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MSME

Is Konga following Redeemed Church strategy in e-commerce market?

I see a growing similarity between The Redeemed Christian Church of God (RCCG), one of Nigerian’s biggest Pentecostal churches, and Konga, Nigeria’s foremost composite e-commerce giant in their mode of operations.

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By Joseph Okoghenun

I see a growing similarity between The Redeemed Christian Church of God (RCCG), one of Nigerian’s biggest Pentecostal churches, and Konga, Nigeria’s foremost composite e-commerce giant in their mode of operations.

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In Nigeria today, there is hardly any street where one cannot find a branch of RCCG. The church has become ubiquitous. In Christendom, RCCG certainly has no rival in terms of spread, and no one has ever dared to compete with the Pastor Enoch Adeboye led-church in that regard. The strategy has certainly worked for the religious body.

Interestingly, Konga seems to be following the same strategy. In its seven years of existence, Konga has expanded the scope of the e-commerce operations in Nigeria with its retail roll-out strategy. As disclosed by the company, Konga currently has over 31 retail stores. Indeed, it is hard to miss the attractive Konga fuchsia colour dotting the landscape with its rapidly growing stores – a factor which now makes every fuchsia-painted building appear like a Konga store.

This is also the strength of the RCCG brand equity. Every beautifully constructed house of worship is now assumed an RCCG church, if not closely scrutinized.

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Due to the nature of my job, I have the privilege of travelling to various states in Nigeria every month to engage customers in this trying times. It is rather unbelievable the massive spread of the Konga retail store. Whether it is in Warri, Kano, Uyo, Asaba or Ibadan, just to mention a few, you cannot miss the imposing colour and signage, thereby leaving one wondering what their strategy is.

Last Monday, I had a challenge with my laptop and I asked my neighbour who is an IT expert where I could buy a reasonably priced HP laptop in Lagos. He volunteered a number of places, including the smart Computer Village in Ikeja, Lagos, but advised that before I finally buy, I should check prices on Konga as he was sure Konga had the best prices.

I did as my neighbour advised. I went to the Konga Online Marketplace App, which I had installed on my phone to check for the price and specifications of the available HP laptops.

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After checking the price range and functionalities of the various HP brands available, I settled for the HP Spectre, which is a perfect device for me, especially considering the nature of my work. Thereafter, I needed to cross-check the price with what was obtainable in Computer Village. Hence, I put calls through to some of the contacts in Computer Village my neighbour had given to me.

Surprisingly, the prices I got from them all were far higher than what I got from Konga. Considering that I needed to endure heavy traffic in various parts of Lagos to get to Computer Village amidst my busy schedule, I did not think twice before settling for Konga to place the order. In the comfort of my bedroom, I placed the order before I went out.  Since I knew that my movement wouldn’t be certain on that Monday and I would be attending a series of meetings, I directed that the laptop should be dropped at the Konga retail store located at Third Roundabout on Lekki-Epe Express Way, Ikate, Lekki Phase 2, Lagos, close to where I live, for onward pick up.

Throughout that day, I was too busy to have time to pick up the laptop. On Tuesday, I went to the Konga retail store. Since the store was opened this year, Tuesday was the first time I was using it. When I went to pick up the HP laptop on Tuesday, I was pleasantly impressed by the courteous service I received from the attendants at the store, and the aesthetical layout of the place.

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Further raising my impressions was the fact that all my attempts to give the attendants a tip for their wonderful service was politely rejected. In fact, they informed me that the practice was against the company policy. I was really impressed by what I saw and observed.

Curiously, I also noticed that the store is located in a strategic place not far off from a branch of RCCG. I don’t know whether this is also a deliberate strategy by the new Konga owners to have some of their stores located close to branches of the biggest Pentecostal church in Nigeria. As a matter of fact, the Konga store located at Redemption Crescent, Gbagada, is adjacent to a branch of RCCG. The affinity between the two brands is becoming too glaring for anyone not to notice.

My visit to Konga store also afforded me the opportunity to meet with the Konga CEO, Prince Nnamdi Ekeh for the first time. Unassuming and smart, the young Prince Nnamdi was entering the store while I and other customers were about leaving the place. As soon as he entered, he greeted all of us warmly and asked about our welfare. I replied in the affirmative but enquired if we had met before.

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Beaming with a huge smile, Prince Nnamdi humbly replied in the negative, but explained that as the CEO of Konga, it was his responsibility to see that the welfare of Konga customers was taken care of always.

I was really marveled by the simplicity of the young CEO that I decided to exchange contacts with him. Surprise is an understatement when I later received a call from Prince Nnamdi that evening, asking whether I got home safely and how I was enjoying my new HP laptop.

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I was marveled by his sincerity of purpose so much that I wondered whether he is also a pastor in RCCG – the brand I assume Konga is imitating in their retail rollout. I had to scan through the CEO’s profile on the internet.

Subsequently, I got to know that Prince Nnamdi’s life has been all about e-commerce. He was just 23 when he founded Yudala – a bold and ambitious e-commerce outpost, which later merged operations with Konga in 2018. In fact, I got to know that Konga imbibed its retail store strategy from Yudala, which pioneered the model in the global e-commerce sector.

The merger, no doubt, has repositioned Konga from a business, operational and quality service delivery standpoint, with cutting-edge efficiency to drive the company’s operations, including its retail stores.

The relevance of expanding the Konga brick-and mortar presence in the manner of RCCG cannot be understated. Despite the marginal growth of e-commerce since the turn of the decade in Nigeria, the market has faced significant challenges. These include poor road infrastructure, delivery and inconsistent addressing system which have encumbered a number of players. Anybody who has worked in the logistics sector of our economy as I have done will understand the point being made here.

Although the RCCG may not have encountered such challenges with its every-street-branch operational model, it is apparent that this model remains the best for reaching many more potential shoppers in our clime, as Konga model has shown.

For instance, how do you deliver a product to remote areas where there are no roads or traceable addresses? But a nearby retail store, which doubles as a pick-up centre, will solve such challenges, as it has done for Konga. The foregoing appears the reason Konga is following in the RCCG’s footsteps.

 

Patricia

Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform. To get your articles on Nairametrics, kindly send an email to [email protected] and we will publish it within 24 hours of approval by our editorial team.

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MSME

What SME’s need other than Intervention loans

Since access to finance is a key constraint to SME growth, funding it has become paramount.

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SME's, Here’s why your business needs a solid value proposition (PART 1)

Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries. According to the World Bank, they represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies and these numbers are significantly higher when informal SMEs are included. The World Bank predicts that “600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world.  

Since access to finance is a key constraint to SME growth, funding it has become paramount. This has birthed a myriad of programs ranging from incubators to accelerators both locally and internationally giving out loans, grants, and other resources to ensure that the sector is equipped to create jobs and stimulate the overall economy. There have also been federal grants and other forms of support given to SMEs. Since the outbreak of the Covid-19 pandemic, SMEs have been prioritized as recipients to loans and other stimulus packages. The CBN’s N50 billion Targeted Credit Facility (TCF) geared towards supporting SMEs and households whose economic activities have been disrupted by the COVID-19 pandemic, is just one of the different packages that have been put in place to cater specifically to it.  

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While there is data to back the impact SMEs have on our economy, it is true that even though small businesses help the economy, not all small businesses will contribute to the dream – or even survive past its early years.  According to The Better Africa report, by Weetracker, an African digital media company, the top 5 countries that experienced the highest shutdown rates among start-ups between 2010 and 2018 were Ethiopia at 75%, Rwanda at 75%, Ghana at 73.91%, Zimbabwe at 66.7%, and The Democratic Republic of the Congo (66.7%). Failure rate for start-ups in Nigeria averaged 61% over the same period. What this means is that if small business loans are being given to businesses at random in Nigeria, 61% of those businesses are bound to fail and the monies given, completely lost.  

The small business loans being offered by the CBN is a good step in the right direction. However, determining whether it ends up in the hands of the startups that are viable enough to scale and create the jobs or the larger percentage that will fail, depends to a large extent on how they are selectedIn disbursing the loans, there must be clear methods of choosing the recipients. CBN’s N50 billion Covid-19 intervention fund for SMEs in conjunction with NIRSAL Microfinance Bank, simply noted that it would appraise and conduct due diligence applications before sending them to the applications to the CBN for final approval, to CBN for review. The results will tell their story. 

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Why the economy needs more than loans 

The CBN giving out intervention loans is just one part of finding the solution – and this too does not say much about the amount in loans being given and their effect on the economy at large. If it’s too little to make any real difference, then it might only buy many of these businesses a few more months of dogged survival, after which all will be lost.  

The overall operating environment must be able to stimulate growth either through favourable tax incentives for specific industries, moratorium on other forms of loans, or just the provision of basic infrastructures like electricity and speedy internet services.  

READ ALSO: What Nigerian MSMEs must do to thrive in the new normal

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Another important thing is to ensure there is a ready market for businesses within the country. Even with the right federal loans, a business having no ready market will sink its funds into inefficient marketing. This ready market, however, has a lot to do with the ease of local production to ensure competitive pricing, further curtailing the proliferation of imported items, and more. 

In other words, economy will benefit even more from its overall development. The loans might help but, overall, there is unlikely to be sustainable exponential growth until the things that should be in place to expedite the development process exists. 

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MSME

How Nigerian SMEs can survive high mortality rate

SMEs are a very important economic catalyst in developing and industrialized countries.

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More than 40 SMEs in Lagos shut down due to economic crisis

In Nigeria where unemployment is a serious issue, the local businesses have a special position in the industrial sector because it has created employment and has been able to utilise labour. The local businesses, otherwise known as SMEs which means, Small And Medium Enterprise are everywhere, found on every street and corner as they surround us.

There is however no universal definition of SMEs that is widely accepted as it differs and varies from countries, but this is usually based on employment, assets or combination of the two. Institutions and organizations define SMEs in different ways depending on the purpose and the objective. Take for example, according to Organization for Economic Co-operation and Development OECD (2005) SMEs are considered to be independent firms that employ less than a given number of employees. However, SMEs were classified in terms of size, and financial assets.

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The Small and Medium Industries and Equity Investment Scheme (SMIEIs), defined SME as an enterprise with a 200 million naira maximum asset base, with the exclusion of land and working capital and with a workforce of not less than 10 employees and not more than 300 employees. Akabueze,(2002).

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The Third National Development plan of Nigeria (1975 – 1980) defined a small scale business as a manufacturing firm that employs less than ten people, or whose machinery and cost of equipment does not exceed N600,000
The Federal Government Small Scale Industry Development Plan of 1980 defined a small scale business in Nigeria as any manufacturing process or service industry, with a capital not exceeding N150, 000 in manufacturing and equipment alone.

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These definitions give a clearer explanation as to how the meaning of SMEs differs and varies. However, just to give you a clearer understanding of what local businesses or SMEs mean, they are independently owned organisations that require less capital and less workforce and less or no machinery. They are ideally suited to operate on a small scale to serve a local community and to provide profits to the business owners.

READ MORE: FG to disburse N97.3 billion to tech innovators, agric enterprises

Most enterprises in Nigeria, most of which are in the commercial sector are categorized as small businesses. The role of the small and medium enterprises towards the development of Nigeria is of great importance as it has contributed greatly to the country in terms of growth and development and also in providing employment opportunities.

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From seminars to workshop initiatives for SMEs both locally and internationally, a lot is being said about SMEs all over the World.

According to the Central Bank of Nigeria report (2003), SMEs are a very important economic catalyst in developing and industrialized countries.

According to the United Nations Industrial Development Organization (UNIDO), developing countries can conquer poverty and inequality by democratizing, deregulating, and liberalizing the integration of the global economy. Recent studies have shown that SMEs contribute to over 55% of GDP and over 65% of total employment in high-income countries also that SMEs and informal enterprises account for over 60% of GDP and over 70%of total employment in middle-income countries (OECD, 2004).

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READ ALSO: These Nigerian businesses are being affected by COVID-19

However, considering the term “small”, there’s a whole lot of enormous challenges that come with it. In Nigeria, the factors working against the development and growth of local businesses are quite numerous, some of which include:

1. The issue of funding is a major problem with SMEs in Nigeria. However, the problem is not how to source it but the accessibility to either short or long term loans.

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2. Lack of infrastructural facilities is a serious impediment to the performance of SMEs. The problem of inadequate infrastructural facilities includes electricity, good road network, availability of potable water, and solid waste management. These infrastructures are left to the business owners to provide themselves.

  1. Poor Management and Low Entrepreneurial Skill Base is a serious clog in the survival of small businesses as there is a lack of essential and required expertise in business which leads to wrong and costly decisions and mismanagement.
  2. Entrepreneurs often blame their failures on inadequate sales. However, the problem lies with poor marketing skills that could help promote their sales.
  3. Most entrepreneurs go into business without proper planning by taking a realistic view of what their strengths and weaknesses are, let alone giving careful consideration and analyzing the economic trends or business conditions in that particular sector of activity, which sometimes leads to mishandling when the business starts to expand.
  4. The root of most employee problems in Nigeria is poor personnel management. They put aside personnel matters till crises set in. Such crises usually pose serious threats to the firm’s survival if they are not promptly looked into.
  5. The harsh deteriorating macroeconomic environment in Nigeria has adversely affected the performance of small business enterprises and has posed as a major challenge to their survival and growth. Most small business enterprises are struggling with the problem of uncertainty caused by the unstabilized macroeconomic environment and policy shifts.

With all of this ongoings, some of the solutions preferred to ease these challenges include:

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1. The need for government, and non-governmental organizations to create Seminars and workshops initiatives and other forums, to establish a platform for the interaction of SMEs owners/managers with others which can help to improve on their management capabilities.

2. Government should also provide the necessary infrastructures in order to ease the burdens and thereby encourage and promote rural industrialization.

3. The SME owners/managers should strive to develop effective marketing strategies in order to boost business operations which will become profitable.

4. It is important for SMEs to develop good personnel management policies to avoid crises that could affect their business.

5. Local business owners should take to proper planning, realizing his strengths and weaknesses before diverting into any business to avoid mishandling.

6. Goverments should help create a macroeconomic environment that is stable as it will enable these local businesses to make reasonable forecasts on costs, turnover, and return on investment.

7. The government should help in making funds easily accessible to SME owners/managers, be it short or long term loans that could help to encourage them to execute their business plan.

8. SMEs operators should also develop their competences in managing and sustaining their businesses by constantly engaging in training, research and development.

 

Patricia
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MSME

130 farmers to receive seed funding of N100,000 each

The target of the programme is to adopt farmers in 774 LGAs across the country.

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The National Information Technology Development Agency has kick-started a job and wealth creation programme where 130 farmers will each receiv, e seed funding of N100,000Border Closure: Nigerian rice farmers are struggling to feed a rice-hungry nation. CBN to give Niger Delta rice farmers single-digit loan 

The National Information Technology Development Agency has kick-started a job and wealth creation programme where 130 farmers will each receive seed funding of N100,000. The programme will be supervised by the Federal Ministry of Communication and Digital Economy.

According to a statement from the agency, the National Adopted Village for Smart Agriculture (NAVSA) programme is in line with the government’s drive to lift 100 million Nigerians out of poverty, and it will start with 130 farmers in Jigawa state.

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The target of the programme is to adopt farmers in 774 LGAs across the country, open the platform to all agriculture ecosystem players with access to information, facilitate and improve productivity, reduce the cost of production, and facilitate access to local and international markets.

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READ MORE: President Buhari directs Ministries of Power, Finance, BPE to seal Siemens deal

With all of this in place, it is expected that the farmers will be able to build sustainable business models and digital business opportunities that will create not less than 6 million well-paying jobs in the next 10 years.

“NAVSA Platform is aimed at digitalising agriculture to drive Digital Economy, as part of President Buhari’s agenda to leverage on technology and innovation to revolutionise the agriculture value chain,” the statement read.

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Among other things, the farmers will be empowered with a digital platform, smart devices (tablets), connectivity for data and calls, Digital agripreneurship skills, and enrolment with telecom operators and the National Identity Management Commission (NIMC) for identification.

All of these will be given to them at the end of the programme, which will last from July 1 to July 13, 2020.

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Patricia
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