E-commerce and Logistics in Nigeria

From previous conversations from experts in this platform on e-commerce, I have come to assume that perhaps the biggest problem facing e-commerce in Nigeria is the fact that as they scale, the logistic challenges start to get complicated. Then the other problems, which include lack of trust which is hinged around the fear of not getting exactly what is ordered. Many Nigerians for a lot of reasons are still not comfortable paying online. This is also a problem.

To be honest I hate complicated things, and I avoid them unless  in some very limited and specific instances when I try to dabble a little just because I think I may stand a chance of solving them. Sometimes too, you just try as you never know what will unfold as you dig a little bit further beneath the surface. Most complex problems aren’t solved with the entire solution in sight, some just gradually appear as you do those iterations, they just unfold as you scramble.

Basically there are two components in this, e-commerce and logistics. So if I pick the first and isolate it, you discover that most of these firms have no issues here. So, I can say that their comparative strength is in this domain. This doesn’t mean that they haven’t got  little bottlenecks to overcome there.

Part of the problem is in having access to logistics infrastructure to enable them scale. The cost of doing this is unimaginable .But pioneers like Amazon have been able to survive working with companies like UPS, USPS (United States Postal Service) and FedEx, all working under their own individual terms and conditions.

Of Course, our own NIPOST is out of the question for obvious reasons, but still we have got logistics company within us, who have built the needed infrastructure . These companies have had relative success in local delivery and logistics. GIG logistics, ABC transport, and a few others have been able to survive this difficult terrain. They’ve got a comparative strength in local delivery and logistics and interestingly have got the needed basic infrastructure.

EXPLANATIONS USING SET THEORY. 

So let’s say there is a company P that has different elements in it, which includes difficulties and strengths in specific areas,  and another company Q which has strengths in a specific area, but has very limited capacity in another important area.

Let for the sake of this analogy take P to be the e-commerce company, and Q the logistics company.

If for maximization of returns, the e-commerce company P  needs logistics necessities (12,6,18,10,4,2,16,8,14) but has only got (12,6,18) ,

But Q being a company that has built logistic capacity with time and experience has got all those necessities (12,6,10,18,4,2,16,8,14).

The solution to the problem would theoretically be the union of the two sets (PUQ) as shown in the grey shaded  portions of the diagram.

Here you have a set that has all the components of Q, and still has the components of P.  As for Q, it benefits by receiving additional inflows from P as is represented by the point of intersection {12,6,18} which is actually also a part of P.

In the end you have more profit for Q and more Specific capacity for P; a win – win situation.

Some companies based in the United States for instance push the manufacture of specific items which are components of their product to China because of the lower cost of production occasioned by cheaper labour.

Nokia for instance is a Finnish firm, but most of its components including it’s  lithium ion batteries are manufactured in China. Nokia saves some money, China makes a little bit more.

So one could suggest that, e-commerce companies merge or sign partnership deals with local transport and logistics Companies who understand the terrain and who have a track record of effective delivery that has been proven and tested with  time.