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Future of e-commerce in Nigeria’s economy

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By Samuel Abimbola

Online shoppers are expected to surpass 70 million in the coming years.

Despite the country’s challenging economy, the future of e-commerce in Nigeria appears promising, with more growth expected in the coming years. Factors such as increasing internet penetration, a growing middle class, and a strong entrepreneurial determination are driving the expansion of the e-commerce market in the country. According to the Nigerian Communications Commission (NCC), internet penetration in Nigeria stood at over 40% in 2022, with projections indicating continued growth. This rise in internet access opens up new opportunities for e-commerce platforms to reach a broader audience nationwide.

The growing middle class contributes to the increase in e-commerce adoption. With rising disposable incomes and changing consumer preferences, many shop online for convenience, variety, and competitive pricing. Statista reports show that the number of online shoppers in Nigeria is expected to surpass 70 million by 2025, up from around 45 million in 2021. The entrepreneurial spirit is fuelling the growth of the e-commerce sector. Local entrepreneurs leverage digital platforms to establish and expand their businesses, utilising various e-commerce models such as online marketplaces, social commerce, and direct-to-consumer (D2C) sales.

Foreign investors see Nigeria as a major e-commerce hub in Africa.

International investors and e-commerce giants are noticing Nigeria’s potential as a key African market. Companies like Jumia, the continent’s largest e-commerce platform, have already made remarkable investments in Nigeria, reflecting confidence in the country’s e-commerce landscape. The government’s support for small and medium enterprises (SMEs) through initiatives like the National Digital Economy Policy and Strategy also improves the e-commerce ecosystem. Mobile commerce is expected to play a more effective role in the e-commerce market, driven by the widespread adoption of smartphones and mobile payment solutions.

Innovations in logistics and fulfilment will also be necessary to improve the efficiency of last-mile delivery and overcome infrastructural challenges. In addition, the rise of digital payments and fintech solutions is set to transform the e-commerce industry, making transactions more seamless and secure. With initiatives like the Central Bank of Nigeria’s Cashless Policy and the growing popularity of digital payment platforms like Flutterwave and Paystack, the e-commerce ecosystem is evolving to meet the changing needs of consumers and businesses.

Tech in e-commerce boosts customer shopping experience.

Also, the rapid growth of e-commerce utilisation of social media in Nigeria is anticipated. While many businesses in the country already leverage platforms such as Facebook and Instagram to market their products, this trend is projected to gain momentum in the upcoming year. Social media offers a dominant tool for connecting with potential customers, enhancing brand visibility, and driving sales. Companies that capitalise on this trend by creating engaging social media strategies will find themselves in a prime position to achieve success and expand their online presence in the competitive market.

Its expansion offers many advantages, such as increased convenience for consumers and businesses, reaching a broader market beyond traditional physical stores, and cost savings from avoiding expenses associated with maintaining a brick-and-mortar presence. Furthermore, using technology in e-commerce can enhance the overall shopping experience for customers. Leveraging the e-commerce platform also has the potential to create job opportunities, promote entrepreneurship, and drive economic growth by enabling small businesses to compete globally, thereby contributing to the overall development of a digital economy.

Related Article: Major e-commerce trends in Nigeria 2023

Lastly, its future in Nigeria holds immense potential for growth and development. With rising internet penetration rates, an expanding middle class with greater purchasing power, a culture of entrepreneurial innovation driving business opportunities, and supportive government policies encouraging digital commerce, the e-commerce sector is poised for rapid expansion. These factors create a conducive environment for businesses to thrive, offering exciting prospects for further technological advancements, enhanced customer experiences, and increased economic empowerment through digital trade.

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