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Price Vs Quality: The Nigerian e-commerce shopper’s dilemma

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By Terry Ibinabo,

By nature, Nigerians are predominantly traditional in their approach to shopping.

This is hardly surprising when you consider that online shopping or e-commerce, as it is more popularly known, is a fairly recent phenomenon, one that is still catching on here in Nigeria but undoubtedly growing in leaps and bounds.

Konga

Indeed, e-commerce, or at the very least, the structured version of it that we experience today, is barely a decade old in Nigeria. More on this later.

The predilection to readily embrace an opportunity to see, touch or experience a product (a classic case of what you see is what you get) before parting with hard-earned money is deeply ingrained here.

This is undeniably tied to the skepticism and natural sense of caution an average Nigerian possesses, particularly in situations that involve spending money.

Another important factor is a chance to haggle over price and the satisfaction of walking away with a perceived good deal, especially when the buyer succeeds in convincing the seller to shift ground. This is not to rule out the warm, human interaction that shopping in such traditional retail formats engender.

Perhaps, this is why open-air markets, corner shops or mom and pop stores remain popular and have continued to command a dominant share of retail spending in Nigeria and many other African countries.

The foregoing finds expression in a recent study by the Boston Consulting Group (BCG). Specifically, the report, published in June 2022 , submits that more than 600,000 small shops and open-air markets dominate the retail landscape in Nigeria, accounting for an overwhelming 97% of national sales of food, beverages, and personal care products.

The study adds that these traditional retailers consist of small kiosks and open-air markets. Even more eye-opening is the fact that the report reveals that the dominance has remained, despite the considerable challenges posed to traditional retail by the expansion of modern retail, the nascent rise of e-commerce and changes in consumer behaviour accelerated by the COVID-19 pandemic.

Titled ‘The Future of Traditional Retail in Africa’, the report holds that despite the advance in supermarkets, convenience stores, and other modern formats, including e-commerce, African consumers on average continue to buy more than 70% of their food, beverages, and personal care products from the continent’s more than 2.5 million small, independent shops.

In addition to some of the earlier listed factors which encourage traditional shopping, the BCG study highlighted other prevailing reasons.

‘‘Several factors make traditional retailers remarkably resilient. Small shops offer the proximity, flexibility, and convenient operating hours needed to serve their communities. They also often allow customers with limited incomes to purchase small quantities on credit,’’ the report suggests.

The BCG report is bolstered by another research conducted by the Oxford Business Group which attests to the power of traditional retail. The study noted that Nigerian shopping is still heavily dominated by the world of neighbourhood stores, street vendors and open markets. Although the study predicts that this will change with time, it insists that traditional retailers will continue to dominate for the following reasons.

‘‘One is taste: even of those who can afford to shop in malls or supermarkets, many prefer more traditional ways. Another is a tendency to shop frequently rather than stock up.

And deficient public transport means that malls are not very accessible to those without cars. Yet another edge may be cost-related, as pointed out to the local Business Day in April 2012 by sector analyst Cedric Bra.

Using informal labour, often selling goods bought illegally, and frequently operating unregistered and therefore untaxed, smaller shops can keep costs low. Contrast the modern retailers, which have high fixed costs and visibility, having to obey the rules in respect of tax and sourcing.

Taken together, noted Bra, this means that modern grocery retailers’ prices are on average 10-20% higher than those found in unregistered outlets.’’

Nevertheless, one can no longer deny the growing influence of e-commerce or online shopping, as a useful and convenient alternative for a growing band of savvy shoppers. This can be attributed to the rise in internet connectivity, greater exposure among the younger members of the population, the impact of the COVID-19 pandemic which brought the power of online shopping to the fore, as well as the ease and convenience that accompanies digital shopping.

Also worth mentioning is the growing awareness and appetite for e-commerce among Nigerian shoppers. A survey conducted by Philip Consulting in 2016 in Lagos, Abuja, Oyo, Delta, Kaduna and Rivers States revealed that at least 51% of respondents sampled still prefer to shop in-store, while 49 preferred online shopping. But between 2014 and 2016, 97% disclosed that they have currently shopped online, at least once per year.

E-commerce is also being embraced by a growing segment of the population because they do not face some of the structural challenges that confront traditional retailers.

One of this is inefficient distribution systems that often force retailers to close their shops for several hours so they can go purchase goods from wholesalers, making it hard to obtain or retain sufficient inventory – a pain-point that tech-driven platforms such as TDiLife, a major FCMG and lifestyle products distribution giant headquartered in Lagos, are helping these small businesses overcome.

Further boosting the popularity of e-commerce is the range of options afforded the shopper. From the comfort of one’s living room, bedroom or office, you can check out an array of products from the biggest brands on the platform of competing players at the click of a few buttons on your device – smartphone or laptop.

Also closely related to this is the fact that one can do this at any time of the day. In other words, e-commerce is a 24-hour operation, one that allows shoppers access to preferred items round the clock, without having to worry if the market is closed or whether the seller is yet to open or has locked up their kiosks to go to church/mosque or attend to other pressing personal issues, as may be the case with traditional retail.

But more importantly, e-commerce has the beneficial attribute of enabling Nigerians live out their price-sensitive proclivities.

Here is the catch. The average Nigerian is a price-conscious freak. We get unusually emotional or irritable at the prospect of being made to pay a higher price when we can avoid it. In the same way, we are often triumphant, giddy with excitement and fulfilled when we succeed in extracting a discount, a deal, a better price than stated for a product or item.

Certainly, e-commerce is best placed to sate this thrifty appetite.

A 2019 GE Shopper Research Study revealed that a growing number of consumers extensively research and compare prices and offers before making major purchases. According to the study, 81% of consumers go online before shopping and spend an average of 79 days gathering information before making a major purchase.

Further, the study disclosed that the availability of financing options continues to be a key factor in a shopper’s choice of retailer, with nearly half of all shoppers researching payment options online before visiting a store.

The above aligns with a 2017 Retail Dive Consumer survey.

The findings show that 56% of shoppers say they visit stores — at least occasionally — to first see, touch and feel products before buying them online. Additionally, one-third of shoppers say they make this practice a habit, reporting that they always or frequently go to stores to see or try out items before buying on the web. One in 10 shoppers say they always visit a store to see items they then buy online.

Here in Nigeria, it is common for shoppers to explore and compare prices among the major e-commerce firms before making up their minds, thereby affirming the primacy of price in the decision-making process. But where does product quality stand in the mix? Given a choice, would you sacrifice quality on the altar of cheaper pricing? This is the dilemma that confronts many online shoppers in Nigeria today.

Nevertheless, several studies point to the fact that quality remains key for most consumers, even ahead of price.
This takes us back to the recent emergence of e-commerce and its rise as a tool for price comparison. Hardly can one discuss e-commerce in Nigeria today without a mention of Jumia and Konga, unarguably two of the market leaders, but both of which have only been in operation here for 10 years.

Predating this, however, the only other claim Nigeria can lay to anything resembling e-commerce was BuyRight Africa, a platform founded over 13 years ago by Leo Stan Ekeh, one of Africa’s leading techpreneurs and which was way ahead of its time, but reportedly collapsed due to the absence of credit/debit cards at the time, paving the way for the latter-day players.

Still, many would be hard pressed when choosing between price and product quality.

But in the view of Durogba Arogundade, an e-commerce researcher based in the UK, the decision ought to be a simple one for shoppers.

‘‘As a Nigerian, I understand the huge attention paid to price. However, a shopper would only be getting the short end of the stick if they prioritized a sweet price at the expense of a low-quality product. It is a decision that often ends badly.

“The key is finding a balance. This is where brands such as Konga come in, by leveraging their combination of the traditional retail approach represented by strategically located physical stores accessible to the shopper and modern retail, as represented by their online platform.

“You can never go wrong here as research indicates that many shoppers often visit retail stores when comparing prices before buying online and vice-versa.’’

Arogundade’s submission is further supported by insights gleaned from George Nkem, a self-professed avid online shopper.

‘‘I have been shopping online actively for the past six years. I have experienced all the e-commerce firms we have. Today, I can confidently tell you Konga has the best price. Yes. Things are cheaper at Konga across board. But that is not where it ends for me. Quality is also very important.

“So, I would rather choose a place where I can get both. So, I often walk into a Konga store most times as it enables me confirm product quality and compare prices with other platforms online before I pay.’’

In conclusion, the controversy surrounding price and quality can be said to have been laid to rest bby findings from the Retail Dive Consumer Survey.

‘‘Because a majority of shoppers are still visiting stores before buying products online, it remains critical for retailers to provide a high-touch in-store experience.

“Turning physical retail space into showrooms — where customers can try and test products and generally get to know the product better before making the final purchase online — may be the logical next step for retailing,’’ the study asserts.

Terry Ibinabo, an academic, researcher and varsity lecturer, writes from Abuja


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Ugo Onwuaso is an ICT enthusiast. He believes technology should be used for general good. He holds a Master of Public Administration (MPA) degree from the Lagos state University. Dear Reader, Your support matters. But we believe that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. That is why, we have devoted our energy to independent reportage of technology and finance and how they affect lives. Our incisive and analytical view of how technology news affects the daily life help individuals and organizations make up their minds. Quality journalism costs money. Today, we're asking that you support us to do more. Kindly support our effort to deliver technology and finance journalism to everyone in the world. Donate as little as N1,000. Bank transfers can be made to: UBA Plc 1017156876 Communication Week Media Ltd

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AfDB Appoints Dr Babatunde Samson Omotosho as Director of Statistics Department

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African Development Bank has appointed Dr Babatunde Samson Omotosho, an economist and statistician, as Director of the Statistics Department, effective June 16, 2024.

Dr Babatunde Samson Omotosho

Dr Omotosho, a Nigerian national, has more than 21 years experience in developing data strategies to align with the strategic objectives of organisations. He also brings expertise in data compilation, data analytics, macroeconomic research, and policy analysis.

Omotosho previously served as Director of Research and Statistics at the West African Monetary Agency (WAMA) in Sierra Leone, where he was seconded from the Central Bank of Nigeria. At WAMA, he provided advice on monetary and economic integration within the Economic Community of West African States (ECOWAS).

Prior to that he held various positions within the Statistics and Research Departments of the Central Bank of Nigeria.

As an Assistant Director in the Statistics Department, he led the data analytics team and managed the Central Bank’s strategic initiatives on big data and data analytics. He oversaw projects aimed at enhancing data analytics capabilities for policymaking, automating surveys and statistical systems, improving data sharing infrastructure and developing social media listening tools. His leadership fostered a culture of data analytics within the Central Bank, driving innovation and efficiency in operational and policy processes.

Dr Omotosho holds a PhD in Economics from the University of Glasgow, United Kingdom (2021); a master’s degree in Applied Statistics and Datamining from the University of St Andrews, United Kingdom (2011); a master’s degree in Economics from the University of Benin, Nigeria (2008); and a Bachelor’s degree in Economics from the University of Ilorin, Nigeria (2000).

He has contributed extensively to academic literature, with publications in reputable journals, including the Journal of Economic Dynamics & Control, Journal of International Money & Finance, Macroeconomic & Finance in Emerging Market Economies, and the Central Bank of Nigeria Journal of Applied Statistics. His research covers big data, econometrics, monetary and fiscal policy interactions, business cycle drivers, and the macroeconomic implications of resource shocks for small open, emerging economies.

Omotosho is a member of the Nigerian Statistical Association, the International Association for Official Statistics, and the Royal Statistical Society.

Commenting on his appointment, he said, “I am grateful to President Adesina for this appointment, and I am excited about the opportunity to contribute to the continued success and growth of the African Development Bank Group, an institution that plays such a pivotal role in the economic and social development of our beloved continent, Africa. I am fully committed to fulfilling the responsibilities of the position while collaborating effectively with the Bank’s senior leadership team, colleagues, and other strategic partners.”

Dr Akinwumi A. Adesina, President of the African Development Bank Group, commented: “I am pleased to appoint Dr Babatunde Samson Omotosho, a respected statistician, as Director of the Statistics Department. Dr Omotosho brings to this role an impressive track record in statistics, economics, and data analytics. He will support the Bank in building a robust data ecosystem to achieve our strategic objectives and sustain our long-term development goals.”


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ATII Awards Scholarship to Students

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A knowledge transfer and technology innovation hub, African Technology and Innovation Institutes (ATII) has awarded scholarships to ten pupils from Bridge International Academy, Lagos.

Through its Junior Scholars Program in partnership with Lumina Educational and Empowerment Foundation (Lumina), the scholarship will meet the educational needs of the benefitting pupils through their primary education, which is extendable to their university education.

The Junior Scholars Program is an offshoot of  ATII’s  Innovation, Leaders, Fellowship and Scholars Program that aims to empower and cater to the welfare of students aged 3-12 years from underprivileged and low-income communities by partnering with other organisations to provide scholarships for these rough diamonds.

In addition to the scholarship, ATII also provides STEM-based back-to-school kits and other Science, Technology, Engineering and Mathematics (STEM) materials to spark their desire for education and to contribute to their communities in STEM-related fields.

In her congratulatory message, the Founder of ATII,  Prof. Rose-Margaret Ekeng-Itua represented by Mr Sunday Awolowo, ATII’s Programs Manager, praised the students for their “outstanding academic excellence” and their “resolve to continue to improve in their academic pursuits, especially in the STEM fields.”

“We hope that the scholarships will continue to encourage you to do great work to pursue STEM. We hope one day in the future you all will be inspired to be an Engineer, a technologist, a mathematician or scientist,” Prof. Ekeng-Itua said.

The ATII Junior Scholars Program is designed to encourage and support students who are interested in pursuing careers in these fields.

Mrs Ezinne Tochie-Asogwa, Manager of Academics at Bridge International Academy, expressed her appreciation to ATII for the generous gesture.

“On behalf of the management and staff of Bridge International Academy, we appreciate the kind gesture of ATII.

ATII is passionate about the next generation of leaders and individuals who will change the world, pursuing its mission to promote African and Indigenous Technologies, while supporting human capital development in alignment with the UN Sustainable Development Goals.

The ATII scholarships will provide financial assistance to the students as they continue their education in STEM fields. The program will also provide mentorship and support from ATII professionals.

 


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CBN, FintechNGR Chart the Way Forward to Enhance Nigeria’s Fintech Ecosystem

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In light of recent developments aimed at strengthening Nigeria’s fintech sector, Ade Bajomo, President of FintechNGR, led a team from the Association’s Governing Council in an engagement with the Central Bank of Nigeria (CBN) to chart the way forward.

Receiving the team at the CBN headquarters in Abuja, Philip Ikeazor, Deputy Governor, Financial System Stability, commended FintechNGR’s active advocacy efforts that have significantly improved the fintech ecosystem.

The Central Bank emphasized the need for the Association to work closely with stakeholders to operate within regulatory provisions, facilitate compliance, and establish robust risk management frameworks and governance structures.

Mr. Ikeazor stated, “The Central Bank understands the critical roles of fintechs in driving financial inclusion to the last mile. Our efforts are geared towards helping fintechs become more attractive to investors and achieve greater success.”

During the meeting, Ade Bajomo noted that while stakeholders strive to comply with regulatory requirements, they sometimes face challenges beyond their control.

“The common understanding within our ecosystem is that compliance makes the environment safer for all to innovate, scale, and collaborate. FintechNGR will ensure the co-creation of a support structure with the CBN to enhance compliance.”

Some of the initiatives the regulators plan to pursue with the ecosystem include making the 2024 Nigeria Fintech Week more impactful, enriching the activities of the Regulators Forum, organizing fintech learning series for various stakeholders, and exploring self-regulation status for FintechNGR to foster closer relationships with regulators.

FintechNGR remains committed to working with all regulators to better position the ecosystem to be more inclusive and impactful.

 


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