Business/Economy

Challenges of E-commerce in Nigeria (Updated)

E-commerce is the new frontier of business, however, the challenges of e-commerce are glaring upon use. Though the benefits of e-commerce outweigh the challenges, these challenges must be taken into consideration before venturing into business. In Nigeria e-commerce has become more widely accepted than it was five years ago and the growth of e-commerce in Nigeria cannot be denied. Challenges differ, therefore, the challenges of e-commerce in Nigeria will differ from that in any other country. However, some challenges are uniform. There are problems faced by both product providers and consumers in e-commerce.

Here are the major challenges of e-commerce in Nigeria.

  1. Trust

Though the larger part of Nigeria understands how e-commerce, there is still a very visible lack of trust from the people. This is because Nigerians know their retailers to have fraudulent tendencies, therefore nobody wishes to be fooled. The fear is that what you ordered may never come or you will not get exactly what you ordered.  As the cybercrime rate increases, so does distrust. The payment on delivery option is not the easiest feat to achieve, however, the purpose of this option is to gain this trust, however, the trust is still very much absent. The trust is not only from customer to retailer, it is also from retailer to courier. The fact that the customer cannot touch and see their item in real time are other factors that fuel the distrust.

  1. Logistics/Delivery

Logistics of e-commerce is technical. There are many things that go into the business, including raw materials, transportation, delivery etc. Nigerian logistics and delivery services are relatively new. However, not many are available. Also, there is no well-known Nigerian logistics company that operates nationwide delivery. This is one delivery issue in e-commerce. With inter-state deliveries, the logistics company might be far from your location, and they are also quite expensive. The delivery cost is enough to transport yourself to the market, and back with change, however, with e-commerce, you are paying for comfort. Logistics/delivery as a challenge of e-commerce in Nigeria is also emphasised in the lack of methods to accurately locate delivery addresses. In most communities, the housing is not structured, making it harder for delivery companies. At the same time, the already existing distrust plays a great part in courier service choice.

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challenges of E-commerce

 

  1. Competition

On a platform like Instagram, the business feature is overcrowded. In Nigeria, there are a million and one online clothing retail stores and they all sell the same thing at competitive prices. Some take advantage of their market position or personal image and sell things at a higher price. The competition is stiff. Though it is a profitable market, it becomes hard to tell the fraud from the genuine retailer.

  1. Product Returns and Refund

Product returns and refund is something that is not practised properly in Nigeria, therefore, making it one of the challenges of e-commerce in Nigeria. Most businesses often have “no refunds or return” boldly stated on their business pages, which scares customers into thinking the business is a fraud. Often times, customers do not get exactly what they ordered, and the return and refund process is dysfunctional, causing them to forego the item and their funds.

  1. Customer loyalty

Due to the stiff competition, it is a challenge of e-commerce in Nigeria to obtain customer loyalty. This is because your product, price and service can and will always be compared to many other online businesses in Nigeria. Everybody is constantly looking for the best deal. A customer will be loyal to you until you give them a reason not to, then they move on to the next vendor and take their friends with them. This often happens when a cheaper vendor enters the e-commerce eco-system, or customers find the source of your products.

  1. Finding the right product

In order to succeed in Nigeria, you must find the right product to sell. There are some fields where everybody can sell the same thing, and there are others where you have to be unique, to fill a gap. Also, in determining the right product, you must decide whether you want to sell fast selling consumer goods or not, custom goods, services, or are you selling a platform. This is a challenge as most online businesses offer the exact same products.

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challenges of e-commerce in nigeria
photo via invoice.ng

 

  1. Generating targeted traffic

Most online businesses need traffic to stay afloat. Generating this traffic is not as easy as ABC. Various digital marketing tools and techniques go into generating traffic. With the large competition, it is even more difficult to achieve this, and it is a challenge for Nigerian businesses to make their business more visible online.

  1. Choosing the right technology

In order to build a successful e-commerce business, your business must be based on the right platform, using the right technology. This will ensure effective service and desired results. Using the wrong technology can also hinder you from reaching your target audience and this is one of the challenges of e-commerce in Nigeria. Numerous online business are done on the small scale and the knowledge of aiding technologies is almost not there, hence, these businesses fail to use platforms and technologies that fit the business type, economic and regional factors as well as the customers. For example, if your target market are market women, you cannot put your business on a website knowing full well that the average Nigerian market woman, may not own a smartphone or know how to navigate through the website.

  1. Cybercrime

Cybercrime is one of the leading crime contributors in the country. Cybercrime is any crime committed online or using the internet. It ranges from internet fraud through hacking, deceit etc. The increased rate of cybercrime is one of the challenges of e-commerce in Nigeria. believe or not, the emergence of e-commerce, created more ways for people to engage in cybercrimes. At times products displayed are completely different from what you receive or non-existent. Also, because there is no certified method of verification, many people fall victim to fraud thus discouraging the general public from engaging in e-commerce to a certain extent.

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