In the previous article, I focused on challenges investors in the online shopping and e-commerce industry in Nigeria should be aware of and develop blueprints on how to solve before investing. In this article, I will offer solutions on how to build a successful online store in Nigeria.
A lot of online stores currently operating in Nigeria are running on lean budgets. Some do not have warehouse and do not buy products in bulk. They simply take orders online and buy products from other sources to fulfill the orders.
So their prices will always be higher than the brick and mortar store they buy their products from. This is the major reason why some online stores in Nigeria sell products at much higher prices than their brick and mortar competitors.
To build a successful online store in Nigeria, adequate capital is required. You must be able to buy products in bulk so as to offer competitive prices. You also need capital for your operations. Like pointed out in the challenges article the infrastructure in Nigeria is decaying.
You will need to build your own infrastructure and that costs money. Money will be required for power generation, training, public enlightenment, advertising, promotions, and logistics. In fact, most of the solutions here will require capital to implement.
So, ensuring you have enough capital to run your operations for at least 3 years is key to succeeding in your online shopping enterprise.
Build Physical Structures
Building a successful online enterprise in Nigeria cannot be entirely done online. You will also need to be on the ground. This may start in the form of road shows to create awareness, build trust, and interact with the people.
You may also need to build collection points and customer centres where people can reach you. The knowledge that there is a physical location within their state or city that they can go to if they have any issues will go a long way to encourage customers to do business with you.
In the challenges to online shopping in Nigeria article, a lack of valid addresses in a lot of places in Nigeria was fingered as a key impediment to the mainstreaming of online shopping in Nigeria. This challenge can be handled using collection points close to locations with invalid addresses.
Customers can order products online and pick it up at a collection point close by with an ID card and/or printout or mobile notification of the transaction. Knowing that their product is safe at the collection points is enough to compel many Nigerians to shop online.
Integrate with Mobile
Majority of Nigerians access the internet on mobile devices. This is a key challenge to e-commerce sites as identified in the previous article. Mobile is a bigger challenge in Nigeria compared to the West because of the tiny devices we use to access the internet.
A lot of Nigerians use feature phones to access the internet with a lot of these phones less than 240 pixels wide. You need to figure out how to build an online store that will offer a reasonable shopping or product browsing experience given this constraint.
Since a lot of Nigerians are already using mobile, you should also consider integrating mobile payment solutions like the much talked about mobile money to your online store.
Although, in my opinion none of the mobile money services has shown any sign of success, integrating mobile payment solutions on your online store is worth a short. Maybe it is the push that the mobile money sector needs.
You can also offer value added services where consumers can check for availability, key features and prices of products via SMS.
Cheap Prices & Discounts
All over the world consumers love cheaper prices and discounts, Nigerian consumers are part of that bunch. One of the biggest draws to online shopping is that consumers can easily find great deals.
However, most online stores in Nigeria are not where you go to when you are hunting for best prices for products. Their prices are often 1% to 20% more expensive than their brick and mortar counterparts.
If anything has a great potential of compelling Nigerians to shop online, it is smart pricing. Cheaper prices at online stores will make a big case for Nigerians to shop online.
It is also important to note that cheaper prices was also responsible for making online shopping popular in other parts of the world. The same principle can still be applied in Nigeria.
Online stores like Jumia have used this tactic to build their brand and dominate online shopping in the country. Campaigns like the Jumia Mobile Week, a week long campaign where Jumia partner with mobile brands to offer deals on mobile devices and the Jumia Black Friday are very popular with consumers.
Offer Free Shipping
The cost of shipping contributes to discouraging online shopping. This is why online stores abroad offer free standard shipping for products above a certain order value. Offering free shipping will make online shopping more compelling for consumers.
You will need to figure out how to offer free shipping at your online store if you plan becoming a popular online shopping destination in Nigeria.
Offer Payment on Delivery Services
Trust is a big issue in Nigeria. So, enabling consumers to pay for products when it is delivered to them is going to be attractive to a number of consumers. Some may use this service for their first shopping at your store to determine how genuine or efficient you are.
However, make sure you have a system in place to identify genuine orders to minimise invalid orders and cost.
Valid product warranties will help solve the trust issues. There are a lot of fake products in the Nigerian market, consumers shopping online will often need reassurance that the products they are buying online are genuine, offering valid warranties is one way of doing this.
To offer a valid warranty, you need to deal with the manufacturer directly or at least have a deal with the major supplier in Nigeria.
Start small, grow organically
You must not start your online store in a big way. You can simply build an online store for Victoria Island, or Lagos or Enugu. Focus on as much area as your current capital can carry.
Do not try to lunch a Nigerian wide online store if you cannot handle it. I will rather shop from an online store that focuses on Enugu with great prices, free shipping, good shopping experience than waste my time on a national online store that offers expensive products and shipping and haphazard services.
As you grow you can buy small online stores in other cities or simply merge with them. Do not try biting more than you can chew. Start small, and expand your operation gradually.
Invest in Training
In the challenges to online shopping in Nigeria article, I pointed out that the decay in the education sector has led to low human capacity in Nigeria. I also held that online shopping and e-commerce are relatively new in Nigeria, so some specialist skills may not be available.
Hence, you must be ready to invest in training and re-training of your people.
Do not target only the rich
Some online stores make the mistake of focusing their business on the rich. The rich already do some of their shopping abroad so focusing your store on rich people is a step in the wrong direction. Create a broad based online store offering a vast product line that will appeal to all segments of the society.
Nigeria has a large population of low income earners, ignoring them will put a dent on your growth potential. It is more profitable to make ₦100 each from 10 million people than to make ₦1,000 each from 100,000 people. Do not restrict yourself to any class of people, except you are a niche of exclusive store.
Integrate Affiliate Marketing
Affiliate marketing was a key factor in the mainstreaming of online shopping in the United States, United Kingdom, and indeed most parts of the world. Leading online stores like Amazon, BestBuy, and AliExpress used and continue to use affiliate marketing to drive sales to their websites.
With affiliate marketing, every satisfied customer is effectively a marketer and they have a reason to be. They get paid commissions for telling their friends about products they bought at your online store.
A lady who just had a cosmetic range she bought at your store do wonders on the pimples on her face can share affiliate links to her friends through her Android phone, Twitter, or Facebook and in days some of them may decide to try the product, bringing in more sales for just satisfying one customer.
Integrating a transparent affiliate marketing system to your online store will also attract bloggers to promote and market the products you sell at your store as it will offer an alternative business model for bloggers. The dominant montisation model currently used by Nigerian bloggers is the pay per click or pay per view advertising model.
With affiliate marketing opportunities, bloggers will begin to see the potential of the pay per lead or pay per sale advertising model and once they do they will not stop driving traffic to online shopping sites. Meaning millions of additional page views weekly and you don’t even need to pay for them except they actually sale a product. How cool could that be?
For example, the affiliate partnership between NaijaTechGuide and Jumia and Konga have been quite successful. Over the last couple of years NaijaTechGuide have sold products worth millions of Naira for Jumia and Konga.
Affiliate marketing, will also lead to an emergence of another type of online business built solely for driving traffic to online stores. Price comparison website exists to show people the best prices of products online and they make money by driving traffic to online stores.
Currently there are very few price comparison engines in Nigeria, because of a lack of a sustainable business model. A transparent affiliate marketing program by your online store can give birth to up to a thousand comparison sites all competing to drive high quality shopper traffic to your online store each day. Imagine a whole new industry that exists just to sell your products.
With thousands of bloggers and price comparison sites preaching the gospel of online shopping every day, hundreds of new converts could be won each day.
Target Students they are the future
A love for the status quo was fingered as one of the causes of the low uptake of online shopping in Nigeria in the challenges to online shopping in Nigeria article. However, students and youths are more open to change. They are also the future, introducing them to the culture of online shopping is a good long term strategy.
Find out products that students and youths are likely to buy (eg. books, movies, phones) and stock up. You may also need to build collection points within tertiary institutions. A lot of students live in houses and hostels with invalid addresses and crowd management issues, not safe for online shopping.
Having secured collection points within their school to pickup products they have ordered online could make some students to consider shopping online. Introducing students to online shopping is an important long term strategy for online stores. Teach them online shopping now and in a couple of years they will not know any other way to shop but online.
You also solutions Jumia is using to win against the competition.