top of page
  • Writer's pictureAminu Hashim

Nigeria is ripe for a social commerce revolution

Nigeria's digital landscape is flourishing. The country has one of the biggest internet economies in Africa, the continent’s largest population and one of the youngest worldwide. Nigeria presents a vast digital audience, with one of the best network coverages in Africa, as well as good infrastructure for mobile connectivity. Internet penetration is around 60 percent and is projected to increase steadily with smart phone ownership reaching over 50 percent. In fact, mobile devices are at present much more frequently used to access the internet than desktop devices. In 2019, over 70 percent of internet accesses were recorded on mobile devices, whereas this share was even higher when it came to online marketplace visits. Nigeria is also the largest economy in Africa and the 27th largest globally with a gross domestic product of $1.044 trillion (PPP) and GDP per capita of $5,066 (PPP).

Nigeria’s E-commerce Market Background

Nigeria is one of the largest and fastest growing ecommerce opportunities in the world, Total ecommerce spending was estimated at $12 billion in 2020, and is expected to grow to $75 billion by 2025. Cash based retail spending is even larger, estimated at over 300 billion USD annually. 3rd party merchants account for 65% of Nigeria’s commerce sales, this signifies a highly fragmented market ripe for disruption. E-commerce has been growing significantly in Nigeria, especially between 2018 and 2019. Online food retail and personal care rose by 50 percent, whereas the fashion and beauty sector experienced an increase of over 40 percent. Overall, the number of visitors to online marketplaces has grown constantly, exceeding 250 million site visits in 2019. This makes Nigeria uniquely positioned for a technology-led retail revolution. Indeed, these seven key attributes clearly showcase the trend and gradual shift towards digital and more importantly - social commerce.

1) Increased internet use and high mobile penetration

Nigeria like other African markets is experiencing an internet penetration boom with massive potentials for future growth. This growth is owed to the increased consumer hunger for the consumption of information online and the consequent digitization of services. There has also been greater competition for internet services within the telecommunications industry; and increased affordability of smartphones which contribute to rising mobile phone adoption. The rise in smartphone ownership admits a surge in availability of supporting digital services necessary for e-commerce has allowed the industry to flourish.

2) Availability of cheaper smartphones and more affordable mobile internet has made e-commerce more accessible

Mobile e-commerce accounted for almost two-thirds of e-commerce by retail value share in 2020. With Stiff competition between mobile phone manufacturers making smartphones more affordable, mobile network providers making internet services more accessible with a range of low-cost data plans, telecoms companies running promotions that encourage consumers to spend more time online, and the affordability of easy to use smartphones enabling consumers who cannot afford a desktop or laptop computer to access the internet; A rapidly growing population of tech-savvy young adults are continuously driving mobile e-commerce in the country, these consumers are most likely to use apps to purchase goods and services thus boosting adoption of e-commerce.

3) Changing market dynamic forcing even traditional retailers to adopt e-commerce

Industry experts expect the rapid pace of e-commerce adoption and resultant competition to increase the importance of digital channels for traditional brick and mortar retailers between 2021-2025. As usage of the internet continues to grow, some players are already shifting towards more of an omnichannel model to enhance their appeal to middle- and high-income consumers. Players are also increasingly becoming more likely to form partnerships with on-demand delivery services. Nigeria has a growing number of online-only supermarkets, such as The fact that most Nigerian households do not live within walking distance of a modern grocery retail outlet combined with chronic traffic congestion in urban areas makes the country particularly ripe for an e- commerce revolution.

4) Post-pandemic economic rebound and increased internet use is driving strong growth

The rate of growth in retail current value sales of mobile e-commerce will accelerate sharply during 2021, as economic recovery boosts consumer confidence and the supply-chain disruptions which occurred in 2020 becoming very unlikely to be repeated. Between 2021-2025, Euromonitor forecasts that strong population growth and urbanization will continue to support growth in demand for mobile e-commerce. Mobile e-commerce will continue to account for the bulk of overall e- commerce sales as smartphone ownership continues to grow, internet speeds improve, and more retailers launch smartphone apps.

5) Rise in popularity for cashless payments with significant potential for future growth

Nigeria’s Increased levels of smartphone ownership, faster mobile internet speeds and evolving digital payment technology are making it more convenient for consumers to shop online. These factors have resulted in platforms increasingly seeking to shift consumers away from cash payments, which are both inefficient and a security risk. The nations fintech ecosystem is booming with online payment service providers offering solutions to facilitate e-commerce transactions. For small businesses looking to go beyond social media for e-commerce, companies like Flutter-wave and Pay-stack provides channels for setting up websites and accepting online payments without the need to build a custom website. They offer multiple forms of payments, including payment cards, bank transfers, QR codes and USSD/quick codes – a payment method for feature phones. They are among the growing number of local start-ups trying to make it easier for small retailers to collect payments and offer e-commerce to consumers.

The pandemic has also made Nigerians more comfortable using their mobile phones for financial transactions. Prior to the pandemic, the use of mobile money in Nigeria lagged many other African countries. However, this gap is beginning to narrow. For example, the number of active users of mobile phone network MTN’s mobile money business in Nigeria rose by around 1,000% in 2020, to 4.7 million people. This will help to support growth in the retail current value sales of mobile e-commerce.

Moreover, In the aftermath of COVID-19, a growing number of traditional retailers are expected to embrace mobile payments in line with government recommendations to provide the option of contactless transactions to consumers. Many Nigerians do not have a bank account, let alone a payment card, but a growing number of them have smartphones, and mobile internet access is steadily becoming more affordable. However, it is worth noting that the central bank has been slow to grant mobile banking licenses, which some blame on lobbying by banks that are seeking to limit competition.

6) Growing adoption of omni-channel sales strategies by merchants and retailers

There is a growing number of traditional brick-and-mortar retail chains expanding into click and collect and traditional e-commerce as they pivot towards an omnichannel model. Konga has been something of a pioneer in this regard, as it already operates a chain of retail outlets. Meanwhile, Jumia is continuing to expand its nationwide network of pick-up stations, helping it to significantly reduce fulfilment costs. Small retailers are also not left out of this trend, with a growing number of merchants selling products both in-store and across multiple channels online. Department stores in Nigeria have till date ignored e-commerce – One of the country’s largest retailers; Sahad Stores Ltd; does not even have a website. This phenomena will likely change within the next decade, as a growing number of middle & high- income consumers begin to shop online. This presents a thriving opportunity for online ordering or Click-and-collect platforms serving such clients and eliminating issues of last-mile delivery which can be particularly challenging – and expensive.

7) Social media's emergence as an important channel for SMEs

During the lockdown, many apparel and footwear specialist retailers turned to social media platforms such as Facebook, WhatsApp and Instagram to market their products. This trend is likely to deepen in the future as the number of internet users in Nigeria continues to expand rapidly. Nigeria has a vibrant entertainment industry, and many celebrities from film, TV, and music have a social media presence from where they offer influencer advertisement services. A growing number of apparel and footwear retailers continue to leverage this presence to broaden the appeal of their brands among local consumers. Social media platforms are increasingly transforming into marketplaces for small and medium businesses. Indeed, A growing number of brands are setting up exclusive social media operations without having any functioning website; depending exclusively on these platforms to carry out transactions and close sales. Our research suggests that as much as 60% of sales for some SMEs are sourced from social media.

The Factors which contribute to the rapid adoption of social commerce in Nigeria

1) Ease of Engagement: Traditional e-commerce websites provide only one-way engagement between merchants and clients. The customer enters the store, makes a purchase, and waits for the order to arrive. In social commerce, the customer enters the store, makes comparisons, asks questions, and talks to merchants before making a purchase, this two-way communication strengthens customer loyalty. Social commerce also makes measurement possible. Retailers can find out what is being said about their products and why users believe that they are better or worse than other products in the market.

2) Visibility and Interaction: In-built recommendation algorithms on social media platforms serve as lucrative sales funnels for brands. Moreover, social media makes it easier for customers to recommend brands to others within their network. Indeed, Shopping is by its very nature, a social activity—people always want to know what other people are buying or discuss what they’ve bought themselves with friends. This level of visibility and social interaction is absent on traditional eCommerce websites.

My Conclusion: Welcome to the Federal Republic of Social Commerce

Considering the aforementioned factors lead me to believe that Nigeria is on the cusp of experiencing a boom in the social commerce industry. This emerging industry which is forecasted to reach 1.2 trillion USD in spending globally within the next decade will provide new opportunities for small scale entrepreneurs to thrive.

Startups with innovative business tools that tap into social media platforms to aid businesses reach a wider audience, improve their products and services, and grow their businesses will be created to service this growing industry, and new business models like product reselling and group buying will become more popular. However, it's important to remember that Nigeria is still in the early stages of the social commerce industry, and we are yet to reach the complexity and sophistication of nations like China. Nonetheless, we are well on our way, and the future looks bright for the social commerce industry in Nigeria.

About the Author:

Aminu Is a Co-founder and CEO of Kamel. A multi channel commerce solutions provider building tools to enable entrepreneurs in emerging markets easily start, manage, and grow their businesses across multiple online and offline channels with ease. Kamel first product is an all in one business app for entrepreneurs to easily create an instant ecommerce website in a few clicks. Users of the app are able to easily manage inventory, orders, transactions, customer relationships, and more across all sales channels from one app.

56 views0 comments



bottom of page