Andile Masuku
Andile Masuku

The reality of building an e-commerce business in Africa

By Andile Masuku Time of article published Jun 9, 2017

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For Etop Ikpe and his team at the Nigerian vehicle marketplace,, it is time to shake off the euphoria of closing a $5million (R64.14m ) Series A funding round that came courtesy of the Frontier Cars Group - a holding company backed by the likes of Balderton Capital, EchoVC, TPG Growth, and NEA.

Given the turbulent time Nigeria’s e-commerce industry has had of late, the significance of this achievement is not lost on me, but Ikpe and his team would do well to get on with the unenviable task of building a successful online business in one of Africa’s most challenging consumer markets.

Ikpe is formerly the commercial director of Konga - one of Nigeria’s largest online shopping platforms, and before that, he served as chief executive and co-MD of DealDey, a Nigerian Groupon clone.

Doubtless, he is an e-commerce veteran at this point, and in a recent podcast interview he granted, he outlined his company’s roadmap for the next 18 months (roughly the amount of time he expects Cars45 to burn through their newly acquired funds), and he gave his take on why Nigeria’s e-commerce scene hasn’t lived up to many of the heady expectations that many people had for the industry some five or six years ago. But first, some context.


Some would point to late July 2016, as the time when reality truly set in for even the most bullish proponents of Nigeria’s e-commerce industry.

That is when the Swedish investment firm, Kinnevik, released its second quarter report detailing the performance of its subsidiaries around the world.

It was that simple act of corporate compliance on Kinnevik’s part that would allow us all to get a sense of just how Nigeria’s biggest e-commerce platform, Konga, was doing.

I must admit that it is rather curious that journalists and tech commentators on the continent - myself included - had never before this thought to pore over Kinnevik’s results to check Konga’s pulse, and by extension, work out whether or not Nigerian e-commerce was growing as vigorously as hoped.

Nevertheless, perhaps the most shocking revelation contained in the report was that Konga only had 184000 active customers.

That translated to a measly 1.1percent of Nigeria’s population. To say that number was disappointing would be an understatement.

That news sparked hearty debate both on social media and in the blogosphere about why Nigeria’s e-commerce industry appeared to be stalling and regarding what interventions might be required to turn the situation around.

Nigerian angel investor and economics commentator, Eloho Omame, whose eloquent blog post on Medium entitled “Thoughts around Kinnevik’s half year report and the e-commerce industry in Nigeria”, was one of the more balanced and constructive, albeit online retail specific, reviews published on the topic around that time.

While Omame found the expectation that more and more Nigerians would transact online in the long-run sensible, she wasn’t entirely convinced that the Nigerian market had the capacity to support both Konga and its Rocket Internet-backed competitor Jumia - operating at scale.


She also challenged the commonly-held oversimplifications that didn’t adequately account for how expensive and time-consuming it would be to carry out the tough chore of converting a meaningful portion of Nigeria’s cash-loving populace into savvy online shoppers.

And with Nigeria’s two biggest e-commerce players miles away from achieving profitability, Omame argued that the e-commerce sector was in no position to demonstrate, beyond a reasonable doubt, its viability in the short to medium term.

Whatever your speculative take on the potential of Nigeria’s e-commerce scene, it is now abundantly clear that failing to take into account the unpredictable, complex and often counter-intuitive characteristics of African markets is not a plan.

Just ask the folks at Groupon, who, after six long years of trying to make a go of it in South Africa (the "sure-thing" market), withdrew a little over seven months ago with their tail between their legs.

While defending the lofty expectations that were set for his industry some years ago, Ikpe admitted that there were some reckless statements, but argues that given the pummelling Nigeria’s economy has taken in the last two or three years, e-commerce has done as well as can be expected under the circumstances.

Andile Masuku is a broadcaster and entrepreneur based in Johannesburg. He is the executive producer at Follow him on Twitter @MasukuAndile and The African Tech Round-up @africanroundup

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