The global trend of e-commerce growth is also apparent in Nigeria, where increasing internet usage and smartphone ownership have created opportunities for micro to medium-sized enterprises (MSMEs) to explore thriving online markets both locally and globally. This guide is designed to provide Nigerian entrepreneurs, startups, and MSMEs with a comprehensive understanding of the e-commerce landscape, including insights on developing a successful online sales presence, operational advice on customer acquisition and fulfilment, and recommendations for selecting the most suitable digital selling platforms.
Overview of Nigeria’s Rapidly Growing E-Commerce Sector
Propelled by rising internet access, a youthful tech-savvy population, and the COVID-19 pandemic necessitating digital transactions, Nigeria has seen surging interest in e-commerce over the past 5 years. Key trends include:
- Internet users have doubled, from 97 million in 2016 to over 206 million in 2021.
- Broadband access is rising, with 129 million mobile broadband subscriptions. Smartphones have reached triple-digit penetration.
- Online shopping portals like Jumia, Konga, and OLX receive millions of monthly site visits. Jumia alone had 4.3 million annual active customers in Nigeria as of 2020.
- Logistics networks are expanding to support e-commerce order fulfilment across major cities in Nigeria.
- Venture funding into Nigerian startups enabling e-commerce like payment gateways, last-mile delivery fleets, online retailers, and marketplaces has quadrupled since 2016 to over $1.37 billion in 2021.
- Business-to-business e-commerce is also growing with sourcing and procurement moving online.
These trends present openings for Nigerian MSMEs to diversify revenue by incorporating digital channels and tapping into underserved niches. Let’s examine strategies for building a profitable online sales presence.
Developing an E-Commerce Strategy
Transitioning even partially from brick-and-mortar to online sales requires rethinking markets, positioning, and operational processes. Here is a step-by-step approach:
Set Objectives
Begin by setting clear e-commerce objectives. Potential goals include:
- Reaching new customer segments like youth or professionals in other cities.
- Countering rising competition and retaining existing buyers through digital channels.
- smoothing order payment, delivery, and customer service.
- Test marketing new product lines or categories online before making physical retail investments.
Be targeted; selling your entire catalogue may not make sense online initially. Prioritise best-selling or niche items.
Choose an online sales approach.
Key online sales channel options for MSMEs:
Own Website Gives control over branding, user experience, and direct customer access. Allows deep insights into visitor behaviour. Requires upfront investment in online store development and driving traffic. Ideal if you have strong digital marketing capabilities or specialised products.
Online Marketplaces: Quickly tap into established platform audiences. But limited control and seller competition Commission fees ranging from 5-25% of sales apply. Useful for testing products and new segments. Examples: Jumia, Konga.
Social Commerce: Leverage your existing following on social media platforms like Instagram and Facebook by adding e-commerce capabilities. Provides intimate customer engagement but limited product display and commerce functionality.
Hybrid: Start on marketplaces and social media to validate products online while building an owned website in parallel to progressively shift customers. Provides flexibility.
Analyse logistical requirements.
Assess operational capacities for key e-commerce success factors:
Inventory Management: the ability to accurately track and fulfil online orders while still meeting in-store and wholesale demand.
Order Payment: seamless integration with digital payment options (cards, mobile money, bank transfers)
Last Mile Delivery: reliable dispatch and delivery of online orders to customers in major cities (or pickup options).
Returns Process: systems for accepting return requests, managing reverse logistics, and refunds and exchanges.
Assess gaps, outsource to 3PLs if needed, or phase-launch by geography.
Review Financing Needs
Project working capital needs include initial inventory procurement, marketing, delivery costs, and platform fees. Explore financing options if required, like overdrafts, digital loans, merchant advances, or mobile money credit schemes.
Configure Online Presence
Develop a product catalogue, photos, descriptions, pricing, and categories for a website or marketplace listing. Ensure consistent brand messaging. Optimising your digital shelf for search discovery and visual appeal is crucial.
Prioritise user experience: website speed, payment and checkout experience, and mobile friendliness. For marketplaces, optimise seller profiles and reputation management.
Driving Traffic and Sales to Your Online Store
An online presence alone is insufficient; you need marketing strategies to drive targeted traffic that converts into sales.
SEO and keyword strategy
Ranking high on Google and other search engines is essential for visibility and traffic. Keyword optimisation across your product portfolio through tailored page titles, meta descriptions, headers, content, and image tags is key.
Content Marketing
Engaging social media updates, blogs, and videos to showcase products, company culture, events, and promotions Build steady information flows to educate and attract customers.
Paid Advertising
Explore search ads on Google, display ads on blogs, and social media ads on Facebook, Instagram, and YouTube to reach defined demographics. Provide targeted offers.
Email Marketing
Send product updates, special deals, newsletters, and cart reminders via email and SMS. Offer discounts for purchases. Email capture pop-ups and incentives like discounts help build your subscriber list.
Influencer Partnerships
Leverage social media influencers in your industry to create authentic buzz around your products and promotions.
Affiliate Marketing
Offer commissions to third-party sites and bloggers to promote your products. Only pay affiliates for successful sales.
Digital Tools to Optimise Online Operations
Deploying the right e-commerce software and tools is essential for efficient processes as your online sales grow.
e-Commerce Platform
An online store builder or self-hosted platform like WooCommerce, Magento, or Shopify for your website. Offers responsive design, payment integration, and sales analytics.
Business management software
Integrated enterprise software to manage orders, inventory, invoicing, CRM, fulfilment, and accounting in one system. Examples: SAP Business One, Zoho
Digital marketing tools
Email marketing, SEO, social media management, and analytics tools to optimise and track marketing campaigns. Examples: Mailchimp, Hootsuite, SEMRush
Customer Engagement Tools
Live chat, messaging apps, ticketing systems, and voice bots for automated customer interactions to improve response time and experience
Logistics management platforms
Platforms like SEND to track shipments, get quotes, manage pickups, and COD with multiple carriers. Provides visibility and aids logistics coordination.
Investing in the right tool stack enables efficient scaling while minimising headaches during periods of rapid online growth.
Fulfilling orders profitably and quickly
Managing fulfilment and last-mile delivery for e-commerce orders can make or break your online success. Some tips for customer satisfaction:
Optimise inventory planning.
- Forecast demand by product based on historical data, seasons, and promotions, and avoid overstocking.
- Maintain sufficient safety stock to meet order spikes and demand fluctuations.
- Rotate stock using the FIFO policy to avoid losses from product expiration.
Leverage 3PL Logistics Providers
- Outsource delivery to third-party logistics firms to serve more locations faster while controlling costs.
- Offer customers pick-up and drop-off options from 3PL hubs.
- Start in one city, monitor service quality, then expand locations.
Process orders quickly.
- Streamline your order preparation process with packing checklists and barcode scanning to minimise errors.
- Offer customers defined delivery timelines and share shipment tracking details proactively.
Manage returns efficiently.
- Make return and exchange information readily available to customers.
- Streamline your return handling process: institute validation checks, update inventory, and issue refunds quickly.
- Analyse returned items to identify problem areas like damages or sizing issues.
Key E-Commerce Operational Considerations
Managing Payments
Offer customers multiple online payment options: cards, mobile money, bank transfers, and COD. Use payment gateways like Paystack and Flutterwave for convenience and security. Reconcile payments received with orders daily.
Cybersecurity Essentials
Install security certificates, SSL encryption, firewalls, and strong password policies on websites and payment systems. Ensure the site is hosted on secure servers. Install antivirus and procedures for data backups, malware detection, and access controls.
Accounting and taxation
Ensure accurate invoicing, payment tracking, and account reconciliation. Pay the required consumption taxes on online sales. Maintain orderly records for auditing and filings. Engage professionals to advise on e-commerce accounting and tax compliance requirements.
After-Sales Customer Service
Respond to product complaints, damaged goods, and returns efficiently. Communicate order status proactively via emails, SMS, or phone calls. Seek customer feedback for improvements. Record issues faced to fix common problems.
Key E-Commerce Sales Platform Options
There are diverse e-commerce platforms offering Nigerian MSMEs low-cost digital storefronts:
Facebook Shop is a free, customizable storefront on a business Facebook page. Leverage existing followers and the ad platform.
Instagram Shop: Native integration with catalogue and checkout for merchants’ Instagram business profiles
Jumia is Nigeria’s leading B2C marketplace. Large buyer base but commissions around 12%.
Konga is an online shopping platform with good logistics integration and lower commissions of 3–7%.
Sendbox is a local startup platform for Nigerian MSMEs. Low fees, discounted 3PL shipping, and payment options
Afrikrea specialises in marketing authentic African-inspired fashion, crafts, and beauty products locally and globally.
DHL Africa eShop is an e-commerce marketplace focused on facilitating cross-border exports across Africa. Provides logistics support.
Evaluate each based on fees, target markets, logistical support, and features offered to choose the optimal starting point for your e-commerce journey.
Key Takeaways to Build a Sustainable E-Commerce Venture
Some best practices for Nigerian MSMEs to ensure e-commerce success:
- Start by testing demand for your best products online before scaling up your catalogue.
- Provide great visual content and storytelling around your products and brand.
- Focus on responsive customer service and quick issue resolution to earn trust.
- Leverage social media extensively for low-cost promotions to drive traffic.
- Monitor data closely—orders, payments, logistics, product demand—and respond nimbly to optimise.
- Institute digital payment and cybersecurity measures proactively, as these facilitate scale.
- Reinvest revenue to improve the online customer experience and fulfilment capacities continuously.
- Be patient; sustainable e-commerce takes time to penetrate communities and shift consumer mindsets. Persevere!
The Future of E-Commerce in Nigeria
While just getting started, e-commerce holds tremendous potential to enable Nigerian enterprises to expand sales, create jobs, and drive grassroots economic growth by leveraging digital channels.
With increasing internet connectivity, a large youthful market, fast adoption of fintech solutions, and improving last-mile logistics infrastructure, the foundations are falling into place for e-commerce to transform economic opportunities in Nigeria over the coming decade.
MSMEs that move swiftly to build their online presence and capabilities will gain a first-mover advantage in tapping into this inclusive growth lever for the digital age. By leveraging e-commerce strategically, Nigerian businesses can unlock new horizons.
Conclusion
For Nigerian MSMEs seeking new revenue streams and market opportunities, developing an e-commerce strategy can open up avenues for business growth and resilience. With the right digital presence, customer experience focus, data-driven processes, and proactive upskilling, small businesses can profitably tap into Nigeria’s rapidly expanding online retail sector. This primer provides practical guidance for beginning that e-commerce journey.