It is easy to open websites and clone Amazon.com and eBay in Nigeria. There are many players in Nigeria joggling for the irrational exuberance that is Nigerian opportunity. Unfortunately, all of them will fail. Nigeria is not structured for companies in the likes of Amazon.com to succeed.
From Kasuwa to Konga, Tekedia predicts they will exit within five years. Our reason is simple: the open market structure in Nigeria will make it tough for these companies to have scale to compete with any serious brick and mortar competitor. Why will someone in Aba order a shoe online when every street is selling shoes?
If you live in Lagos, does it make sense to order iPhone on the website where there are merchants everywhere. Unlike the developed markets, Nigeria has an open market and that is our own Amazon.com. In U.S., there are few places you can buy iPhone – online or electronics stores including Apple’s. But in Nigeria, you need not plan. Just keep moving to Ikeja.
Without scale, the online retailers cannot succeed. It has nothing to do with their business models. It is largely due to the a simple fact that anyone can enter Idumota and buy any electronics or if he/she has more time, go to Alaba. The constructs of online is not happening anytime soon. Yes, that does not mean the players will not be busy. They will not have scale as many Nigerians are not connected to that shopping model. Forget the bandwidth issue – this is purely structural.
The problem with Nigeria is that those that are usually online are not the people with purchasing power. The college students and Facebook visitors can raise sites traffic in you drive them via ads, but they have no money. It is an illusion to think that those traffics mean anything. Nigeria is a country with very low disposable income and those with money are not going to be buying online. They have shops in front of their homes in Victoria Island, Asokoro Villa, etc. Any day you expect moguls like Otedola and Bank execs to be putting their credit cards online means you are mad
That said – do not waste your money cloning Amazon.com. The fundamental environments are different. Besides our lack of income to sustain such operations, the fragmented market structure puts the online guys at disadvantage. Forget those guys, if they tell you they are making profit in Nigeria via online sales, they are lying. Just as it happened to Kalahari, it will happen to all of them. Unfortunately, there is no recommendation because we will still have markets that are open 6 days in a week everywhere with shops and the idea of buying online will continue to be depressed.
Google may like to deceive you with statistics that shows that 40% of Nigerians will be shopping online in 20?? Forget them. They are not serious. They are simply looking at ways to take over small companies with their flawed GNBO program. If you have a business with abc.gnbo.com.ng, can you say you truly have a brand? Why not create an account in WordPress or even Google Blogspot. At least in those ones, you are sure no one will tell you that your business is doing well because someone is squatting you with other hundreds. Please do not make business cards with website URL with the GNBO program. It is simply stupid. Get a website – it costs N1,500 per year and get a student in UNILAG to make one site at N5,000 for you. That is it, you are ready with your unique identity and that is branding. Microsoft tried this “Google innovation” through officelive and has since closed it.