- By-passes distributors, middlemen
By AYOOLA OLAOLUWA
In its quest to leverage on Konga’s massive warehousing infrastructure and market reach, Fast Moving Consumer Goods (FMCG) manufacturer, Unilever Nigeria, has signed a partnership deal with the e-commerce giant.
According to the fast-moving consumer goods firm, it intends to explore Konga’s thriving online platform to reach its ever-expanding online customers in need of genuine products at the best prices available in the market. This move, it was learnt, could adversely affect the distributors of the company who could lose a large chunk of their market share
BusinessHallmark reliably gathered that Konga was chosen due to its appeal as a premium vehicle suited to Unilever’s ambition of reaching new and potential customers. While the e-commerce giant has a network of physical stores widely spread across the country, another factor that gave it an edge was its payment wallet, KongaPay, licensed by the Central Bank of Nigeria (CBN).
This singular factor, noted industry watchers, has made Konga the toast of several top global brands looking to make an in-road into Africa’s biggest market via e-commerce. Also, Konga had rolled out free delivery for shoppers on the various product range in the Unilever stable, which includes products such as Royco seasoning package, Lipton Yellow Label Tea, Close-up Red Hot and Herbal lines, Sunlight detergent, Lifebuoy, Lux, Pepsodent, Vaseline and Shea Moisture, among others.
These products could also be accessed online on the Konga platform. The deal is already causing excitement among consumers who are elated because their purchases will be delivered free of charge, while Konga is throwing in free bars of Lifebuoy soap on all orders placed on Unilever products in the Konga warehouse.
According to the Vice President, e-Commerce at Konga, Dave Omoregie, the partnership remained one that will enrich the delightful offerings available to Nigerians on the Konga platform.
‘‘For us at Konga, it was an easy decision signing off on this partnership with Unilever. Indeed, the Unilever brand is one whose wide product range appeals to Nigerians of all classes and status. Therefore, we are delighted to add these products to our growing bouquet of delightful offerings available to shoppers.
‘‘Most importantly, we understand the difficulties being borne by Nigerians especially with the restrictions occasioned by the COVID-19 crisis. Consequently, we are offering Nigerians the opportunity of stocking up on these essential products and household items at zero delivery cost. All you have to do is place your orders and enjoy free delivery as we deliver right to your doorsteps.
‘‘The addition of the Unilever brand to the growing portfolio of genuine products available to shoppers on the Konga platform and the offer of free delivery is further proof of our commitment to continually push the boundaries in meeting and exceeding the expectations of our customers. We will continue to update our inventory with more of the excellent new additions to the Unilever product range as they are rolled out,’’ Omoregie said.
Meanwhile, some distributors of the manufacturing giants have expressed fear that the partnership could push them out of the market. They argued that instead of buying products from them for their daily needs, Nigerians may decide to abandon them for Konga.
“I heard the news like every other person and I will be lying if I say it does not bother me. We are waiting for them (Unilever) to come and tell us our fate before investing more resources in the distributorship arrangement.
“I suffered in the hands of Nigerian Bottling Company when they introduced something like these several years back. I was a major distributor then until they started establishing mini depots in neighbourhoods where people could buy from one crate of mineral at factory price, thus denying us the much-needed market. I have to stop when sales nosedived and moved into selling of provisions.
“I hope this is not what is happening all over again? What is the essence of still having distributors when they have decided to reach out directly to consumers? They should let us know our fate before we lose our investments”, said Mrs Shukura Onigbinde, a provision seller at the Bola Tinubu Shopping Complex, Jankara, Ijaiye-Ojokoro, Lagos.
According to a logistic expert at Office Max, Ikeja, Bolaji Akinola, increasingly efficient logistics systems now allow manufacturers to sell more goods directly to end-users, bypassing distributors. Also, consolidation in many manufacturing sectors has produced large manufacturers with national distribution systems.
“Distributorship in the business of transporting products, and fuel prices play an important role in a company’s overall profitability. The cost of petrol or diesel can represent a significant portion of total wholesale operating costs. Many distributors pass this cost to manufacturers in the form of fuel surcharges. So to find their ways around this problem manufacturers are now looking for firms with robust logistics that could help move their goods around at no extra cost”, said Akinola.
An economist, Dr Dapo Benson, said relationships between manufacturers, wholesalers, retailers and customers are shifting every day.
“For years, most manufacturers did not sell directly to customers. Wholesalers and retailers served as middlemen by purchasing items in bulk from the makers and sell them to consumers at a higher rate.
“However, with the rise of the internet and small businesses leveraging websites, the distribution business model is evolving. Manufacturers are increasingly skipping distributors and selling products directly to consumers.
“In the distributorship model, manufacturers made only small profits compared to distributors’ profit margins. Yet, manufacturers can’t sell directly to consumers without the consent of retailers.
“But things are changing now with globalisation and the internet. Producers can now reach consumers without middlemen. This has allowed them to see that selling directly to consumers comes with benefits for both manufacturers and consumers. Things could get worse for inflexible distributors without innovations”, declared Benson.