Jumia: An Unrelenting Quest for Monopoly
By Olutokun Emmanuel: To the targeted consumer reading this, you would have seen an on-going digital promotion by Jumia Nigeria for its newly floated arm- Jumia-Party. At first sight, one would have thought it was probably an invitation to a party Jumia was organizing but a quick google search shows that the idea goes beyond that.
Jumia-Party is a platform that allows you order for drinks online predominantly alcohol and spirits and you get it delivered to your doorsteps with ease. This, like the singular most important benefit of e-commerce, aims at bridging the gap between online and offline-reducing consumer stress of visiting malls and bars to purchase drinks that could as well have been delivered to them with opportunities of discount.
The new business is not entirely new in the Jumia-family, as it has been tested in other African countries like Kenya and Egypt before its near quiet entry into the Nigerian market, and it falls as a sub-platform under Jumia-foods.
Since the launch of the leading e-commerce platform in Nigeria in 2012, the company has established its presence in over 20 African countries and continues to expand its hold with its simple but difficult to replicate business model. A model that has essentially edged out competition.
An Ad run by Jumia Nigeria early in the year which had the key message “Everything on Jumia” provides a hint into the company’s long-term business strategy in Nigeria and Africa. In simple terms, the ad tells you that whatever you want to buy or sell, that you think can or should be sold online, can be found on Jumia.
Jumia as a company is keenly interested in being the one stop shop for everything e-commerce across the continent and its every day move into new sectors lend credence to this.
Over time, the brand has moved into latent grounds like Real estate, Foods, Groceries and Hotels either through M&A or as a floated company. Many have paid off while some haven’t like the recent acquisition of Jumia house by ToLet.ng.
The good part of being a service provider in all gamuts of e-commerce is that you deliver an integrated service to your consumer which ultimately reduces the overall burden of moving from one website/app to the other in search of what can be provided on one platform. Putting the consumer first in your approach is key for me, which is why the consumer may not know or even feel the downside of being serviced by one brand without a strong competitor.
This does not necessarily imply that local e-commerce sites are not potential threats to the Jumia business in Nigeria but the level of such threat is yet to be known.
In the general merchandise category, Jumia, Konga, Payporte and Yudala easily come to mind with initial two being the two key players in that space. While the former has been able to scale and expand its business across markets, Konga hasn’t been able to do that.
The recent restructuring by Konga which compels merchant to pay before putting up products and also prepayment request from consumers in a way places Konga as a classified platform whose direct competitors are now Jiji&Olx and less of Jumia.
This is where the inevitability of being a monopoly arises. When Nigeria was in a recession both young and old businesses felt the pang of it including Konga and Jumia but as someone said Jumia pulled through literally unhurt because it got strength and support from its networks in other countries.
There was a period in Nigeria’s history when a telecoms brand controlled over 60% of the market but a legislation by the NCC levelled the playing ground but such move might not necessarily be applicable in this stance.
The returns of running an e-commerce business are never really immediate and oftentimes require a pool of funds to invest in the business before generating returns. Not many companies have the strength and wit to shoulder this responsibility which puts a powerhouse like Jumia in the lead.
For example, the introduction of Jumia party into a space that already has budding startups like drinks.ng and myshayo.com isn’t hinged at grabbing a portion in that space but edging out.
In light of that, Jumia’s potential competitions are gradually gravitating from local competition to the likes of Alibaba and Amazon though some consumers already prefer to make their purchases on these platforms.
Can e-commerce company really dominate Nigeria’s e-commerce like Amazon and Alibaba have done in other countries?
Piece contributed by Olutokun Emmanuel, Winner, ADVAN Future Leader in Marketing Award, 2014 @eolutokun