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Black Friday: Konga tipped to break Alibaba’s $38 billion record but Jumia poses threat

Konga has been tipped to break the shopping record of China’s online supermarket, Alibaba, despite the stiff competition from rival, Jumia.

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Konga now offering merchants loan at interest rates of 2.08% , Black Friday: Konga tipped to break Alibaba's $38 billion shopping record but Jumia poses threat, How Konga restores investor confidence in Nigeria’s e-commerce sector in 2019

Konga has been tipped to break the shopping record of China’s online supermarket, Alibaba, despite the stiff competition from rival, Jumia, which holds the Black Friday record in Nigeria. Alibaba recently smashed its record for the largest single-day shopping sales ever recorded worldwide with a revenue of $38 billion.

The $38 billion sales by Alibaba’s online supermarket was generated on it’s Singles’ Day (November 11, 2019) which is similar to the Black Friday operated by Konga and Jumia. This is a significant growth compared to the $30.8 billion the company generated in its 2018 sales.

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Such sales are possible on a single day because a date or period is set aside to slash prices of goods and products, selling at a lower or discount price compared to the initial market price. The Black Friday is a global sales culture among e-commerce companies but Alibaba’s Singles’ Day is the biggest shopping event in the world.

Black Friday: Konga tipped to break Alibaba's $38 billion shopping record but Jumia poses threat

Why Konga is tipped ahead of Jumia

Though the timeframe that it would take Konga to achieve such feat wasn’t stated, the African representative of IEEE-World Forum on Internet of Things (IoTs), Chris Uwaje, projected Konga would be the Nigerian e-commerce company to attain such staggering figure recorded by Alibaba.

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“One day – very soon -, Konga will smash the e-commerce biggest day-sale record. If you follow the strides recorded by Konga within the past 18 months, you will agree with me that it’s only a matter of time before Alibaba’s Singles Day sales record is within reach,” Uwaje said in a report by Nigerian Communications Week.

IEEE is the world’s largest technical professional organisation dedicated to advancing technology for the benefit of humanity.

[READ MORE: Konga’s founder discloses how he paid N60 million debt that wasn’t his, to save Konga’s operation]

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While speaking on the calibre of those managing Konga, Uwaje said, “Konga boasts arguably the best brains in technology in Nigeria, even more than any bank in the country. This is due to its cutting-edge team of engineering talent at its disposal.” 

He attributed this to the managerial support and investment of Zinox Group, the ICT company that acquired Konga in 2018.

It’s an (im)possible ambition

Recording such a feat might seem far-fetched but it’s not impossible. However, the e-commerce business in Nigeria is constrained by trust issue, the culture of traditional shopping among Nigerians and limitation as regards shoppers’ locations.

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Also, despite the increase in smartphones and internet users, not many are fans of online shopping because it is dragged by disappointing deliveries which don’t reflect what is advertised online. So Nigerians still prefer to visit physical stores or brick and mortar supermarkets that is visible to them. These issues have made the e-commerce business unprofitable in Nigeria despite having a huge untapped customer base.

Also, unlike Alibaba, which is a global e-commerce platform despite being a Chinese online supermarket, Konga’s and Jumia’s customers on Black Fridays are majorly Nigerians. Besides, Konga and Jumia operate separately outside Nigeria. This means other African operations owned by Jumia operate independently from that of Nigeria.

The current eCommerce spending in Nigeria is estimated at $12 billion and is projected to reach $75 billion in revenues per annum by 2025. This means Alibaba made half of Nigeria’s e-commerce future revenue in a single day. So, it’s a herculean task that Konga shouldn’t even worry itself over.

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Black Friday: Konga tipped to break Alibaba's $38 billion shopping record but Jumia poses threat

Konga has Jumia to compete with

Both companies run Black Friday sales. According to a report, Jumia’s Black Friday had the highest sales in 2016 compared to that of Konga. Jumia recorded about 295,000 total black Friday sales which accounted for N7 billion sales in Nigeria while for Konga, Nigerian e-commerce recorded N3.5 billion sales on 155,000 orders.

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The competition between Konga and Jumia is visible for those who have been tracking the growth of both companies. They both lay claim to being the largest e-commerce business in Nigeria. Though the merger of Yudala and Konga seem to have given Konga a better positioning in the Nigerian market, Jumia takes it in Africa generally.

While figures for the 2017 and 2018 sales are not readily available, the figures in 2019 might be pushed by the high prices in the traditional market. However, looking at the performance of both e-commerce companies in 2016, Konga has a mountain to climb if it is to beat the Alibaba’s record because it’s yet to surpass Jumia. Alibaba will keep dragging the goal post forward. However, if there’s any e-commerce company likely to close the gap, it will be Jumia.

But note that while Alibaba does its own discount price shopping in a day, Konga and Jumia operate about four Black Fridays in a month. So, to achieve the feat by Alibaba, both Jumia and Konga will have to reduce their Black Friday to a day and ridiculously slash their prices.

Trailed by unhealthy rivalry

Apart from competing to become the first profitable e-commerce company in Nigeria, Jumia and Konga have always been at each other’s jugular for years. In order to secure the e-commerce marketplace beyond Nigeria, Jumia’s parent company, Rocket Internet, bought and registered Konga-related domain names in ten countries.

[READ ALSO: Konga now offering merchants loan at 2.08% interest rates]

This move by Jumia infuriated Konga, and the latter threatened to take Rocket Internet to court, stating that registering all Konga-related domain names would cripple the company, affecting its expansion plans when the decision to embark comes.

The domain names Jumia bought

  • Konga.cd for Cote D’Ivoire
  • Konga.cm for Cameroun
  • Konga.ly for Libya
  • Konga.mu for Mauritius
  • Konga.ma for Morocco
  • Konga.mw for Malawi
  • Konga.sc for Seychelles
  • Konga.sh for Saint Helena
  • Konga.co.ke for Kenya
  • Konga.co.za for South Africa

Black Friday: Konga tipped to break Alibaba's $38 billion shopping record but Jumia poses threat

Shagaya, in a letter in 2014, described the German’s decision as a “Destructive foreign competition in the internet industry.” According to Shagaya in the letter, Rocket Internet had been trying to take down other local startups that operated in the same market where its (Rocket Internet) subsidiaries were operating.

 

Patricia

Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: [email protected]

2 Comments

2 Comments

  1. George Idehen

    November 19, 2019 at 11:54 am

    How on earth will Konga ever be able to break Alibaba’s record. What was Uwaje on when he isuued such statements. Please journalists have a duty to report reaponsibly. Not this nonsense!

    • toluwalase oluwadamilare

      November 20, 2019 at 3:51 pm

      Read the article through ..that was just to catch your attention..Konga is obviously not going to break that record

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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.

 

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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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