BY EMEKA EJERE
Nigeria’s leading e-commerce startup, Konga, on Sunday, bagged the Company of the Year award in the 2020 edition of the prestigious People of the Year Awards of Business Hallmark Newspaper.
The newspaper in a letter to its promoter, Mr. Leo Stan Ekeh, said “the choice of Konga is in recognition of the ground-breaking feats achieved by the company in the year under review, stressing that despite all odds, Konga has become the market leader and fastest growing e-commerce company in the African region.
Nothing, perhaps, speaks louder about the company’s growth aspiration than the optimism with which it is working towards an ambitious projection of hitting a daily turnover of $10 million by the year 2024.
To reach the target set early this year, the e-commerce giant, according to the management, is riding on the back of its renewed commitment as well as the confidence of its stakeholders, while also planning to make the most of its newfound efficiency which has led to consistent growth.
Although the company has not operated without suffering losses in recent years, it is in the public domain that it has consistently and significantly reduced losses over the years, especially now doing so is critical to achieving its four-year target.
Since Konga was acquired by Zinox Group, the Nigerian e-commerce platform has been able to grow revenue by eight times, while also reducing its costs by 65%, a feat it has attributed to its long-held tradition of ethical conduct and realistic business model.
According to the company’s co-chief executive officer for Online, Nick Imudia, this would be a step by step process, culminating in two major milestones. The first milestone, he said, is that by 2022, the company plans to achieve $5 million daily turnover on its way to hitting its ultimate 2024 milestone.
“With the high level of trust Konga has gained among shoppers in and out Nigeria, it is safe to say Konga is ready to scale big in the early part of this third decade”, Imudia had stated.
“Therefore, we are targeting a $10 million daily turnover by 2024. We shall attain half of this target at least by 2022”.
“Konga has grown over eight times since the business was acquired by the Zinox Group. We have consistently reduced our losses by nearly 70%. Added to this is the addition of new and thriving business units such as Konga Travel, among others, all of which have enjoyed huge growth and massive acceptance by our rapidly expanding customer base.”
A herculean task
Nigeria’s e-commerce sector has not been stable despite the huge potential of the market. While there is huge competition in the sector, the biggest problem remains the Nigerian market itself.
Over time, low purchasing power of citizens, high cost of operation in the country and lack of solid internet laws and identity management, which has made internet businesses struggle, have conspired to make the operating environment very tough.
The situation has seen several e-commerce and internet platforms like Dealdey, Efritin, OLX and Careers 24 either pack shop or devalue in recent times. Unfortunately, developing the infrastructure for success has been difficult as the requisite funding and support do not exist. Nevertheless, Konga is looking to not just survive under the same conditions, but also to thrive.
Recognising the company’s strive in this direction, Business Hallmark noted: “Our Editorial Board was particularly impressed by your investments in technology and infrastructure. Your creative business models have continued to set operational milestones that have placed Konga at the apex of the industry.
“Your leadership role in the industry has earned the respect and admiration of many including this newspaper. We are, therefore, pleased to select Konga for this well-deserved honour.”
In a brief chat with BusinessHallmark, a market analyst, Peter Onuoha, wondered how Konga intends to achieve its lofty aspirations “in a market that has seen Jumia, widely considered the biggest e-commerce in Nigeria struggle” and not exactly looking optimistic about the future.
“There’s no doubt that Konga’s $10 million per day target is a herculean one”, Onuoha said.
Positioned to lead
Speaking with CNN Marketplace Africa on the sidelines of the first Creative Africa Exchange weekend held in Kigali, Rwanda early this year, co-chief executive officer of Konga, Nnamdi Ekeh, noted that Konga has made significant strides which have positioned it as the clear leader in Nigeria’s highly competitive e-commerce market.
Ekeh was one of the speakers at the event which brought together over 1500 participants from 68 countries and over 250 exhibitors. He disclosed that Konga’s omni-channel structure, self-owned tech-driven logistics solution, Kxpress through which it handles deliveries to customers as well as external parties, state-of-the-art regional warehousing facilities which enable it retain inventory in diverse states and locations in Nigeria as well as sound knowledge of the Nigerian business terrain are factors that have placed the company in front.
He said, ‘‘Konga is best positioned as the leader in the Nigerian e-commerce market. We are not just an e-commerce company but we run an omni-channel model with over 30 physical stores spread across Nigeria. So, we are closest to the people.
“Also, we are seeing huge growth in the business and in our customer base. Between last year and this year, the business grew by almost eight times,.’
Equally important, according to Ekeh, are Konga’s strategic business ideals as the company is run efficiently and with transparency and integrity.
Breaking logistics barriers
On how Konga is creatively resolving the challenge of logistics, which has hobbled other players in the market, Ekeh explained that the company had relied on its deep understanding of the Nigerian terrain – a factor, he emphasized, has distinguished Konga in the marketplace.
‘‘The starting point for us was identifying the problem. There is a huge problem in Nigeria where the informal market is so huge, so massive; in fact, almost 98% of the market. This means that people don’t have access to quality products; they don’t have access to quality after-sales services.
‘‘So, we identified this problem when we came into the market. What we hold ourselves on is integrity and making sure that we are supplying quality products and as quickly as possible. We had to look internally and invest in a logistics platform for ourselves.
“So, we built a logistics platform working with franchisees in local areas. If you understand the dynamics of local villages in Nigeria, most people know each other. As long as we had the name and the phone number of the person who requires the product, someone in the local village knows that person. So we partnered with local people and empowered them to deliver to the last mile for us.
‘‘Today, we have built Kxpress, our logistics platform, to the point where we are not only delivering for Konga but for other partners. That’s where you begin to add value because not only Konga has that problem.
“A lot of people have the same problem. People who sell on social media have that problem too. So, we are building a platform not just for ourselves but for the entire industry. With that, we are able to scale much quicker.’’