Two significant but fear-inducing events in the Nigerian e-commerce space in the last two weeks:
1. Zinox and or Yudala acquires the struggling Konga
2. Nasper’s OLX closes its office in Nigeria
I have often asked the question … How does OLX make money? If you know, please tell me. Can’t figure it out.
I can easily outline factors that made Konga lose money ….
1. Pay on Delivery (POD): When buyers refuse to pay for a shipped item because they do not like it, konga absorbs the expenses already made on logistics. That is far more than their margin of 3%.
2. Ruthless merchants: Buy once from them, they will request politely that you buy direct and split the Konga commission with them. That is unethical, but Nigerians don’t give a damn. Call them all joint murderers.
3. High logistic costs. I wish NIPOST was existent and efficient and handles the last mile for e-commerce in Nigeria. They are setup to do it, someone just does not think it is development to do it, like yesterday.
4. Heavy advertising budget that carries coal to new castle and basically does not lead to any further conversion. The Social media Konga intelligent adverts always show me what I have bought again!
5. Some bad staff, who did not understand where their salary was coming from, and that they will end up soonest in the job market. They had enough muscle to wreck the train.
6. Poor payment processing. Not their fault, but the poor network intolerant interswitch payment capture system guarantees that you will not want to pay with your card again, after the first disastrous encounter shopping online. I hear Paystack is a charm, but it came just too late to save Konga.
7. Consumers who trust nobody. Until they see the goods, it does not exist, hence show them no picture but the goods!
Will Zinox stop the continued loss of vital blood in Konga? Time will tell.
All eyes are now on Jiji and Jumia. Please guys, stay the course! Something will give way soon, that will rejuvenate the industry.
Sorry guys. I am sure it is a temporary setback. I am sure. I believe. I sincerely believe it.