After a surprise acquisition of e-commerce powerhouse, Konga, on Friday, by technology Company, Zinox Technologies, Nigeria’s e-commerce sector is tipped to be on its way to a tremendous growth that will back up Africa’s position in the world market.
Global statistics of e-commerce is looking up and Nigeria is seriously considered to be a major partaker in the fortunes and massive growth anticipated in the next four to five years.
In 2017, retail e-commerce sales worldwide were valued at $2.829 trillion while e-retail revenues are projected to grow to $4.48 trillion by 2021.
Here in Nigeria, the e-commerce sector has an estimated worth of over $13billion which is approximately N4.01trillion, and could rise to over $50 billion by 2027.
A London based Economist Intelligence Unit , EIU, released a report in 2017 which identified three Nigeria based online retail platforms; Jumia, Konga and Jiji, as leading the African e-commerce space to compete among world technology based retail businesses.
The report, described the three as serving a mass-market clientele, despite reduced patronage, witnessed among Nigerians in the last few years, due to lean pockets during the recession.
Analysts say that buying Konga, which may complement Yudala and most possibly revive BuyRight Africa.com, puts Zinox technologies on the right footing to becoming a mega platform Africa can rely on to rule the global e-commerce landscape.
Zinox has also promised to recall many of the erstwhile employees of the ecommerce company that were laid off during a restructuring process recently.
A Lagos based financial analyst, Godwin Eboighan said: “this acquisition is not only for Zinox as a company but a pride to Nigeria as a country and Africa as a continent. Although Konga started in Nigeria, foreigners eventually took over a larger share of the firm having put in so much money. So getting it back is a national pride.
“Besides, the firm is about one of the biggest online retail platforms in Africa. What this acquisition means is that a combined effort of Yudala and BuyRight Africa .com owned by the same Zinox group, will eventually make it the biggest. The resultant effect is that a Nigerian platform owned and run by a Nigerian, is leading Africa’s online retail business pack and promises a good showing in the world stage. That is also something to celebrate,” he added.
Meanwhile, the telecom company has also promised to create at least 750 employment opportunities to be filled by Nigerians within a short period, while no less than 5,000 jobs could be created on the platform for Nigerians at home and abroad in the near future.
Head of Corporate Communications at Zinox Group, Gideon Ayogu, who confirmed the development, disclosed that the organization is keen to take e-commerce in Nigeria to unprecedented heights. “Zinox has always had an interest in Konga and another big one you know very well but our priority was Konga first because of her integrated nature of four quality companies in one.
“Konga is a world-class, professionally-run company with landmark strides in the sector that has gone a long way in ushering millions of Nigerians into the ease and convenience of online shopping.
“Today, many Nigerians can attribute their first experience of e-commerce to Konga.com and we are excited to be a part of this remarkable story. Many shoppers can also attest to the speed and efficiency in delivery that characterizes Kos-Express, the company’s logistics arm, which is arguably the best in the sector at the moment.”
Ayogu continued, “Our ambition is to up the tempo by revolutionizing e-commerce on the African continent, with Konga at the fore-front of this initiative. In addition to positioning the business on a path of profitability in the short term, our long term plans are focused on seeing Konga well established in other African capitals.
“Furthermore, we will be unveiling a lot of new initiatives soon and we advise shoppers and merchants alike to look out for these innovations which will radically reshape the average customer’s experience of e-commerce in Nigeria and on the continent,” he noted. Konga had recently announced a shift to a prepay-only model, essentially putting a stop to Pay on Delivery (PoD) – a significant decision which formed part of an internal restructuring aimed at putting the business on a sound footing in the market. This move, coupled with the new investment, is expected to spark an up-turn in the company’s fortunes which will see Konga assume a more significant share of the e-commerce market.
Acquisition of Konga, gives the Zinox Group, right to assume ownership of the e-commerce group which includes Konga.com, Nigeria’s largest online mall; KongaPay, a CBN-licensed mobile money platform with over 100,000 subscribers and rated as one of the best mobile money channels in the country as well as KOS-Express, a digitally-driven and world class logistics company with advanced delivery capabilities for Konga and other structured companies nationwide.
The acquisition is also understood to have passed all regulatory approvals by the Securities and Exchange Commission (SEC).
Zinox says its first priority in the acquisition is to reposition Konga for a greater share of the e-commerce market in Nigeria and beyond.
Already, the ecommerce company which is said to be worth $34 million, has 184,000 active users which is 80% mobile based.
Former owners of the business are South Africa based Naspers, a broad-based multinational internet and media group, offering services in more than 130 countries while AB Kinnevik, founded in 1936, is a Swedish investment company investing primarily in digital consumer brands.
Through this acquisition, the Zinox Group, also one of Nigeria’s foremost integrated ICT solutions conglomerate and Original Equipment Manufacturer, OEM, is expected to expand its operations to e-commerce, an industry it pioneered in Nigeria with the launch of BuyRight Africa.com which was challenged by the absence of credit card and e-payment infrastructure when it was launched over 12 years ago.
History of Konga
Konga.com is a Nigerian electronic commerce company founded in july 2012 with headquarter in Ikeja, Lagos State. It offers a third-party online marketplace, as well as first-party direct retail spanning various categories including consumer electronics, fashion, home appliances, books, children’s items, health care and personal care products.
Konga was founded in July 2012 by Sim Shagaya, with 20 staff. Shortly after launching in 2012, Konga raised a $3.5 million seed round from Investment AB Kinnevik. The site initially functioned as a Lagos-only online retailer focused on merchandise in the Baby, Beauty, and Personal Care categories, but broadened its scope to all of Nigeria in December 2012 and gradually expanded merchandise categories through 2012 and 2013, responding to its major competitor, Jumia, which launched around the same time and was functional across all categories.
In early 2013, Konga raised another $10 million round from Investment AB Kinnevik and Naspers. In Q2 2013, Konga opened the platform to third-party retailers and moved away from a pure first-party online retail model.
In late 2013, Konga finalized another $25 million financing round from previous investors, Investment AB Kinnevik and Naspers, the largest single round raised by a single African startup at the time.
On November 29, 2013, Konga.com crashed and remained offline for 45 minutes as a result of unprecedented traffic stemming from its Black Friday promotion. The e-commerce firm sold more in the first six hours of the promotion than it did in the whole of October, the month preceding the Black Friday.
It officially launched its third-party retail platform in the first half of 2014, rebranding it as ‘Marketplace’ from ‘Konga Mall’; by the end of 2014, Konga’s Marketplace featured 8,000 merchants, beating internal targets of 1,000 merchants eight-fold.
The company, during its 2014 Black Friday promo period, declared that it received USD $3.5 million worth of orders, compared to USD $300,000 during the promotion in the previous year.
Konga reportedly grew 2014 revenue 450% from 2013. In late 2014, it finalized a $40 million part C financing round from Investment AB Kinnevik and Naspers, the largest single round raised by a single African startup to date.
In January 2015, Konga was ranked as the most visited Nigerian website by Alexa Internet and it went on to acquire the assets and mobile money license of Zinternet Nigeria Limited in June 2015, thereby meeting the Central Bank of Nigeria’s legal requirement for the provision of mobile payment services. The acquisition supported KongaPay, launched in August 2015, to facilitate uptake of cashless electronic payments.
KongaPay: Was launched as a pilot product in 2015 in partnership with Nigerian commercial banks in order to work for customers only within the Konga.com’s platform.
The challenge of lack of trust in making online payment was quenched by KongaPay that has made it possible for anyone to use Konga’s online platform. This innovation protected online shoppers against the reports of fraud when they release their bank details online. KongaPay is similar to what is seen in Amazon platform with its one-click payments. The payment option has been fully integrated with Ecobank, Access bank, FCMB, Diamond Bank, Zenith Bank, Heritage Bank, UBA, First Bank and GTB.
A digitally-driven and world class logistics company with advanced delivery capabilities for Konga and other structured companies nationwide.
It was established to make its online integration very effective. Meaning that customers can have their ordered products tracked online and get delivered to them within 1–3 days.
Konga started its massive expansion in Nigeria with Konga Mall, an option that allows businesses in Nigeria to showcase their products online.
Konga Marketplace makes it possible for even roadside sellers to be involved from any part of the country. Amazing products have been discovered and massive sales are made daily through this market. The sellers and buyers interact in this marketplace.
Konga Self-Fulfill Model Self-Fulfill Model was a major upgrade in Konga’s marketplace offer. This service made it possible for its merchants to have great shipping agreements negotiated by Konga with reputable courier partners. The sellers control the management of its parcels from the point of order till the customers receive them. Payments are made directly to the sellers from the buyers when they receive their parcels.