E-commerce spending in Nigeria has grown to $ 13 billion annually and is expected to hit $ 75 billion in revenue annually by 2025, according the Federal Government.
Nigeria has experienced a significant shift in consumer behaviour
over the past decade, largely due to the rise of e-commerce as the convenience
of being able to purchase products from the comfort of their homes or offices
has made online shopping the preferred option for many Nigerians.
This according to stakeholders has revolutionised the
Nigerian retail landscape, opening up new opportunities for consumers and
businesses.
With almost half of the Nigerian population having internet
connectivity, Nigeria is one of Africa’s largest consumer markets and the market
is projected to increase by 25.5 per cent in 2023, contributing to the
worldwide growth rate of 17.0 per cent in 2023.
According to ecommerceDB, five markets in Nigeria majorly
contribute to the growth of e-commerce: electronics & media (39.3%), fashion
(22.3%), furniture & appliances (15.7%), food & personal care (12.7%)
and toys (10.1%). As mobile phone proliferation increases, Nigerians can now
shop with just a few clicks on their phones, enabling them to access products
nationwide.
The COVID-19 pandemic has accelerated the adoption of
e-commerce in Nigeria, with consumers turning to e-commerce platforms for their
shopping needs due to lockdowns and restrictions on movement.
Despite the continuous rise of e-commerce, some challenges
still need to be addressed. One of the major concerns is the issue of trust, as
many Nigerians still doubt online shopping, preferring to physically inspect
and purchase products. Also, the lack of a reliable and affordable logistics
infrastructure in Nigeria remains a major barrier to the growth of the
industry.
However, many platforms are actively addressing these
concerns to build consumer trust and confidence. One of the most effective ways
e-commerce platforms build trust is through pay-on-delivery services, where
customers only pay for their products when they receive them. Additionally,
many platforms now offer a return and refund policy, allowing customers to
return products that do not meet their expectations.
The growth of e-commerce in Nigeria is undeniable and has
been fueled by the increasing shift in consumer behaviour towards online
shopping. Consumers are now more comfortable with the idea of making purchases
online, driven by the convenience, availability, and better prices offered by
e-commerce platforms like Jumia. With the trend showing no signs of slowing
down, the e-commerce industry is expected to continue to experience significant
growth and evolve in the years to come.
Initially, consumers were primarily interested in
electronics and gadgets due to the convenience and price differentiation that
online shopping offers. However, the COVID-19 pandemic and subsequent lockdowns
and social distancing measures led to a significant shift in consumer behaviour
towards everyday products and consumables, including fast-moving consumer goods
(FMCG), fashion, and beauty products.
The rising inflation in Nigeria has had a significant impact
on consumer behaviour, with many Nigerians turning to e-commerce platforms for
competitive pricing. As the cost of living continues to increase, consumers are
becoming more price-sensitive and looking for ways to save money. E-commerce
platforms like Jumia offer competitive prices and deals, making it an
attractive option for consumers. Online shopping also allows consumers to compare
prices across different platforms, giving them the opportunity to find the best
deals. With inflation showing no signs of abating, it is likely that more
consumers will continue to turn to e-commerce platforms to save money on their
purchases.
Discount sales like Black Friday, Tech Week, and Brand
Festival have also contributed to the growth of e-commerce in Nigeria, with
consumers taking advantage of discounted prices and deals. Even grocery
shopping is now being done online, with platforms like Jumia offering consumers
a wide range of grocery products. Consumers can now order groceries online and
have them delivered to their doorstep, saving them time and money.
Another factor driving the shift of consumers towards
e-commerce in Nigeria is the increasing use of mobile devices. According to a
report by GSMA, there were 173 million mobile subscribers in Nigeria as of
2020, representing a penetration rate of 85%. With the widespread use of
smartphones, consumers can easily access e-commerce platforms and make
purchases on the go.
Furthermore, the shift towards online shopping is not only
limited to the urban areas of Nigeria but is also gaining traction in rural
areas. E-commerce companies like Jumia have been expanding their reach to rural
areas to cater to the growing demand for products and services often neglected
by offline retail. This trend has opened up opportunities for small and
medium-sized businesses in rural areas to reach a wider market and expand their
customer base.
Stakeholders concluded that e-commerce is here to stay in
Nigeria, and stakeholders must continue to adapt to this changing landscape. By
embracing e-commerce and implementing strategies to overcome the challenges it
presents, businesses can tap into the vast potential of the online marketplace
and reach a wider audience.