where in the US, the net profit is less than 1 per cent but they generate billons of turnover.”
He said the sector could also be strengthened by combining e-commerce with cloud platforms to eliminate intensive capital investments in traditional data centres.
He continued: “Firms that have robust cloud platforms will partner with e-commerce firms to provide low cost solid infrastructure. Investment in the proper infrastructure, preferably cloud is also important. Look for a rise of quality cloud platform firms partnering with the Kongas, and Jumias of the world to lower cost of e-commerce.
“Firms like SIdmach, is already a successful educational e-commerce company. Investing heavily in the Microsoft Cloud Platform will be an attractive platform for firms seeking their success in e-commerce,” he added.
The expert further said the sector is a goldmine that can contribute significantly to the nation’s GDP.
According to him, “In 2016, OmobolaJohnson, the former minister of Communications and Technology, predicted in the Oxford Business Group report that Nigeria’s e-commerce industry will reach a valuation of $10 billion in the years ahead, with some 300,000 online orders expected each day”.
Hachem, CEO of Aramex, one of the leading global providers of e-commerce, logistics and transportation solutions, with presence in 60 countries believes with others that by 2030, the Nigerian e-commerce market will reach $1.3trillon annually.
Speaking exclusively to LEADERSHIP, the chief executive officer of Media Range, Mr Hassan Abdul, said most of the challenges a lot of the big players face currently is unstable prices of items displayed on their sites by merchants.
He said there are now cases of customers’ orders being cancelled because by the time the site reaches out to a merchant that an item has been ordered, the prices would have changed in those instances.
“These didn’t use to happen before. Hopefully, as the exchange rate stabilises, this may become a thing of the past,” Abdul said.
He, however, said that newer entrants will find this more of a challenge than the big brands who have already built loyalty and brand equity over time. They also have bigger marketing budgets to play around with to help drive market penetration.
Abdul said for newer entrants, they will need to carve a niche or offer a clearly differentiated but related service such as experimenting with social commerce options.
“There is a lot of optimism though with a lot of foreign interest in investing in the e-commerce sector. In March last year for instance, Jumia raised $325 million in capital from new and existing investors. What is yet to be seen, despite all this potential, is more interest from local investors into technology as a whole and in e-commerce in particular,” he added.
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By Nkechi Isac, Abuja