Sequel to our story of a young couple who transacted successfully on the now defunct classifieds website Efritin, (catch the story here), we share with you a few insights on why the promising marketplace never really took off.
- The 180 million-people-paradox
From the books, Nigeria, home to such an enormous population seems a natural hotbed for trade and investment because, flipped over, you could see 180 million customers or 180 million users. We see however, that this was not the case. Internet penetration has stood starkly at 47% over the past 4 years. This means that less than half of the population have access to the internet and only about a tenth of them are active users of ecommerce platforms such as Jumia. Factors responsible for these plummeting numbers have been the high cost of internet usage in Nigeria, lack of digital coverage of rural areas, high inflation rates that encroach on mass spending power amongst many other things. In a nutshell, 180 million Nigerians actually meant 180-thousand, or something like that.
2. High operational cost
Arrive grand-style, steal the show and get the audience to keep chanting your name. Easy right? NO!
According to Nils Hammar, the Founder and Chief Executive Officer of Saltside Technologies — the parent company of the start-up. He bemoaned the high cost of data and cited that as a major roadblock to higher enrolment of users. Data here refers to the cost of internet subscription of its users, as well as the technology infrastructure the company uses to track user activity. Internet companies in Nigeria hire large and fast in anticipation of a market boom. Efritin, being a C2C marketplace that earned money through commission on transactions done on the website, earned very little from users to recoup their marketing spends. Nonetheless, staff salaries and other bills had to continue getting paid — whether or not there were returns.
The result? A shutdown.
3. Lack of adaptation to the market
Nigeria with its very large population, exists entirely as a paradox to internet businesses and technology investors. At first glance, one is wont to relish the prospect of a huge market. Upon closer look, one realises that less than half possess any form of digital presence, and about a tenth of this number would go on to execute payments virtually. Efritin, sadly, fell flatly into this trap, and this was not their fault, as this can only be learned ‘on the road’. Statista, a data-driven site ranks fashion and gadgets as ‘hot’ items of trade amongst Nigerian ecommerce users. It is to this end that Jumia onboarded an additional 10,000 vendors of these commodities to meet this need in 2019. Also, a Customer-to-Customer model of trading is not always sustainable because customers do not restock after selling off items. This means they would not always have something to sell and be off the platform until they do. A Business-to-Customer model however would have ensured a continuous flow of items for trade from the business to the customer. This would driven demand and kept revenues from commissions flowing.
Are there more things you think could be learned from their story? Please share them with us.
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