Jumia Launches Integrated Warehouse in Kenya to Improve Logistics Operations

The demand for mobile data usage as well as increased network coverage have increased the potential of the Nigerian e-commerce market. Based on data from the Nigerian Communications Commission (NCC), mobile network coverage was estimated at 102% at the end of 2021, based on a population size of 190 million. However, internet data penetration via GSM was 74.5%.

A thriving e-commerce market will allow small and medium-sized enterprises (SMEs) across the country to benefit from increased business activity and reduced operating costs, which would translate into higher profit margins. The role of e-commerce has been re-emphasized following the outbreak of the COVID-19 pandemic. Activities on online marketplaces have experienced a visible boost.

In 2020, the United Nations Conference on Trade and Development (UNCTAD) B2C index score for e-commerce in Nigeria was 46.2 points (the 8th highest in Africa). The index measures an economy’s willingness to support online shopping and takes into account four indicators. These include (i) the percentage of the population with bank accounts or accounts with a mobile money service provider, (ii) the percentage of the population using the Internet, (iii) the Postal Reliability Index, and (iv) the presence of secure Internet servers.

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According to industry sources, Nigeria’s e-commerce market is estimated at US$13 billion (N5.4 trillion) with at least 87 Nigerian e-commerce platforms (including Jumia, Jiji and Konga).

In 2021, according to Statista’s ranking, Jumia was the most popular online marketplace in Nigeria with an estimated 147 million visitors. According to Jumia’s fiscal 2021 financial statements, the e-commerce platform generated 34 million orders and $177.9 million in revenue.

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Coronation Merchant Bank found that in general groceries, personal care, fashion, beauty products and electronics were the most commonly purchased items online.

It is worth emphasizing that logistics plays a key role in the e-commerce value chain (which includes the processing, packaging and delivery of orders). This value chain creates employment for logistics personnel and services. Coronation Merchant estimates that Jumia shipped 8.3 million packages to at least approximately 1,500 customers in 2021. This compares to half a million packages that were distributed to around 270 customers in 2020.

The latest data from Nigerian Interbank Clearing System shows that as of May 2020, Nigeria recorded a total of approximately 160 million bank accounts while the number of active bank accounts stood at 111.5 million. The advent of eNaira (a digital currency issued by the CBN) as well as the development of mobile money in light of the CBN’s approval for Payment Service Banks (PSB) such as MOMO, Smart Cash, Money Master and 9PSB are expected to improve financial inclusion.

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The latest data on e-payment channels from the National Bureau of Statistics shows that in Q4 20, 3.5 billion transactions worth N356.5 trillion were recorded on electronic payment channels.

For e-commerce to reach its full potential, technological infrastructure needs to be improved and logistical challenges addressed. In addition, forward-looking solutions to cybersecurity issues are needed to boost consumer confidence.

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