1. The Goldrush: The Market is Growing.

Despite the pandemic, in the first quarter of 2020 Jumia, an e-commerce Company operating in 11 African countries gained $31.79 million in revenue from 6.4 million e-commerce orders. According to Statista, it estimated that Africa’s e-commerce market size will grow to $29 billion by 2022. The market is growing.

But that’s one side of the story, around 2012-2015 the news of multimillion dollars investments rounds closed by e-commerce companies was everywhere, as a result, several entrepreneurs were motivated to start an e-commerce business, today a number of these companies have shut down their operations and Jumia is still operating at a loss, despite posting large numbers and securing millions in investments. This trend is as a result of the barriers to market entry. 

2. Barriers to Market Entry.

Accessibility, infrastructure, finance and cultural factors prevent e-commerce businesses from scaling in Nigeria and across the continent. According to a Statista, the smartphone penetration rate is around 10-20% of the Nigerian population have a smartphone device (this number is improving for the better), these devices are a crucial component needed to seamlessly access e-commerce services.  A majority of those with smartphones have trust issues when ordering from e-commerce companies. The logistics and delivery industry is still in its infancy, and depending on the scale of the business, there may be a need to secure significant investment to successfully run an e-commerce business. To succeed, you will need to develop a strategy to surmount these barriers and a host of other odds.

3. Start with a niche.

This is important during the early phase of a business, for example, Amazon the most valuable e-commerce company in the world started by selling books before expanding into other product categories. Start with a single product category, it will enable you to figure out your operational processes and test the market with leaner resources. 

4. Marketplace or Direct to customer storefront model.

You will need a business model for your store, do you want a marketplace where other sellers can sell their products or a direct to consumer storefront that enables you to sell directly to your customers. Each model has its pro and cons, choose wisely. 

5. Choose the right platform.

If you’re a small business, it is advisable to start small, by leveraging Facebook, Whatsapp, Instagram and twitter shopping functionality, you can also list your products on existing online market places like Jumia and Konga. For medium-sized businesses or businesses with a large inventory and significant resources they can opt to build an e-commerce site with Shopify, Woocommerce, Magneto and other solutions, these platforms provide access to customer data and a host of other functionalities. 

6. Sourcing, logistics, delivery and customer experience.

Some entrepreneurs spend their resources focusing on the look and feel of their e-commerce website, the products in their store and marketing to the extent that they end up putting less emphasis on figuring out the logistics and delivery framework of their business. Sorting orders, ensuring your customers get their products on time is a crucial component of your business that you’ll need to figure out. 

7. Competitive Positioning.

Unlike offline stores where customers have to drive or walk in to get to a new store, if they are not satisfied with your service offering, with online your competition is one click away. The competition is fierce online, to thrive, you need to define your competitive advantage and position. 

8. Marketing and Advertising.

You will need an effective eCommerce advertising strategy that leverages offline and online channels to gain traction. Paid advertising will make up a significant part of your eCommerce marketing strategy and significant resources will need to be allocated to consumer education and trust build depending on the scale of your proposed operation. It is also important to figure out a way to reduce your customer acquisition cost and create top of mind awareness for your brand.