The acting chief executive officer of e-Business trading platform, Konga, Shola Adekoya, tells Crusoe Osagie that the foreign exchange crisis and the economic downturn have not really affected fast consumer moving goods instead they have reduced the brand sensitivity of their customers
Economic downturn and its impact
In the Fast Moving Consumer Goods (FMCG) market, as long as you are servicing the daily needs of people, you will continue to experience growth. What we saw with foreign exchange and the decline in the economy was just a resetting, where people who use to buy Iphones will choose to buy another model, people are probably less brand sensitive. So I think it is more of a reset rather than a downturn for FMCG and at that point, you will see the value of things that the people are buying maybe a little bit lower, you may say revenues would have been impacted, but the consumer must buy because it is a daily need they have to meet except if you want to talk about the categories of luxury goods, that is where you will get hit hard, but if you are in a category where you are servicing daily needs, people will have to buy, but what they buy might now be different when they become less sensitive to brand.
Other challenges apart from forex
What I will say is that we have noticed people tried to buy online because we actually deliver better value online and offline, so when you have lower prices to spend in the economy, people look out for places where they can get value for their money spent and Konga.com is one of those places and that is what we have seen in the last three months where people now come online to at least see what we have and we are seeing more people buying because they are looking for deals that they will not quickly get in shops and when you shop on Konga today, the buying is different from the paying, so you buy and register your interest where we have different paying options such as pay on delivery, pay with card and Konga pay. Konga pay is actually another value proposition we have brought to Nigerians where you actually see 5 per cent off of whatever it is you are buying at Konga. All you have to do is to link your bank card to your Konga pay account and you get 5 per cent discount off on anything you buy. So when I was talking about people looking for cheaper alternatives, we were able to provide that opportunity for them.
Who do you consider as a consumer
A consumer for us is literally any Nigerian or anyone residing here. Anybody that wants to buy anything for their daily lives, any need that you have and you need to purchase, we believe we can make Konga.com the destination where you can buy all your daily needs. So a consumer for us is as wide as the whole of Nigeria and ultimately Africa. We do not just think about only Nigeria but about Africa. So everybody is a consumer.
How do you manage trust Issues
Trust is a very big item on our agenda and we always monitor customer feedback. First of all, we have a whole floor of agents working on trust and safety. Anything that looks dodgy and anything that does not look right, we bring it down quickly and also follow up with merchants and even the shippers. We have a whole team dedicated to make sure that customers experience the Konga experience and we also make sure that they do no lose out on this experience. You will never lose your money on Konga. This is what we have put in place now. Apart from that, we have also gone with Konga pay, to say that apart from getting 5 per cent off on anything you buy, because it is prepaid, it makes your delivery very quick and it is easy. You do not have to worry about cash and counting and all of that, you just collect your item and move on, but more importantly is that this money is held in a Nigerian bank and we do not take the money until delivery is made. As a customer, if you are able to use Konga pay to make payments, it gives you an extra guarantee and knowing that your money is there, you will get it back instantly should you want refund, so one of the benefits of Konga pay is to do refunds and because we have not used the money so to return it will be within hours or minutes in some cases.
Your cost of products compared to other markets
When I compare, I know this for a fact that we are way cheaper than the local market. We found out that when we are doing deals that we have some customers from the local markets who buy from us to resell. I know for a fact that we are cheaper than a lot of the offline and local markets because we buy in bulk and we are particular about giving value to our customers and our deals are very clean and tight just to make sure we deliver value to our customers. You will find that we get whole lots of our customers from the local markets trying to resell what we sell.
Do you buy from different sources
There is a very long chain in the industry, at Konga, we try as much as possible to get close to the Original Equipment Manufacturers (OEMs) and we go further on the chain to deliver values to our customers. For you to go into any market in the country, you have to go through from one sub-dealers to another, but we cut that off by going close as much as possible to the OEMs and deliver straight to the customer and in cases where do not get directly from them, we will get from their first distributors in Nigeria and sell straight to the customer.
Deliberate policies by the federal government to support the industry you operate
I guess the only one I can point to is the cash less economy, so the more we go cashless, the better it makes e-commerce operate in the country. Most people do not have an alternative even when you go off line, you have to do electronic payments so it means for us at Konga, we do not have to work too hard to convince you to pay online and I think one of the challenges we have is that people even offline, still do not trust their bank cards, different means of electronic payments. So the government pushing towards cashless policy helps us as an industry.
Impact of cashless economy on turnover
I think for us, what we have found the most impactful is our Konga pay proposition. Since we launched Konga pay, it has taken a huge chunk of our pay on delivery orders and converted it to people that are pre paying and I guess the beauty of that is that as people get more comfortable with the Konga pay solution, they see how easy it is people will get attracted even more. With the Konga pay, we have increased our orders by 10 per cent.
Accuracy of delivery
On Konga, we have about 40,000 small merchants that lists their products on Konga and we manage to process the technology to make people come on line as they try to buy from other merchants. What we are trying to do is to first of all say payments will be held and until delivery is fulfilled, we do not actually pay out to the merchants. This is to protect the customers, we are also always on the look out for items that do not look right. We actually have a vetting process where you do not just load in your products without us carrying a thorough check. We have an inner big team of viewers who go through your description, pictures and the pricing and if your products look odd, we do not just take it. We have also introduced a new process where we actually vet the merchants. So they go through a vetting process, training to understand e-commerce, understanding the importance of doing exactly what you put online. We are training merchants to actually deliver what they offer and we are also vetting them as well. We built our own logistic network, so the merchants have to give it to us to ship it and at that point we are vetting to see if it is the right item and we compensate customers if a merchant has given a wrong product either by replacement or compensation if they experience any thing like that and because it is something new in Nigeria, we have to train people, merchants in this industry , so we went through a phase where we had a lot of complaints, we have cleaned it out and we are presently at a point where we feel very much comfortable. What we have on the platform, the kinds of merchants all understands the customers’ needs.
Your market share
The share is very hard to say because the figures are propping. I do not know exactly how much competition is making, I do not know how much Shoprite or Spar is making and I also think one of the biggest challenges we have in Nigeria is that FMCG sector is still plagued with a lot of informal trading happening and there is no adequate research in that area to say this is the total size of the market, but I will say we are doing quite well
Yes, what drove us to Konga pay is the issues we have seen with bank cards where people try to make payments online and the cards decline where we cannot get back to the customers to explain why, but with Konga pay we can tell exactly what is wrong and why it is wrong and we used to have a high rate of failure, but with Konga pay, there is little or no supply payment issues. About a year and half ago, we decided that when we import technologies, now we have our own software development experts and we are working with some more experienced software engineers in South Africa developing technology for Nigerians.
Delivery challenges in Lagos
Lagos is actually one of those areas where we are very dense in terms of our delivery capacity and in a few weeks, we will be launching same day delivery service in Lagos where if you place your order on Konga, you will get your order the same day. So in terms of delivery strength, we have a very strong network and this latest service will be rolled out in the couple of weeks and this is what Lagosians want.
Konga’s biggest challenge
I think it is people embracing e-commerce and I think Nigerians can do more. The market is big, there have been a lot of online fraud where people have had bad experiences and because of that, you see people hesitant to go online to buy what they need on a daily basis, what makes life easy for them and despite the value you are offering to them, people are scared to ask if online delivery is true or not. So, there is a need to people to be educated and people also need to experience it.
Locating the buyer
This is a technology we are coming up with to help us so that if we make one delivery today, we can easily go back there the next day, but today, we actually call the customers and because the delivery guy is a hyper local and he goes to same area everyday and he knows the area. This is the benefit of building this kind of network of entrepreneurs, people who are local. It is a capacity we are building using local knowledge.
Global opportunities for e-commerce in Nigeria and for Konga
I strongly believe in the opportunities that e-commerce has in Nigeria and I do not think we have tapped anything just yet. When you compare us with developed economies and as consumers are beginning to get more sophisticated, they understand what e-commerce stands for, I think it will only get better and if you think about the number of people that have access to data, we are talking about a 100 million people using mobile phones, using data services, social media is just getting them to also experience e-commerce. The market is huge and there are very countries where you cannot find these huge numbers of people using data on their phones and in terms of the future when you look at the demography of Nigeria, we are a very young country where younger Nigerians can be compared to their peer group anywhere in the world and they know how to use technology very well, it can only get better
Drone technology for delivery
We are just focusing on using the traditional delivery solutions, but we are not blind to it. When you look at what it requires to actually get it up and running and if you look at the States, they get the FAEC to approve the particular height for them to do test runs and they have gone through a lot of approval and we are even yet to start that in Nigeria. All we are trying to do at the moment is trying to get the traditional delivery solution optimised and I think we are there if we are able to do same day delivery in Lagos and the drone will do the same day delivery as well but maybe will come in hours instead of same day, but the regulatory requirements to do drones an even the safety implications have not been looked into just yet
Pace of Technology
Well, given the way we leapfrog in terms of technology, we are very good at meeting up with new ideas and technologies and when you also look at the young demography of Nigeria and the younger ones coming through we will definitely be looking into that technology, there is a possibility of that happening in 10 years
Social media and your business
I think social media for the younger demography have seen us receiving people commending our services which mean followers can also see the level of our success. Social media has helped people to be aware that our services exist and it does work.
Expectations from the Nigerian Forum
We came to the Nigeria forum to talk about the Fast Moving Consumer Goods (FMCG) sector which Konga is one of them and apart from explaining to Nigeria the challenges faced in the industry, it is also to showcase what we have also been able to build as a company and Konga. Com, our approach to the challenges in the nation and the solutions we have built to address them.