Challenges of Shopping Online in Nigeria

I got the following message from a reader of this blog:

Good day Mr. Ajao.
I am a post graduate student at the university of Northampton, United kingdom, studying MA International Marketing Strategy. I am really proud as I see a Nigerian like you writing good articles on current issues on the internet. I have read about 4 of your articles and I must that I am very impressed. You are making us proud here in the United Kingdom.

After reading one of your articles I had the urge to write on how internet can be improved in the Nigerian economy. I have now decided to write on the challenges of online shopping in Nigeria. My objective is to propose ways in which most of our Nigerian companies and major retailers can engage in online shopping. As you rightly said in one of your articles online shopping has a lot of opportunities in Nigeria which can be carried out at minimal cost.

Sir, please can you take part in my topic “challenges of online shopping in Nigeria”.

I will be very grateful to hear from you.

To address this issue, I would list some of the challenges to e-commerce in Nigeria.

A. Lack of Trust

Trust is a very rare commodity, especially in Nigeria. There are multitudes of stories about scams and betrayals. Since trust is in short supply, many find it impossible to sit behind a computer to buy online by sending money to a strange company or person.

E-commerce has not reached its full potential in Nigeria. Photo by BTO Educational.

E-commerce has not reached its full potential in Nigeria. Photo by BTO Educational.

B. Credibility

This is still a human reason but is different from Trust because this reason hinges on the merchant.

How credible is the Nigerian e-commerce merchant? This is a hard question to tackle. While there are multitudes of genuine Nigerian merchants online today, some are reckless with customer service whilst others are deliberately out to fleece Nigerians, and have no intention of shipping the good nor delivering the service.

  1. Poor customer service scenario:
    A good friend of mine in Nigeria bought a textbook over the internet from a leading online book store. The textbook was delivered on schedule to her office via courier in a very attractive package that impressed me. With this experience, she ordered another textbook from the same store another time. The second time, the book was not delivered on schedule. Days turned into weeks and weeks into months. By the time the book was eventually delivered, she had lost faith in Nigerian e-commerce.
  2. Scam scenario:
    Some online stores appear with no intentions of shipping anything. The scam is to disappear after getting paid. There are too many complex examples of this.

C. Shipping/Delivery

NIPOST (postal) system is not as efficient as it can be, and courier services are not cheap. Would you buy a DVD online for N2,500 and have it shipped to you in Kaduna for N5,000? Unless it’s a “How to make Millions of Naira from oil bunkering business” DVD, I am not sure many would be eager to spend that much on courier delivery. Thus, there is a question mark on timely delivery to every nook-and-cranny of Nigeria.

D. Online Payment

The Nigerian online payment systems that exist are not effective, for varying reasons. Examples:

  1. Interswitch: their financial & technical requirements are too steep for most Nigerian sole entrepreneurs and small businesses. Despite forming the bulk of Nigerian online enterprises, this market segment steers clear of the ‘almighty’ Interswitch.
  2. Etranzact: the grandfather of online payments in Nigeria – launched in 2003 – is still alive and kicking. The company is not exploring its full potential successfully, thus making it unattractive to most Nigerian e-commerce merchants.
  3. ValuCard Nigeria: despite being Visa International’s official acquirer in Nigeria, they are hardly visible in the e-commerce payment processing arena. They seem solely focused on being the power behind all Visa cards and Point Of Sale terminals issued by Nigerian banks.
  4. There are a multitudes of smaller payment systems like CashEnvoy, dudupay, NetNaira, SurePay etc. Each of them is trying to fill the void, by catering specially to small business owners and entrepreneurs. Sadly, none of them seem to have the muscle to massively impact a big market like Nigeria. They have not gained widespread usage – yet.

One might then wonder, why are the merchants not using international payment processors?

Well, Nigeria-based merchants are not welcome on Paypal (the global leader in online payment) and most international credit card processors do not do business with anything that contains the word “Nigeria”.

In summary, e-commerce despite its huge potential in Nigeria, seems stuck in the crawling phase.

Comments

  1. says

    Nice piece. I like this
    I happened to order online every now and then. Thanks for GTB that always make it easier for me with their card products(though they act up sometimes) But I digress.
    Our online shopping is an eyesore.
    @ Niyi…I can relate with international card processor not having anything to do with anything Nigeria. Cos we’ve been reported world over as scammers. I’ve had my orders declined several times cos I’m simply a Nigerian. Some company however take time to ask for verifications where they asked me to scan my card and ID and block most of the number out.
    The other day, I had to pay someone on Paypal before I knew cards in Nigeria are not acceptable.
    Even on Ebay.. I lazily registered and I bidded for an item. To pay was war. Till they put me on suspension and I had to send someone to go into the store and make the order for me.
    Well to cut the long story short. This may not work till we can fix our acts in Nigeria where we have scammers abound. I’m very shameful to admit it.. So everybody is label as such. Painful.
    Regards,
    Spicy

  2. says

    There’s a bit of a chicken-and-egg problem here. Many of these problems can be solved within Nigeria – in fact, I’d argue that this is the *only* way these problems will be solved.

    1) Trust: This is a biggie, but I think a major player could overcome this problem. I used to work as the Technical Director for a wireless ISP in Lagos, and even though we were new to the market with a new technology there were lots and lots of people who were more than willing to pay cash deposits up front for a service we couldn’t even install for a few months. A retail player with local name recognition (Park-n-Shop comes to mind) could open an ecommerce arm and get around the trust issue.

    2) Credibility: The first example you give has to do with infrastructure- it’s not so much whether the ecommerce vendor can meet their promises, but whether the other vendors involved in the transaction can meet theirs. I’ll get to this when we talk about shipping. The second example is a much more difficult thing to deal with, as it relies on there being a solid legal structure that you can use to enforce commerce laws. There’s not enough faith in the Nigerian legal system that you could take action against scammers if you were a victim.

    Still, this could be handled outside of the legal system. Perhaps a Nigerian electronic payment firm could hold the client’s payment in escrow for a period of time – long enough for the customer to receive the item and complain if there was a legitimate problem. Note that this would also create a new problem of people paying for items and then filing fraudulent claims in the hope that they could get it for free.

    3) Shipping: UPS and FedEx are what most vendors use in the US to deliver merchandise. The problem as I see it in Nigeria is that UPS, FedEx, and DHL aren’t set up to handle domestic shipments- they’re designed to handle international packages. Some of this could be solved by volume – if an ecommerce vendor created enough demand for domestic deliveries in Nigeria, UPS would respond by making it easier and cheaper to do this. Actually, here’s a question – is UPS legally allowed to handle domestic deliveries, or does Nipost have the monopoly?

    4) Online payment: I think the smaller providers could do well, but there’s a chicken and egg problem here too – they can only expand if there’s a demand for their services, and as long as online vendors have problems selling and shipping their products there won’t be demand.

    There’s a huge market here for someone who’s willing to think outside the box and come up with a creative solution for these problems (and who has the means to fund it).

    • says

      @Robbie: I agree with the challenges raised in this post. an approach to the shipping challenge is to have vibrant 3PL providers that can aggregate demand and “drop ship” for merchants within a local area. Unfortunately, due to the logistics and payment challenges, national online shopping is not a viable option for both merchants and consumers at this time.

  3. says

    Truly, a big challenge making payments online, but good enough it wasn’t this easier unlike before. Master or Visa cards issued by most top performing banks like GTB and Zenith do work pretty well though some merchants online still will not have Nigeria enlisted. I think it will surely get better with time. Thanks for sharing.

  4. says

    The issues addressed above.. 100% true. The way forward is to have a store owner deliver goods to customers within his locale (state) and receiving payment on delivery..this is the only solution (see example @ [shopp.ing.com.ng, cloth.ing.com.ng, books.ing.com.ng]) the issue of trust, online payment and late delivery of goods is minimized.. Having one large merchant selling and delivery accross our country Nigeria is not possible for now.

  5. says

    My thought is that it so easy for us to draw long list of problems facing online shopping in Nigeria but difficult to find real live examples to substantiate. My point is that when it comes to online shopping within Nigeria, I am yet to read of any bad experience. All I read are assumptions and association of fear.

    While we Nigerians are busying talking difficulties, actors from abroad are entering Nigeria and dominating the scene. Examples abound. So, if the market is that bad, why are international actors entering the market?

    All problems that exists are part of where nigeria is as a nation. Things change and when they do, they change fast.

    here is the thing. Sweden has a population of about 9 Million with about 20-30% regular online shoppers. This is still very profitable for compa´nies involved. Lagos has about 12 mil? (Not sure exactly). Nigeria is 140 mil. Today, if we hypothesise that about only 5% of Nigerians shop online or are willing to shop online, that gives you a huge market anyway especially with the small number of shops selling online in Nigeria. Of this few, a large number of shops are doing a poor job of marketing themselves and staying focused.

    In 1998 Nigeria had no GSM and there was a lot of front an back talk of the disadvantages. Now, see where we are and how much money there is in the market.

    Online shopping is live and well in Nigeria, believe me.

    • says

      I did not imply that online shopping is not active in Nigeria. I only said online shopping is very low in Nigeria due to A…B…C…D….
      I did not say its impossible to surmount the challenges. This blog post screams “opportunities” for any one who can read between the lines.

      • Julius Onwemzie says

        Thanks for that clarification. Not everyone reads on line. I hope your next blog will explore the opportunities in online shopping in Nigeria and the benefits.

  6. says

    In my opinion, we are the problem of our problem. Not until we change ourselves, things won’t change for better. In a case where we (Nigerians) scam ourselves, how would an international body or individual trust us. Till today, clickbank and paypal is saying NO to Nigeria. Are they to blame? Nigeria as a nation has contributed a lot to this.

    Online shopping might not work so well in Nigeria with the points you’ve pointed out. Is it bad roads, high cost of delivery, or the issue of trust and poor security networks? Remember, there are scammers everywhere even in the U.S but there, there’s every possibilities that the culprit will be apprehended but come to Nigeria, there is no way to trace the scammer even if you wanted to.

    We are our problem and our problem is complicated.

  7. says

    Nigerians really enjoy shopping online online if they can afford it, shopping online for Nigerians should not only be limited to shopping from nigeria online stores alone, it should be spread to other africans countries. Our govt should first look into the cost of courier so that it will be fair to all invovled

  8. says

    Hi Oluniyi,

    Very nice topic you have raised but it takes alot to have an e-commerce website to be honest. Well goodnews to all Nigerians or to the Nigerian domain, we at Bargains4lessng.com have been working for about 2yrs now on an e-commerce platform that would remove most of the issues we have in Nigeria with paying on websites abroad.

    Payment will be online via our Interswitch payment gateway system and then we deliver by courier to you and nothing close to the amounts you quoted for the DVDs!! Even cheaper if you’re local in Lagos.

    Anyway while we are rounding up getting ready to serve you, visit our website on bargains4lessng.com or simply B4L.

  9. says

    i think the major problem wit online shopping in Nigeria is trust, but the truth is its gradually getting better. Checked this site out recently, really impressive nigeriadealzone.com its new though but i tink wit sites like this springin forth it can only get better

  10. Oluma says

    I came across some ecommerce builder online like shopify & izzonet which am planing to use for my online shopping site. Do you think they are safe for me or what advise can u give? Thank you.

  11. Jeffery says

    Am a Post graduate student in Southampton Solent university Studying Information Technology for Business. Your article has being helpful in my project on the Impact of E-commerce. will be grateful if more related article will be forwarded to me. thanks and keep it up. one day our country will be where we want it to be.

  12. says

    We have all spoken well. Ajao made a statement, that these many “weaknesses” and challenges are breeding grounds for opportunities for the savvy. we are surely doing something about it through http://www.mybidmonster.com.ng.

    It is the little things that each of us does that will bring the change we need. I remember after my service, i was to be retained and i refused to stay, someone there told me that i am going into a system that is out to defeat me.

    That is what our country is, its tug of war and just like its anyone’s to win in a tug of war match, we can win the “online shopping game” only if we have not thrown in the towel before starting.

    Wether we like it or not, this is the future, foreign companies are coming and leaving because its too “hot” for them. some with thick skin are staying and they will be the winners and big players of tomorrow.

    But know this clearly, no one will build our lives for us and no one will build yours for you.

    Fraud is a universal challenge and over 70 % of it emanate in the US. it will never be eradicated, its just like saying a day will come when people will not steal from brick and mortar shops, well until the return of Christ.

    dealing with it and providing systems that can minimize it in naija us just another GOLD mine that is waiting to be tapped into

    As bad as Somali is, tell me there isn’t one single millionaire in that country. We are far better of and can do far better, but it starts with you and I!

    Arise O compatriots!

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