We predicted few weeks ago that Rocket Internet – the house of clones – founded by three German brothers (on photo) which basically creates clones of top-notch U.S. eCommerce websites across Europe and emerging markets will not succeed in Nigeria.
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?
Today, TechLoy reports that the company is laying off workers in Nigeria in a consolidation move.
According to a reliable source, the company fired about 50 of its staff in both of its operations in Nigeria, mostly involved with support functions last Friday, saying that it was ‘outsourcing’ those support functions in a move to restructure its operations.
The major problem for these eCommerce sites in Nigeria is not the business model, it is the open market structure in Africa and especially Nigeria. It will be very hard to ask someone living in Aba to order shoe on the web when everywhere is shoe shop. The same applies to other things. The open market is the major competitor to these companies.
In Europe and other advanced economies, the competition is supermarkets and malls. In Africa, you have more than those – you need to contend with shops that are everywhere. Does it make sense to order electronics online when you are living in Ikeja? And why pay more?
People, do not put your money on eCommerce site business in Nigeria – they will all exit the market.