No doubt about it, the multi billion Naira online shopping business space has come to stay in Nigeria but not of Nigerian or by Nigerian. Maybe not far away too, the brick and mortar retail may go the same way.
The business-like attitude to online retail really started with DealDey.com, the life is better online crooner, offering juicy daily deals for interested shoppers. The market entry pricing strategy offering huge discounts, sometimes as much as 80% off resonated with the target market. The bait had people flocking to the DealDey.com website to have a pick of juicy deals. And you could get just about anything on offer on the site.
Just name it, electronic gadgets, computing accessories and even discounted professional services. The business became so successful that one of the directors, Simdul Sagaya was convinced enough to launch his own dedicated online store, modelled after Amazon.com. He believed the market is huge especially with Nigeria’s teeming population. Thus began the story of Konga.com in June 2012 and the rest as they say, is history.
Sim Shagaya, though born in Nigeria, received most of his education in the US including an MBA from the prestigious Harvard Business School. He spent some time in the employ of Rand Merchant Bank in South Africa before joining Google and moving back to Nigeria to head the search giant’s strategy for the entire continent, excluding South Africa. While there, Shagaya started an out-of-home (OOH) business e-motion advertising, now managed by Paul Onyia as managing director and Tunde Folawiyo as Chaiman. You will recall that Folawiyo also sits on the board of MTN Nigeria and Access Bank Plc. E-motion advertising has grown to be one of the biggest in the OOH industry in Nigeria. He also invested heavily in DealDey and there is no information that he is out of the board of directors yet.
Konga.com, Nigeria’s biggest online mall invested heavily in advertising and the dividends are paying off. Its radio jingles have very catchy tunes that have several sing-along converts that are eventually led to visit and shop. It also launched its mobile app allowing users to shop from the comfort of their mobile devices and is very active on social media. Times are rosy and things are looking up for the retail giant.
However Konga.com today is involved in a long running battle with arguably its biggest competitor (?) in the Nigerian market, Jumia. If it were possible for Konga.com to have Jumia completely wiped off the online picture, it would. In January 2014, Konga.com threatened legal action against Rocket Internet because the latter had registered the Konga domain name in at least 11 African countries in a perceived attempt to stifle the growth of the Konga brand in strategic African markets.
Jumia, whose operations launched in May 2012 initially by Tunde Kehinde and Raphael Afeador, both Havard Business School graduates. Perhaps this duo and Shagaya even sat in the same class. After their initial efforts, the duo got funding from German-based Rocket Internet and as of today has successfully raised over $80 million in investment capital with Rocket Internet being the major investor in the start-up.
However, in the intervening period of two and a half years, there have been quite a few shake-ups in the Jumia boardroom. Tunde Kehinde resigned his position as joint MD/CEO in January 2014 and Raphael Afeador followed suit with both completely divesting from the company they founded. Since then Jumia has gone through a number of CEOs before currently berthing with Jonathan Doerr the current CEO. Speculations are rife that all the re-jigs in the company are planned and prompted from the Europe.
Albeit, these seeming boardroom issues have not stopped the company from growing stronger and improving its market share in the country. Jumia today is arguably positioned as Nigeria’s No 1 online retail store. The MTN group, through Africa Internet Holdings (AIH) owns a huge stake in Jumia through its 33.3% holding in AIH and Jumia’s site reflects this. It has the MTN badge throughout the site.
In between them, Konga.com and Jumia controls over 95 per cent of the online retail industry in Nigeria. Our findings are indicates that both entities are quite closer to each other than we may know of yet. In fact, one may be tempted to say Konga.com and Jumia are business cousins; AB Kinnevik, the Swiss based global investment company, became Konga.com’s lead investor. However, the company has a sister company, Millicom International Cellular S.A, who with Rocket Internet controls 66.6% of Africa Internet Holding stakes with MTN owning the remaining 33.3%. But Jumia is a company now wholly owned by AIH. Therefore, through webs of investors networks, someone, somewhere, who owns controlling interest in Kinnevik and Millicom, owns controlling interest in 95% of the online retail business in Nigeria! Never mind the facade of bickering.
The less than 10 per cent online market share split amongst many small players have AIH companies that currently play major roles in Nigeria’s online space, including EasyTaxi, Kaymu.com.ng,Â Carmudi, Lamudi and Jovago.com. So in actual fact, there really is no real competition in the bottom-line for these players. After all, the profits may end up in the same place. Other online retailers who are outside the portfolio of these acclaimed investors, such as Tafoo.com and zetashop.com.ng are being stifled in the marketplace.
In actual fact, the online retail space is not an open market. What we have is a monopoly with one entity controlling 95 per cent of Nigeria’s online retail market space through a web of networks of holdings and investments.
Meanwhile, managing importation of all manner of products, scarce foreign exchange, import substitution policy and taxation issues are subject for another day. We have several Nigerian allowance-drawing board members, employment for logistics, packaging and account clerks that are Nigerians, may be good enough compensation for now.