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How Jumia is trying to beat traditional retail in Nigeria

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A lack of availability and choice of goods, heavy traffic and ever-increasing smartphone and internet penetration in Nigeria, one of Jumia’s biggest markets, would seem to make online retail an easy decision for consumers. But, as Sefik Bagdagioglu, managing director of Jumia Market – an online marketplace through which small and medium enterprises can sell their goods – explains, the group’s biggest competition is still brick-and-mortar retailers.

Bagdadioglu spoke with How we made it in Africa about what Jumia is doing to try win consumers over in Nigeria.

In June this year, e-commerce company Africa Internet Group rebranded, becoming Jumia Group. The nine companies that fall under the group were renamed accordingly.What was the reasoning behind the rebranding?

The reasoning behind the rebranding is simple. Basically we had a lot of different brands and they were known in their own different realms. And we realised that we weren’t necessarily capitalising on the recognition of the rest of the brands. We decided that trust is a big issue – being associated with one company that people are comfortable with is super important. We looked around at our different brands and realised that Jumia was the strongest one – and because of that we decided to merge all the brands under the Jumia name.

Is Kaymu now Jumia market?

Yeah, we are Jumia Market. And Hello Foods is Jumia Food, Jovago is Jumia Travel. So basically, if you have experience with Jovago, but you never did anything from Kaymu, that meant that you didn’t know whether they were trustworthy or not. But if you have operations or dealings with Jumia Travel, then you know that Jumia Market is under the same umbrella. So it is basically easier for customers to associate themselves.

Do you have any serious competitors?

To be honest with you, in Nigeria specifically, there are a lot of e-commerce companies that come and go. All of them bring a different aspect of competition, but – probably the last thing you want to hear as a journalist – but I really, really stress that the main competitor has to be ourselves. Because we are not – and I repeat that, I can repeat to everyone – we shouldn’t be competing against each other, we should be trying to compete against the offline market, to disrupt, so that we can bring more people to online platforms.

So, to me, when you look at the market where more than 95% of the transactions still happen offline – I think it tells you who your main competitor should be.

What are some of the challenges you face with delivery?

I am going to say the number one thing is [cash on delivery (COD)]. It adds to the cost of delivery; it of course creates the trouble of trust; it is just not efficient enough. We still accept cash. By COD I mean that you receive the product, you inspect it, and if you do not like it you basically send it back, which is how it is supposed to be. But if you like the product, you pay the delivery agent cash, the delivery agent brings it to the hub, at the hub you do reconciliation, the money gets transferred and then transferred back to the sellers. It takes a long time and it is not the most efficient way. So I would say COD is probably one of the biggest challenges.

The second one is infrastructure-related issues. There is road infrastructure, there is energy infrastructure – that all adds to the difficulty of running an e-commerce company. And the third one I would say is the overall trust issue. People are still hesitant to embrace online platforms. We’ve progressed a lot, but we are nowhere near where we should be, in my mind. And that is a challenge for us, but that means that we have a lot more work to do.

On which platform do you see your best sales numbers – mobile or desktop?

Mobile has been increasing. I would say mobile and apps [are] currently, I would say, more than half of our orders

Why is that?

Because it is easiest. A lot of people have smartphones in Africa and that’s where their main point of contact is for internet. And sometimes they are bored and they are checking their mobile phones, they are waiting for something, they are waiting for the bus or they are just sitting in the bus. I mean Lagos is notorious for its heavy traffic. If you are in a minibus or train during rush hour, you are going to spend a lot of time in there, and you are going to have to connect with the rest of the world. So I think pure convenience.

Which cities, aside from Lagos, are your biggest markets?

We get orders from places like Ibadan, Abuja, Port Harcourt, Calabar and Kaduna and Kano. So we do get what we call second-tier locations, meaning big cities outside of Lagos. And we also get from smaller cities – it is about 20% of our orders. The issue is logistics, obviously, because when a seller that is staying in Lagos or in Abuja wants to sell products to Kano, they cannot do this on their own and that they have to rely on the existing retail network – and that can become a limitation.

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