Supporting the development of a thriving ecosystem through forging partnerships with other small businesses is the key to success as an e-commerce startup operating in the Nigerian market, according to Kehinde Oriola, chief executive officer (CEO) of DealDey.
Speaking at the second annual AHUB which took place in Cape Town this week (November 15-17), Oriola presented his advice and experiences on forging the path to success as an e-commerce startup in the Nigerian market.
Build the ecosystem
Oriola said lacking infrastructure in Nigeria means e-commerce startups are faced with building everything they need from scratch – from packing warehouses to logistics solutions.
However, from experience, he said it is not possible to deal with everything internally without the costs being high; costs which are inevitably felt by the end-customer.
As such, Oriola said the solution is for startups to focus on partnering other small businesses with expertise in complementary areas.
“If you want to be in e-commerce in Nigeria, you need to focus on building the ecosystem itself, rather than trying to build everything yourself,” Oriola said.
Oriola said DealDey shifted its strategy from trying to do everything internally, to working with a “marketplace model” – partnering with local small businesses who know what they are doing. For example, DealDey found a logistics partner to deal with shipping of products. The result was a decrease in consumers’ shipping costs from the original NGN1500 (US$4.7) per order, to NGN300 (US$0.9).
The other piece of advice Oriola gives to e-commerce startups in Nigeria is to start with a small market.
“To launch in Nigeria you need to know your market,” he said, adding that it is not possible to respond to the market variations from state to state on first launching, given the huge geographical range of the country.
“Start with conquering a small market,” he said. To do so, he underlines the importance of always listening and responding to customers.
“It hasn’t been an easy road, but we’ve always come back to the customers.”
Be aware of the challenges
The e-commerce sector is plagued with a range of challenges, Oriola said, such as the high cost of internet, low literacy rates, a lack of trust on the part of consumers, and above all, the lack of a reliable mobile payments solution.
Despite the majority of consumers accessing online stores via mobile, Oriola bemoans the fact that no M-PESA-style mobile money payments solution has emerged yet in the Nigerian market.
Last words: price and UX
Finally, Oriola highlights the crucial role of pricing, and user interface, in the life of an e-commerce startup.
“Price is one of the biggest questions in Nigeria,” he said. As people don’t have enough access to information on pricing, he stresses the importance of providing value for money, and making pricing transparent so as to enable comparisons of the market.
No matter how intuitive a startup thinks their own platform is, Oriola advises making use of focus groups when designing the user interface, to ensure it is very easy to use.