Examining Nigeria’s online shopping potential

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Amidst the challenges of limited internet connectivity and unreliable connections, a new Nielsen Global Connected Commerce Survey has found that Nigerians’ use of mobile devices to make online retail purchases is significantly higher than global purchasing rates across several categories. This points to the fact that an e-commerce experience is the new retail reality, as digital devices enable Nigerian consumers to shop wherever and whenever they choose.

These insights stem from the Nielsen Global Connected Commerce Survey which polled more than 13,000 consumers in 26 countries including Nigeria; based only on the behaviour of respondents with online access.

“The shift towards mobile purchasing reflects a larger trend that is occurring in retail: proximity shopping. Across all regions, smaller format stores that are close to work or home are growing fastest, and nothing offers greater convenience or proximity than the mobile device in consumers’ pockets,” says Harsh Sarda, managing director of Nielsen Africa Retailer Services and E-Commerce.

“As more consumers adopt an ‘on-demand lifestyle’ and turn to mobile devices to shop, the most successful retailers will be those that optimise and differentiate their mobile experience to enhance the in-store experience of shoppers, using ‘personalisation’ to adapt to the specific realities of each market.”

Higher than average mobile shopping

The survey found that three quarters of Nigerian respondents (77%), who are online or connected have used their laptop and 46% their smartphone, to purchase packaged grocery food; 69% and 48% respectively to buy beauty and personal care products, 67% and 42% for fashion-related products and 52% and 46% for restaurant deliveries or meal delivery services.

Of the categories they have ever purchased online, 60% of Nigerians said fashion (e.g. clothing, bags, jewellery) with the same number citing IT and mobile (e.g. mobile phones, computers, tablets, IT accessories, etc.). This was followed by travel (e.g. hotels, flights, car rental, travel deals) at 39% and books/music/stationary at 38%.

In terms of the types of activities potential shoppers engage in online, 50% of Nigerian respondents said they looked up product information, followed by 32% who said they used it to compare prices and 31% for product reviews.

Credit cards aren’t the only way to pay for online purchases

When engaging in this prolific online shopping behaviour, cash on delivery and debit card payments are the most common form of payment methods (76% and 59%) for Nigerian online shoppers, with direct debit from a bank accounting for the third highest at 38%. Cash on delivery is normally popular where credit card penetration and trust are low. This is borne out in Nigeria where 19% of online respondents do not have a credit/debit card to buy online and more so by the 63% who said they do not trust giving credit card information out online.

“An ideal payment gateway has two core characteristics: It is secure, and it allows consumers to pay with whatever method fits their needs (and wallets) best. Not every payment method works everywhere. However, for e-commerce to really take off, it has to migrate towards cashless delivery. To build trust in online and mobile transactions, retailers need to educate consumers about the means they’re taking to protect their personal information, and they must find ways to deliver a better experience than what consumers get from cash,” says Sarda.

Cross border e-commerce driven by technology, choice and a growing middle class

Consumers are also increasingly expanding their shopping to online retailers outside their geographic region. More than half of Nigerian respondents who shopped online in the past six months say they purchased items from an out-of-country or foreign retailer (61%).

Sarda comments: “Retail has been one of the last globalisation holdouts, but technology is giving consumers access to a world of products that were previously unavailable and is one of the key drivers of online shopping

“In many developing markets, the growing upper and middle class is demanding greater assortment not found at their domestic retailers. Consequently, these consumers are looking abroad to purchase authentic foreign brands, often at lower prices than they can find in their home country.”

Product assortment and deals provide an online advantage

Product assortment is a key area where online retailing has a unique advantage over the physical store because product ranging is not limited by square-footage space. This is particularly true in Nigeria where informal retail formats are the norm. Given that product availability is a strong motivator for online shopping in many developing countries, 59% of Nigerian respondents said they shop online for products they cannot find in physical stores and 63% said they shop online to access stores not available in their area or local stores.

One of the biggest barriers when it comes to online shopping in Nigeria for consumable categories includes: the inability to inspect goods with 78% of Nigerians citing it as a deterrent. This is undoubtedly tied to Nigerians uncertainty about product quality (78%) and concerns about freshness and produce/expiration dates of products when shopping for groceries online (79%).

Sarda says that while branded, modern-trade retail penetration is still low in Nigeria, e-commerce retailers have the opportunity to leapfrog the challenges of the physical store environment, enabled by the growth in smartphone penetration. “The challenge is, however, that current online shopping growth is primarily driven from new, standalone e-commerce retailers, rather than the physical offline channels expanding into an online environment, where their advantage lies in bringing products and assortment previously unavailable.”