Africa's Amazon taps diaspora

24 June 2014

LONDON: Jumia, the Lagos-based internet retailer, is expanding its operations to target those West Africans working abroad who send money home to relatives.

In the case of Nigeria alone, remittances from abroad accounted for 9% of the country's GDP in 2012, according to World Bank data. And, the Financial Times reported, an increasing proportion of that $21bn total is being spent on consumer goods.

Sacha Poignonnec, co-founder of Jumia, which has been described as "the Amazon of Africa", told the FT that the African diaspora represented a potentially lucrative market. "We noticed many people coming to Africa with lots of goods purchased in Europe and the US and thought it was a good opportunity for people to buy while in the UK and get it delivered to Nigeria," he said.

While other ecommerce sites may promise to do the same thing, Jumia is banking on its on-the-ground presence to lift it above its rivals, which typically ship items from Europe and depend on third parties to complete the delivery.

"Unlike Asos or Amazon, we have a local presence," Poignonnec explained. "When somebody buys an item from the UK Jumia website the product is already in Nigeria and is transported to the final point of delivery … we are operating the logistics last mile."

That means it can guarantee delivery within eight days, while Amazon, for example, can take up to 32 days. Nor is the retailer restricting its investment to Nigeria, building logistics networks in Morocco, Ivory Coast, Egypt, Kenya and South Africa as it seeks to become the continent's leading ecommerce option.

"The UK was the first but we are now running parallel sites in the US, targeting Nigerians, and France targeting people from the Ivory Coast and Morocco. There are so many cross-continental [money] exchanges and the potential is huge," Poignonnec declared.

Jumia has also developed other innovative approaches to online retail, including equipping a sales team with tablets and sending them out to businesses, churches and homes to show potential customers what they can buy.

Concerns about online fraud have seen it offer cash-on-delivery payment options although the recent entry of PayPal into the Nigerian market may alleviate some of those fears and give the sector an extra boost.

Data sourced from Financial Times; additional content by Warc staff