E-commerce is dead in Nigeria, what’s next?

I don’t want to be carrier of bad news but the reality is that, e-commerce in just got punched in the face.

Since 2014 there has been a gold rush to launch in e-commerce in Nigeria. No doubt, the validation and market creation Konga and Jumia went about was the cause, in good measure.

Konga is reportedly worth $34m, that’s quite small and I want to believe that the economic contraction is part of down valuation having raised more than $70m.

What should we expect of the e-commerce sector?

Konga being the poster child just took a hit and this is not looking well for the ecosystem. A proposed downsizing every 6 months is a pointer to the fact that all is definitely not well with the company, or put another way, the market is stifling the company and its required to do something radical. New e-commerce companies will find it hard to raise funding as I expect investors to be cautious going forward. E-commerce will not that but investment into the sector will reduce.

Did we expect too much from Konga?

Maybe yes because it’s quite disappointing that after more than $50m raise it can ONLY boast of 184k active customers. The question I expect from our journalist is, what is the “algorithm” behind active customers? Is it those who have placed order in the past 30, 60 or 90 days? How many times within that window? What is the average basket size of an average Konga customer? In practical terms to make business sense how much revenue do they make monthly and when you calculate their active customers match with average basket size, how much sure/consistent revenue do they have?

The economy is bad, how much hit has the company taken in the past 6months? It’s worrying to see a valuation of $34m after more than $70 what really happened? As a part insider Konga believed in Moonshots and given the unripened nature of Nigerian market do the investors have patience to see them contribute to the bottomline?

Why did Sim leave?

My bad, I have not personally reached out to see to ask for what really went down but I want to believe that he probably have other ground breaking ideas to bring to market or the investors are just not cool pursuing moonshots and as such they need a cost cutting finance guy to secure their investments.

What’s next?

Nigerian internet sector is growing strong and with what we have now; media, blogging and e-commerce have led the way in the past 5 years, what next? We need to build more consumer facing products with the data cost that had reduced significantly. But how do you get people to pay for virtual stuffs online when they refused (konga Jumia card payment are low) to pay for what they get physically? Those are the challenges we need to solve.

NB: I just put this together on mobile, I will review for errors and nuances.