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    Tuesday, May 9, 2023

    Nigeria’s e-Commerce Spending To Hit $75Bn By 2025

    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.

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