Fri, Aug 21, 2020 3:25 PM WAT
From the outset, the COVID-19 pandemic has been as much an economic crisis as a health one. Across the world, government and business leaders have struggled to balance both priorities, resulting in what experts predict could be the worst global recession since World War II. For Nigeria, experts predict the second recession in four years and the worst recession in four decades.
Yet, in the midst of this, online retail giants like Amazon and Jingdong (JD.com) thrive. Stock values for both companies have skyrocketed while other businesses struggle to stay afloat.
With the current climate, it is clear that E-commerce is perfectly primed for a pandemic. That gold standard of pandemic life - minimal in-person contact - is at the core of the business model. Consumers can experience the full range of the shopping experience without ever setting foot outside their homes, minimizing their exposure to the virus (and keeping themselves, their families and their communities safer).
Amongst our key findings:
The rise in E-commerce in particular reflects popular acceptance of social distancing in our new normal. Perhaps, once a helpful resource for our over-scheduled modern lives, e-commerce has become an essential service for pandemic living. While other businesses have struggled to stay afloat, U.S. online retailer, Amazon, and its Chinese counterpart, Jingdong (JD.com) have seen their stock prices grow.
It stands to reason that Africa’s E-commerce businesses could see similar growth. The potential for the industry is hard to miss, given our continent’s massive markets, and the upward trend in internet penetration in the last two decades. Nigeria and Kenya have seen steady growth in the industry, pegged at 62,939% growth for Nigeria, and 23,335% growth in Kenya from 2000 - 2020.
In this report, we explore the impact of the COVID-19 pandemic on the E-commerce industry in Nigeria and Kenya. We begin by highlighting the trajectory of the world’s largest E-commerce platforms in the last year. Then, we offer background on E-commerce in Nigeria and Kenya, leading up to COVID-related restrictions. We conclude with new insight on consumer attitudes to E-commerce, gleaned from social media chatter and survey data, collected and analyzed using Versus, our proprietary research tool.
Here is a look at stock prices of top E-commerce platforms in the world over the past year (July 2019 - June 2020).
This is a review of the stock prices of the top international E-commerce platforms from July 2019 to June 2020. There was a general increase in stock prices; however, Amazon stood out amongst the other four due to its quick turnaround time in delivering to most countries since inception.
Impact News/Posts – online news, news forums, and blogs, pertinent news articles or posts with associated sentiments (based on impact/rankings) on E-commerce activities. Social media (Twitter) from both Nigeria and Kenya.
We also used our Versus Ask™ product feature to survey our Versus Scouts for additional insights.
This covers the top relevant trends in conversations on the subject matter from June 24th to July 15th.
We used the following keywords and hashtags:
Tweets reviewed for both Nigeria and Kenya
Reviewed from Nigeria 🇳🇬
Reviewed from Kenya 🇰🇪
In Nigeria, sentiment trended mostly neutral (see “Key Takeaways” Section).
In Kenya, Twitter chatter sentiment trended mostly neutral (see “Key Takeaways” Section).
Using the Versus Ask™ feature, we surveyed 600 respondents (our Versus Scouts) across different parts of Nigeria on the topic of online shopping. Respondents aged 16-65, answered questions about their online shopping behaviour and preferences, including changes since the imposition of COVID-19 pandemic related restrictions.
90% of respondents report that they have shopped online at least once.
Online shopping related to coronavirus restrictions:
20% report that they were very likely and 30% were likely to shop online before COVID-related restrictions were imposed.
Jumia was the most used e-commerce platform amongst respondents -- 50% of respondents who shop online indicated Jumia was their preferred online platform. Instagram followed closely with 20% while Amazon accounted for 5%. Jiji and Konga both accounted for 2% each. All other platforms accounted for 10%. The remaining 11% choose not to shop online.
The 11% of Scouts who don't shop online attributed this to various reasons, ranging from availability of Internet, lack of trust in online payment, in particular, online payment before delivery. Respondents would rather view the product, verify its quality, then pay. Poor customer service ranks among the two top reasons why our respondents said they do not shop online.
Of the respondents who shop online (i.e. 540 respondents), 40% say that they shop mainly for Fashion items, 30% of them chose Electronics, 8% chose Food and delivery, and 20% said they shop all of the above. The remaining 2% do not shop online.
SMS or Whatsapp topped the list of preferred means of communication followed by voice phone calls, emails, and Instagram Direct Messages (DMs) simultaneously. Only 1% chose Facebook and Twitter.
Since its inception, Nigeria’s E-commerce sector has experienced rapid growth. Nigeria’s top E-commerce platforms are Jumia, Konga, PayPorte, Jiji and Kara. Jumia is reported to have had 6.4 million active customers in the first quarter of 2020, up from its 4.3 million active customers in the corresponding quarter of the previous year, and Konga is currently valued at $3.5M in revenue.
Various platforms in the country are constantly evolving to offer unique technology-driven solutions; from the integration of seamless payment gateways, to the delivery of goods and services, while protecting both buyers and sellers for a wholesome E-commerce ecosystem.
For many small and medium scale entrepreneurs, Instagram is the go-to platform to launch an e-commerce business. Every month, the platform sees over 1 billion active users, and records much higher brand engagement rates than other social networks (engagement rates on Instagram can be as much as 10 times higher than rates on Facebook).
Though it has yet to be rolled out to all countries, in March 2019, Instagram announced that it is testing a “Checkout on Instagram” feature that allows users to pay for products and track their orders without leaving the app.
As of March 2019, Instagram’s Head of Product stated that there are about “25 million businesses on Instagram globally, half of which do not list a website”. This number is most likely to have increased during the pandemic.
According to Product Hunt, Instagram Shop will allow users to shop directly on Instagram’s Explore page, based on their personalized recommendations and trending topics. Users will also be able to access exclusive launches within the app.
Despite shutting down other arms of its business operations in Nigeria, Opay is focusing on its fintech platform, which is mainly driven by the e-commerce sector in the country. In their announcement, the company cited challenges related to the coronavirus pandemic, and previous government restrictions as reasons for the move. The fact that the fintech platform, which is driven in part by online payment gateways in e-commerce, suggests that e-commerce is viable despite the bad business atmosphere created by the pandemic, and government regulations.
#NightMarketwithDammyB was launched in June by Twitter user @_DammyB_ for sellers across the country to promote their deals 9 pm to 12 am daily. Many Nigerian Twitter users who run businesses used the hashtag to advertise their products, particularly discounts, price slashes and deals.
Conversations around this hashtag trended neutral and some of the most prevalent businesses are shoes, clothes, food vendors, skincare products, gadgets, hair and accessories.
Flutterwave, one of Africa's leading payment gateways launched Flutterwave Store, a tool to help businesses completely launch and manage e-commerce businesses. The successful market penetration of Flutterwave Store, including its seamless and all-encompassing features for completing a sales cycle, illuminate the influence of social media announcements and advertising on the e-commerce ecosystem.
PayStack launched PayStack Commerce to help African creators and small businesses sell digital and physical products. Users can sell via product links and securely receive payments on the platform, completely free. Online mentions of PayStack Commerce show a high positive sentiment, as users were thrilled at the embedded features, and the free-to-create sales links. Twitter users in other African countries like Kenya requested for the product to be launched in their country. Still, issues of trust and buyer protection were raised, as people perceive that the product to be more favorable to the buyer than the seller. PayStack was collaborative, giving potential users the chance to suggest their roadmap.
E-commerce in Kenya has experienced steady growth, aided by an internet penetration rate of 87.2%.
Kenya’s top five E-commerce platforms-- Jumia, Kilimall, Masoko, Avechi and Skygarden -- have slowly become household names across many counties. Though trust remains a concern, e-commerce penetration has been on a gradual and increasing level.
Key Topics (Kenya)
Tweets tagged #PayWithVisa trended neutral. Users spoke to the benefits of VISA cards for online payments including payment speed, security, fraud protection, and discounts at select stores.
#Ikokazike trended mostly neutral. Users advertised different products such as woodworks, home decor, apparel, cars, fashion items and more. Similarly, some tweets promoted job vacancies, and several others promoted users’ work portfolios and CVs in search for work.
Iko kazi is Swahili for “it works”. It is used in Kenyan Twitter for people who are looking for jobs or people who have vacant positions needing to be filled. Chatter around this topic was neutral because of job postings.
This hashtag is used by sellers across the world to promote goods and services. In Kenya, a lot of sellers used this hashtag to promote their businesses on Twitter. Chatter around this topic was mostly neutral because online sellers were advertising their goods and services. 80% of advertised goods were fashion items.
These are the industries/products growing during this time:
Pandemic realities have brought on new consumer needs, and re-energized old ones. In the last six months, there have been increased searches for the purchase of face masks, a prerequisite for engagement in public places in much of the world, Nigeria and Kenya inclusive. People have resorted to home-made sanitizers and fabrics-made face masks. Similarly, several motorbike companies transitioned into the delivery business due to the lockdown and restriction on movement.
From our Twitter mentions, there were a lot of advertisements and engagements on various items but topping the list would be food and consumables, as well as fashion items.
All top five international E-commerce platforms experienced an increase in their stock prices, which is due to the increase in activities from the first wave of the coronavirus. As lockdowns were implemented across the world, people looked to the internet to shop for both essentials and tools for entertainment, work and learning.
Sentiment distribution in Nigeria trended mostly neutral. A lot of Twitter users used the available hashtags to advertise their goods and services. Also, some of the positive sentiment can be attributed to the positive reviews given to the announcement of the various newly launched E-commerce platforms, especially the Nigerian-owned Paystack and Flutterwave e-commerce products.
Sentiment distribution in Kenya, just like Nigeria trended mostly neutral, with a decent amount of positive mentions, and this can be ascribed to various merchants using the available hashtags to advertise and showcase what they had to offer, and also receiving positive reviews from customers.
Instagram sellers in Nigeria mostly attend to inquiries on product sales through Direct Messaging (DM), where the sales process is completed. This process has worked for small business owners, who make daily sales in the thousands, even though there are established E-commerce players who struggle for various reasons like trust, payments, and logistics. These established players may not have been at a complete loss because e-commerce sites offer you loyalty points (which lead to discounts on future purchases), show your purchase history, etc.
The COVID-19 pandemic has reinvented different ways for brands to advertise their products using existing and new online marketing channels. Most brands have shifted their focus to digital marketing channels, especially social media, due to the need for social distancing and less movement. The COVID-19 lockdown brought about the launch of marketing channels such as Facebook Store and Instagram shopping to allow the business to sell their products online and reach a wider audience. Similarly, Shopify, a popular E-commerce platform rolled out a 90 days free trial from the previous 30 days trial to help small-medium entrepreneurs leverage the platform to launch their businesses online.
This report has focused on the internet’s place in business transactions, its potential to support businesses and customers in Nigeria and Kenya, and the challenges that attend that potential. Opportunities for online business have expanded as brick-and-mortar shopping has slowed. Even as pressure on infrastructure has eased the delivery side of online business and new product offerings promise to create even more seamless shopping experiences, results from our consumer survey indicate that trust between vendor and customer continues to be amongst the biggest hurdles to overcome.
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