Electronic Commerce (E-commerce) could simply be defined as buying and selling of goods and services on the internet. In some cases, it is defined as a transaction where everything is done online without the use of paper or face to face meeting with either party. Michael Aldrich created the first online shopping system in 1979 which has metamorphosed into what is now known and seen as a global phenomenon. This was the beginning of the journey which led to the popular e-commerce sites such as Amazon, EBay and Alibaba.com.
E-commerce is divided into 4 main categories: B2B, B2C, C2B and C2C
- B2B (Business to Business) – This refers to e-commerce activities between businesses. For example, a manufacturer selling to a distributor or wholesaler.An example of this type of ecommerce in Nigeria could be website developers.
- B2C (Business to Consumer) – This refers to e-commerce activities between a business and a consumer. This is the general known form of e-commerce and in Nigeria we have sites like Konga and Jumia taking the lead.
- C2B (Consumer to Business) – This type of e-commerce usually refers more to services rather than goods. An example of this type of service are those sites that allow individuals post a project online and then businesses or companies come to bid on those projects or the individual. The consumer then reviews the bids and selects the best company according to his/her criteria and vice-versa. Examples of this type of e-commerce include Elance, Guru, etc.
- C2C (Consumer to Consumer) – This type of e-commerce is made up of online classifieds where individuals can buy and sell their goods. An example of such e-commerce activity in Nigeria is OLX.
Recently in Nigeria, e-commerce has taken a major stance in the economy. I engage in a lot of online shopping in Nigeria as it eliminates the thought of entering the heavy traffic just to pick up some items, which in turn makes you question yourself on how time consuming going to a store or market could be. As much as it is very convenient and time saving, e-commerce also has its drawbacks, most of which in my opinion can be easily corrected. This includes, but is not limited to
- delivery of a wrong order
- expensive shipping fees
- Safety of purchasing things online which sometimes could also lead to electronic fraud.
In Nigeria, Jumia is the largest e-commerce operator and it was founded in June 2012. In the last 12 months, the company has raised over $50 million cash-for-equity funds from industry giants such as JP Morgan, Summit Partners and Millicom. The company has a 10,000 square foot e-commerce campus and a 90,000 square foot warehouse, both located in Lagos.
Nigeria’s second largest e-commerce operator, Konga also secured funds from a Swedish Investment Group – Kinnevik and Naspers MIH Africa. Though the value of these investments is not disclosed, it was intended to grow the operations of the company. Other e-commerce industry players in Nigeria include iRoko TV – secured funds from Tiger Global and now generate over $2 million annually, Dealdey – who also received $1 million from Kinnevik and generates about $1.27 million yearly, Wakanow.com – an online travel agency, Kaymu – Nigeria’s very own EBay and OLX – free online classifieds.
E-commerce has become more powerful than the traditional resources which were adopted for businesses around the world. It broken geographical barriers and enabled customers to contact vendors with little or no hassles. The impact of e-commerce on the global economy is so immense that the target audience can be reached in the least time and minimal economic resources. It has influenced every aspect of buying and selling, from the production to the service levels and has also given companies the challenge of staying ahead of their competitors with the shifts in technology. In Nigeria, e-commerce has cut across all barriers and has given rise to more effective techniques. It has enabled enhanced sales and increased profits. E-commerce has become a technological boom and is here to stay. Although electronic commerce in Nigeria does not have a specific legal framework, some existing legislations may apply even though there would have to be some form of modification. These include …With the advent of e-commerce in Nigeria, Nigerians have spent the sum of $380 million on online purchases and this figure has been predicted to escalate to almost $920 million in 2014.
However, irrespective of these figures, investors are unenthusiastic in investing long term in Nigeria’s e-commerce market. E-commerce in Nigeria is expected to grow on deep internet penetration and increased disposable income of the average resident and deep internet penetration can only be achieved by investing in broadband. The Federal Government of Nigeria has taken major steps in developing national broadband plans to enhance connectivity in the country. This will not only fuel the growth of e-commerce, but will make existing e-commerce businesses thrive and even become internationally acclaimed.