As Zinox completes its game plan for its latest acquisition, Konga – merging it with Yudala from May 1 – the competition landscape in Nigeria’s troubled ecommerce space shrinks further leaving only a few players.
BusinessDay paid a visit to Konga.com on the eve of the merger, 30 April. Although the site has many items displayed for sale, a message was directing customers to sign up on a new site konga.com/newKonga.
A customer representative on Yudala told BusinessDay that the merger was aimed at creating the “biggest organised retail and e-commerce/marketplace outfit” in Africa. Customers making purchases on Yudala.com on the eve of the merger were allowed to do so. However, new and existing accounts on Yudala will be transferred to the new Konga platform.
Zinox Group announced the merger in April 2018.
“Combining forces to power the new Konga will enable us effectively achieve our goals of platform expansion and accelerated growth, as we embark on an ambitious journey to redefine the retail ecosystem with the industry’s most advanced technology,” Olusiji Ijogun, the newly appointed chairman of Konga said at the announcement.
Some experts have seen the merger as confirmation that the ecommerce space remains a hard nut to crack for investors and will take more than new monies to witness real growth. Till date, no ecommerce business in Nigeria has turned profitable.
“In Nigeria, ecommerce is not a digital business,” Ndubuisi Ekekwe, a technology expert wrote in a recent blog post. “It is a traditional business because the highest element of its marginal cost is offline.”
To make matters worse, the space has seen more significant exits that it has witnessed new investments. Efritin.com and OLX are the most recent casualties in the space.
Reports have also emerged that investors in Jumia, the biggest ecommerce platform and Konga’ major rival, is seeking an exit through the Nigeria Stock Exchange. As if to confirm the reports, the company recently sold Jumia House, an arm of its business to Propertypro.ng – formerly Tolet.com.ng. Jumia struggles became evident when in the first 9 months of 2017, it saw its losses widen to €80.7m ($99.1m), while revenues were just €57.3m ($70.4m).
With the exit of Yudala from May 1, the ecommerce space will essentially be open for new competition. At the moment it is not clear who the dominant player will be. There is Payporte which has been bankrolling the popular reality TV show, Big Brother Naija and is reported to have generated a lot of revenue from the show. But sources close to the company have told BusinessDay that revenue from retail is not so impressive.
Although Zinox Group is clearly planning to take over the number one spot in the competition landscape, it is not entirely clear whether it wants to continue with the old Konga model of retail which let the company bleeding revenue or employ the more offline based strategy of Yudala.
One strategy that could return with the merger is the payment-on-delivery (PoD) which was banned just days before the acquisition by Zinox Group. Gideon Ayogu, corporate communications manager for Zinox wrote in BusinessDay recently that the new Konga will leverage “the huge access to technology” it has at its disposal.
“I like the merger between Yudala and Konga,” Collins Onuegbu, director at Lagos Angels Network told BusinessDay. “We need to have more of such deals happening as part of the support system for the tech ecosystem.”
Onuegbu predicts that konga could adopt Yudala offline strategy.
“I suspect you will have a retail chain with an online strategy.
