Emerging report has confirmed that no fewer than 800 jobs have been cut from 2015 and now by e-commerce sector due to economic recession.
This has been traced to low patronage occasioned by serious reduction of about 40 per cent in their website traffic, despite various promotions in the years under review.
According to Gideon Ayogu, Corporate Communications Manager, Yudala, the drop in sales for e-commerce players is traceable to loss of job in the country which has led to “low disposable income to spend”
However, Ayogu said that some consumer goods like smartphones, cookers and microwave oven still recorded some appreciable level of sales on Yudala despite economic lull.
Confirming the situation in the industry, Dr. Olumide Olusanya, Chief Executive Officer of Gloo.ng said it is glaring that e-commerce players are facing tough time, he however urged operators to be strategic and innovate in order to weather the current storm.
For instance, an unconfirmed report revealed that so far, Konga has only been able to garner 184,000 active customers, which translates to approximately 1.1 per cent of the Nigerian population, which according to analysts in telecoms showed that the nation’s e-commerce sub-sector is still crawling and requires serious government support, even beyond the tax incentive.
It was learnt that in 2016 half year consolidated result, Jumia, a member of the Rocket Internet Group, recorded EUR35.4 million losses. When compared to its net loss recorded in the previous year, the company managed to reduce its loss by 19 per cent. In the first half of 2015, it recorded EUR43.7 million losses.
Also on the topline, Jumia’s revenue fell by 56 per cent. Within the first half of this year, net revenue was EUR33.0 million compared to last year when it recorded EUR75.8 million for the first half of 2015. Peter Kimpel, Rocket Internet’s Chief Financial Officer, after the loss, was quoted as saying that he saw Jumia breaking even by 2019.
The woes of some of these players in Nigeria, especially the big ones like Jumia and Konga, might have been compounded by the declaration by the Nigeria Investment Promotion Council (NIPC) that some players that have existed for several years in a particular sector may not enjoy the pioneer status except they venture into a new line of business covered by the list of 27 new industries and products. The list now consists of 71 new industries and products.
A source who has the knowledge of the policy said that the special status actually applies to companies that are in the first year of operation, meaning that those older than one year will not benefit.
It will be recalled that the Federal Executive Council through The Nigeria Investment Promotion Council, NIPC, on August 7 approved the inclusion of new industries in the pioneer status list following its reform of the scheme, which had been on suspension since September 2015.
The reform was initiated to boost transparency and process efficiency, improve the Federal Government’s ability to measure the impact of the incentives and bring the scheme in line with the current economic realities and the Economic Recovery and Growth Plan (ERGP).