Contrary to expectations that the emergence of e-Commerce platforms in African leading markets will effectively do well and drive digital shopping experience for the growth of African economies, emerging indications show otherwise.
Investigations by Business Hilights Intelligence Unit (BHIU), the research arm of the Business Hilights publications have shown that “In the last few years, several e-Commerce platforms are finding it hard to breakeven or grow due to a number of factors”.
“First is the security issue. Secondly, there has not been enough confidence on the originality of goods and services delivered; and thirdly, e-Commerce platforms have failed to do the needful in driving strong awareness programmes on the seamlessness of their service sector.
“Another key factor that is militating against e-Commerce platforms is the continuous squeeze in the economy which has forced Nigerians and Africans to distance themselves from online shopping and rely on physical pricing and bargaining at open markets before they pay for goods.
BHIU recalled in its report that “The killing of Jumia service officer in Port Harcourt also raised clear issues of insecurity associated with the business”
“Apart of insecurity, issues bordering on apathy of shoppers forced Efritin.com to close shop in Nigeria early last year.
Efritin.com closed down with its last chief executive, Nils Hammer, citing high cost of data, poor internet penetration and adoption as well as economic woes of the country as the prevalent factors responsible for their exit from the Nigerian e-commerce market.
Jumia has also had to consolidate all its assets into single units to reduce overhead costs. In Ghana, the initial success of Tonaton has given way to a difficult few years.
Though Yudala Nigeria, first indigenous e-Commerce online and offline shopping platform is doing well, the recent acquisition of Kongo.com by Zinox Group may mean much on the operational efficiency of Konga before the buy over deal after all.
Earlier this week, it was reported that another e-Commerce platform, Naspers owners of OLX, one of Africa’s leading e-commerce platforms, closed its shops, both in Nigeria and Kenya on grounds of poor patronage and rising wage bill.
Besides, BHIU argued that since the criminal case of kidnapping perpetrated by a maid sourced through the platform in Lagos few years ago, the fortunes of the company had not remained the same.
Business Insider Sub Saharan Africa (BI SSA) confirmed from several internal sources within both territories, the closure of its operations in two of Africa’s strongest e-commerce markets.
BHIU gathered that OLX, founded as an alternative to Craigslist and fully acquired by South Africa media giant Naspers in 2010 has been struggling to make its businesses in Kenya and Nigeria viable since it entered those markets in 2012.
Workers’ of the company in Nigeria and Kenya were formally informed of the decision on Tuesday with a notice of termination to staff beginning in March, followed by management team in April.
OLX joins a long list of e-commerce businesses who have wrapped up business in west and east Africa over the past two years after failing to break even.
