Success Story: Jumia Breaking Grounds and the Business of E-commerce in Nigeria

L-R Olatunde Farinde (Editor, Business-Matter.com), Tunde Kehinde, (Co-founder, Jumia)

L-R Olatunde Farinde (Editor, Business-Matter.com), Tunde Kehinde, (Co-founder, Jumia)

If the story of these young men does not propel you to move your act to the next level as a young entrepreneurliving in this environment with vast opportunities hidden inside many difficulties of this harsh business hub called Nigeria, then nothing else can. These two young men must have been dissuaded, discouraged, embarrased, turned down, vilified but they stuck to their giuns, believing the best was just around the corner. LAGOS – The headquarters for this internet startup is cheekily nicknamed “Graceland” and its co-founders are young Harvard graduates with grand plans to take over the retail online shopping. There is no way you would not have come across Jumia, they simply everywhere selling everything, and seriously making money in Nigeria with their ecommerce business.

Nigeria, Africa’s biggest market of 160 million people, has seen internet access expand


rapidly in recent years, opening opportunities for companies to exploit. While most obstacles in Nigeria remain for any business, from deeply rooted corruption to a lack of electricity and widespread fraud, both online and elsewhere, the potential is enormous.

online retailers such as Jumai, which is present in a handful of other African ciountries, are seeking to unlock the possibilities, developing plans that cater specifically for local market.

“I doubt there are many market in the world with 160 million people, a growing middle class and nothing in terms of organized retail,” said Tunde Kehinde, a 29-year old Nigerian who graduated from Harvard and co-founded what would become the country’s branch of the online retailers. “And so for us, that’s the vision that Jumia has to help build organized retail here in the largest country in Africa”

In one year of operation, Jumai Nigeria has grown from around 10 employees to 450. It now offers 50,000 products, including clothes, phones, electronics and even cigars, the site receives about 100,000 visitors each day.

Thanks in large part to the widespread use of mobile phones, Internet access grew to 46 million people in 2011 compared to 11 million in 2008, according to figures from non-governmental organization Freedom House. Research firm Euromonitor International says online sales in Nigeria nearly doubled over the course of a year, from 1.7 billion naira ($10.5 million) in 2011 to 3 billion naira last year.

The company was created with capital from German Firm Rocket Internet and Telecom Firm Millicom. Kehinde and his harvard class mate Raphael Afaedor, a 36-year old Ghanian, had earlier worked to launch two online retail sites in Nigeria and felt they were the perfect people for the job.

Rocket Internet , an aggressive investor in startups that says it has created 15,000 jobs in more than 40 countries, has also launched Jumia branches in Morocco, Egypt and Kenya. In South Africa, it goes b the name Zando. It is also planning launches in varous French-speaking West African nations.

“In Africa, you have a situation where there are few options for quality e-commerce sites” coupled with the fact that traditional retail, such as supermarkets and malls, are underrespresented in many countries, said Jeremy Hodara, CEO of Rocket Internet for France and Africa. Nigeria offers “enormous” opportunity, said Hodara, but “the execution is complex.”

The cost of doing business locally add up quickly. Despite its status as Africa’s biggest oil producer, Nigeria does not generate nearly enough power for its population, forcing companies to employ large and expensive generators. Real estate prices in upscale areas can be priohibitively expensive, with the oil-driven economy throwing many thing off balance. Most people in the country still live less than $1 per day.

Fraud and corruption continue to be a major concern, and anyone who has ever received an email form a “Nigerian Prince” would certainly think twice about buying something online from the country.

But Jumia has sought to address cioncerns such as those, particularly through cash on delivery, which alliow customers to physically inspect their purchases before handing over any money. Payments can also be made by card if customers choose to do so.

The company promises deliveries, even to the most remote areas of Nigeria, in a maximum of five days. It delivers through a combination of its own couriers and an arrangement with DHL.

In another exciting sequence, the website has grown to be the 5th local content website in Nigeria and the customer’s number 1 online retailers of choice. The just over month retail store has seen exponential growth in size of baskets and traffic to its site.

inadvertently leading to growth in all areas of its operations from staff, fleet, warehousing facilities, to more recently the addition of 3 locations in Warri, Kaduna, and Benin; an addition to those existing in Lagos, Abuja and Portharcourt.

“As Nigeria’s no. 1 online retailer, Jumia will continue to pioneer the Nigerian retail market, with vision with being the answer to retail both offline and online in sub-Saharan in Africa. As a place for direct retail shopping online with limit less reach and audience,we have seen orders come in large numbers from nook and cranny of Nigeria, and in our commitment to our customers and making good on our promises of on time delivery, we are gradually expanding and gaining foothold in more cities across Nigeria”, explained co-founders Tunde Kehinde and Raphael Afaedor

 

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