The Nigerian economy has been doing badly since the global oil market went berserk. While everyone is fixated on the bigger picture, the impasse in the economy is fast destroying the tech business scene.
The whipping boy in the tech ecosystem is the eCommerce sector. This sector is the loftiest yet, the most vulnerable to an economy that is gradually caving in. Tonnes of cash investment has entered this sector, but the economic condition, the outlook for Nigeria’s eCommerce sector is gloomy.
The foremost reason is Nigeria’s import dependent economy. However, because eCommerce sites sell mostly imported goods, estimated at 80% of their total inventory, the new import regime puts them in a fix. Most of their suppliers have not been able to bring in new shipments of goods for many months. As their stock gradually dries up, prices would naturally go up the roof.
For a sector that touts lower prices to gain competitive edge, their promises would be broken.Unfortunately, many new entrants came into the market last year. This was a period when the economy was masking its relapse before the average investor/business owner. New players are more at risk of either backtracking on their business plan and or closing down if the bigger economic scene receives no respite.
As a solution, eCommerce players have tough choices to make. Their dependency on imported goods and suppliers has to be looked into. This is a fundamental challenge that must be tackled head-on. This is not easy to tackle owing to the fact that manufacturers produce cheaper outside of Nigeria. However, deepening of product offerings, ‘collectively’ partner with local producers/SMEs to guarantee bulk purchasing of finished goods might be a starting point.
In terms of business services used by players, it is also important that some services that the practice of payingforeign companies and suppliers tasks that can be done locally, should also be looked into. Some critical services such as hosting and database services, enterprise management software, web advertising can be sourced locally, these would reduce pressures of sourcing Forex on eCommerce sites.
eCommerce is now an integral part of Nigeria’s retail value chain. Tackling fundamental challenges during an economic downturn such as this, will serve as a respite pending when a boom cycle beckons.