E-commerce in Nigeria: how Jumia, Kaymu and Jovago are taking over Africa’s biggest market

If Nigeria is “Africa’s India”, it’s for the sheer size of the market – 170m people now, 440 m by 2050 – and because with a GDP growing between 4.5 and 9% each year over the past decade, there is now a small but growing part of the population able to buy online, to travel, and to consume content from the local Nollywood scene, as Nigeria’s film industry is known (it’s producing more movies than Bollywood).

The infrastructure, reputed to be among the worst in the world, is not preventing e-commerce in Nigeria to rise sharply, as Bloomberg Business states: “The number of payments in the country made by mobile phone more than doubled, to 2.4 million, in the first half of 2012, while Internet payments rose 9.3 per cent “.

Above infographics done by Jana, based on a survey of 600 consumers in each country

We’ve listened to and spoken to the three top e-commerce players during our trip to Lagos to attend the Mobile West Africa conference, here is a few more info.

Tapping the emerging wealth through e-commerce in Nigeria with Jumia

Yes, Nigeria is a complex market, but those daring will get early access to Africa’s biggest economy and population. If poverty remains a key issue (and is even growing as a share of the population – from 52% in 2004 to 61% in 2010), there still is a tiny majority of wealthy people and a growing number of go-getters for whom buying online is an act of differentiation and service.

Rocket Internet’s Jumia, the Amazon clone in Africa and the Middle East (dubbed Lazada in South-East Asian markets), is the clear winner today. As in other countries where it’s present, this venture is not so much about buying/selling online – which people like and know how to do ), but about setting up a viable infrastructure, both on delivery, with 200 vehicles roaming Nigeria’s top cities every day, and on payments, with cash-on-delivery being the most popular options. Nigerians don’t trust more scams than we do.

With more than $75m in funding from its inception, Jumia now has 600 employees, and a market share of 70% of e-commerce in Nigeria, this huge and fast-growing country. In 2011, the website boasted 100 000 visits per day, and they have served about half a million customers overall.

Merchants and e-commerce in Nigeria: a marketplace called Kaymu

Kaymu, the equivalent of eBay, makes an easy connection between sellers and buyers of goods, leaving the main pain point – delivery – up to the parties in the deal. Nigeria still being a feature-phone market, with not 10% of smartphone penetration, we saw how it was possible to optimize a marketplace on such phones.

Direct messaging between sellers and buyers, live to chat to mimic Nigerian previous fondness of BBM, and the “Snap and Share” feature to upload a product in two steps only made it a successful venture.

Kaymu also recently added:

• A Referral Program For Sellers, So That They Would Earn Money For Each New Enrolment
• A “Pathway” To Incentivize Them To Increase The Quality Of Their Service, With Gold, Silver And Bronze Badges Showing On The Profile Of The Sellers. Top Sellers Not Only Get Higher Visibility On The Website But On The Advertising Campaigns And Newsletters Of Kaymu.

In the landscape of e-commerce in Nigeria, Kaymu is a complementary brick to Jumia for a more B2B and merchant-oriented marketplace.

New travel behaviours in West Africa and Nigeria are Jovago’s field

Last but not least, we’ve met with Jovago, Rocket Internet’s startup dedicated to travel and bookings online (hotels, packages, etc). If only 5% of global travellers go to Sub-Saharan Africa, it is the fastest-growing destination in the world, with an average 12% growth last year, some countries peaking at 30%

Jovago founder Marek Zymslowski wraps up what is needed for his venture to top the hotel booking industry (still held by local player Hotels.ng – but for how long with the marketing power of Rocket Internet?) : “Quantity of inventory, quality of relationship with hotel Management and quality of information about the inventory is key”. You can read the transcript of his talk on Ventures Africa.

It’s very exciting to see how the growing wealth of Africa (not forgetting its inequalities – there is actually a bigger share of people living with less than a dollar in Nigeria than before) is shaping the regional tourism industry. At Lagos International Airport, on a given weekday, about 50 flights go to Nigerian airports (Kano, Abuja, Port Harcourt, etc), 33 to regional destinations (Accra, Nairobi, Cotonou, Abidjan, etc), and “only” 16 to international destinations, with only 2 transatlantic flights and half a dozen to Europe.

Of course, local players are not giving up, on Hotels. ng for the bookings or Konga.com for the online bazaar, but knowing both the spending power and the execution quality of Rocket Internet ventures, I’d bet more on them, at least to fill the traditional bricks of e-commerce in Nigeria