“Konga.com is Nigeria’s largest online mall. We launched in July 2012 and our mission is to become the engine of commerce and trade in Africa.” Source: https://www.konga.com/about-us/
Konga’s claims about itself can be debatable, but one thing is clear, Konga’s business is to facilitate commerce and trade in Africa (well, starting with Nigeria I guess). But, on whose cost should Konga do this facilitation? Is it wise for Konga to facilitate trade at its own expense? Shouldn’t Konga figure out a way to facilitate trade in an efficient way for its business. Guys, don’t forget, Konga wants “to become the engine of commerce and trade in Africa”.
The African dream might just remain a dream if the business does not survive in Nigeria. So, it is imperative for all of us to figure out a way to ensure that Konga first survives, then become sustainable before thinking of Conquering other territories.
Please don’t get me wrong, I have not started talking about profitability. I know the response to that will be that Amazon and Alibaba didn’t turn a profit in their first 10 years. But 1 thing is sure, the grow at an unbelievable rate. Notice that I used the word rate. I am not talking about absolute numbers, I am talking in percentages. A company growing revenues at an annual rate of 150% but still unprofitable cannot be compared to another business within the same industry growing at 10% per annum with similar cost profile.
I understand the pushback, Nigeria is tough, infrastructure is bad, security and power etc. But guess what, so was China. Every territory requires tailored strategy to win or survive. The model that worked in China might not survive in Nigeria. So, Go-Jek vs Uber (or other car hailing/sharing businesses) is an example. When everyone appears to be replicating the Uber model across different territories, Go-Jek understood the Indonesian market and launched a Motorbike sharing/hailing business. So, you will expect that a bicycle sharing play in china will be a no brainer, however, the market is teaching them a big lesson. Save for Ofo and Mobike (with stash of cash), most other players are struggling. In fact, Wukong Bike has shut down just five months after launching, with US$147,000 in losses. The Chongqing-based company claims that it was forced to wrap up as it could locate only 10 percent of its bikes, with the remainder presumed lost or stolen.
That said, for Konga to achieve its dream, it needs to rethink its Nigerian operations. I believe Konga needs to scale back its operations, fix the inefficiencies within its valuechain, then scale up. I believe Konga needs to deal with the following specific issues;
- Stop trying to be Nigeria’s largest online mall: What is the point of being the Nigerian Civil Service? The largest employer of labour with so much inefficiencies. The idea of being the largest online mall is one of Konga’s biggest problems. Konga should rather focus on providing value to its customers and stakeholders. Being the biggest means nothing if you are not providing value!
- Focus on Quality Control – Sack Merchants with poor quality products: If Konga rethinks its target customers, it would realize that one of the reasons people purchase products online (especially from platforms like Konga) is the mark of quality the product might have. I will rather buy something online if I don’t know where (or have time) to get the original product. I will assume that Konga is a stamp of authenticity on the product. But if Konga then sells me substandard or outright fake product, I won’t care about the merchant, I will say, I bought this terrible product from Konga, simple! Konga needs to clean out its merchants. Only verified and trusted merchants should be allowed to sell on the platform. Konga does not need to sell everything. No, you don’t. If you can’t find a good quality source for a product, you don’t have to sell it. The sacked merchants can go on olx.com or jiji.ng, but on Konga, only verified merchants with quality products should be permitted. This then feeds to my next point –
- You don’t have to incur a customer acquisition cost (“CAC”) on the same customer over again: Once the Konga platform is known for good quality products, then the platform will enjoy repeat customers. Then loyalty schemes can be built on top of that. If Konga continues to allow these merchants (with substandard products) to ruin its business, then the business will have no choice than to always entice customers with low prices and deals – like it does now. This will continue to drive up its CAC. I will rather spend to keep my customers more loyal than spend to acquire them over again.
- Scrap Pay on Delivery (“POD”): Who pays for the cost of a failed or returned order? Once you can assure your customers that they will always get great quality product on the Konga platform, the next step is to scrap the POD option. This will ensure that only serious buyers come on the platform, and orders are only returned for genuine reasons. This will no doubt reduce the order volumes at the beginning, however you are sure that you only attempt to fulfil profitable orders. One director at a certain ecommerce platform claims that the biggest lesson he has learnt from the business is that “Nigerians like to travel!”. He explained that each time their delivery men brings the product to the customer’s house, the customers often claim to have travelled! Scraping POD will help reduce the travel frequency of Nigerians I believe.
- Forget Nationwide Delivery, Focus on Profitable Cities Clusters: There is no point delivering a pack of singlet to my village if the cost of delivering the product is higher than the benefit of doing such. There is a reason Uber will only operate in Lagos and Abuja. I reckon that Konga focuses on Tier 1 (Lagos, Abuja, PH I guess) and maybe Tier 2 (Ibadan, Uyo, Kaduna, Enugu, Abeokuta etc) city clusters. However, to scale this model efficiently, Konga should match merchants with orders within their clusters. So, I I am loging in from Gboko in Benue State for instance, the products I will be able to order are products by merchants around me, so that the delivery charge will at least cover the cost of delivery. If I want to order products outside my delivery zone, I should nominate a delivery address in the products’ delivery zone
Once these strategies are properly executed, I believe Konga will be in a better position to scale a more efficient operation and truly achieve its mission of becoming “the engine of commerce and trade in Africa.”