The Chief Executive Officer of Glovo Nigeria, Lorenzo Mayol, in this interview with HENRY FALAIYE, discusses how the e-commerce sector in Nigeria has been coping with operational challenges
Despite the economic challenges in the country, it is still an investment destination for many foreign investors. Why is this so?
Nigeria is on track to become the biggest investment opportunity on the planet this century, and investors started to realise this a decade ago. Many of them compare Nigeria to the disruptive potential that China or India had in the past.
In my opinion, there are many reasons foreign investors are drawn to the Nigerian economy. First, Nigeria has a large and growing population, which is expected to grow by about 50 million people over the next decade. Combined with a growing middle class, it means it is the largest growing market for goods and services in the future. Secondly, Nigeria has a very strong pool of talent that is important in helping any business to succeed. Like many other countries, Nigeria’s economic problems have been aggravated by external macroeconomic factors. Still, Nigeria is a country that continues to offer many untapped opportunities for tech companies to thrive and help the economy grow that are poised to bring in huge returns to those first movers in the market.
What do you think regulators can do to intensify the continual growth of the e-commerce sector?
Regulators need to resist the tendency towards protectionism and engage more with the private sector to understand the real-life challenges that they face, creating employment and enabling e-commerce within the sector. We envision a huge disruption in Nigeria through the expansion of e-commerce throughout all sectors, and only together with regulators will we be able to maximise the positive impact of this digitisation process. It is key for us and very important to work in tandem with regulators to have sustainable and fair growth in the market.
The main issues are straightforward – streamlining of licenses and permits required by couriers and courier companies and development of regulations suited to the sharing economy business models being deployed in the e-commerce sector. Key drivers for growth include a regulatory framework that is clear about the specific licenses and permits that operators are required to obtain, and that facilitates seamless onboarding and management of courier relationships. From our side, we will continue to provide couriers with safety and customer service training as well as safety items.
How does Nigeria’s low internet penetration affect businesses in the e-commerce industry?
Nigeria’s internet penetration is the biggest opportunity the country is offering to investors. While it is certainly low or less mature when compared to other markets, this brings in new opportunities to re-invent our product offering and quickly adapt to new technologies. Nigerians love the convenience of e-commerce, which is encouraging and is both fuelling and supporting the growth of e-commerce. Nigeria’s low internet penetration might affect businesses by limiting the usual growth of the businesses in the industry at the beginning. This does not mean that we cannot tackle these difficulties and create opportunities. Businesses like ours must find other ways to reach potential customers for the first time. This can be more costly and time-consuming, but it will bring benefits to the extent that we manage to retain our users (couriers, partners, and customers).
What should be done to improve broadband in the country to support businesses?
The government and the private sector can work together in investing in Nigeria’s broadband. Together they can combine investment capabilities and a regulatory framework that incentivises investment. We have seen this successfully occur in multiple other countries. On our side, we are actively working towards increasing broadband demand across Nigeria by building awareness of the benefits of online shopping both among small and medium enterprises looking to digitise and among customers looking to buy more conveniently.
What are the major challenges players in the e-commerce industry face?
The e-commerce industry is experiencing a few key challenges. Lack of trust also remains a major concern. Many customers still prefer to see or receive items before they pay for them. This makes most players offer costly and risky pay-on-delivery options. Also, e-commerce companies are facing challenges in terms of fraud and security both from the customer’s and the delivery agent’s perspective. Some couriers and delivery agents do not remit the payments they receive on behalf of e-commerce companies while some customers use fraudulent means to avoid making payments. We know this issue and we are currently tackling it by being very careful of who we onboard as delivery riders and providing proper onboarding and safety training in collaboration with GIZ (Deutsche International Association for Cooperation).
What trends do you think will shape the e-commerce industry in the future?
There are a few trends that we think will shape the e-commerce industry in Nigeria in the future. These include the increasing use of mobile devices for e-commerce transactions. The growth of online payments and mobile money will be also something that must continue developing. Payment options will continue to expand and will positively impact trust in e-commerce operators, leading to more and more customers being comfortable paying for products online. E-commerce expansion into rural areas will be a major trend to address to help services extend. Also, there is also an increasing push in the B2B segment of the e-commerce space, with more and more solutions being deployed to connect informal, retail businesses with digital native customers. Finally, as the larger last-mile logistics platforms start to establish themselves and adapt their services to the local markets, we are likely to see significant improvements in the delivery aspects of the customer journey. This should in turn drive more e-commerce. To keep up with the trends and be able to serve Nigerian customers, we must adapt the services to the local market and bring economic solutions for all consumers. On the other hand, rapidness in getting the products is something that customers appreciate, pay for, and want. We need to keep up with projects that promote trust, to raise the volume of users by letting them know that they can order and receive their goods properly.
Logistics has been facing a great challenge that is limiting the e-commerce industry. How has Glovo been able to address this problem?
With the aid of our technology, we have effectively overcome the challenges associated with the Nigerian market and its regulatory landscape. This has allowed us to swiftly adapt our logistics processes and achieve rapid scalability. Our close collaboration with authorities and regulatory bodies, such as the Nigerian Postal Service, has been instrumental in comprehending the intricacies of the market and adequately preparing ourselves. As we continue to expand, learn, and refine our operations, we remain highly confident in our ability to navigate the Nigerian market successfully.
Cybercrimes are on the rise globally. And in the past decade, we have seen an increase in online fraudulent activities in Nigeria. How has your company been able to manage this?
Cybercrimes are a problem everywhere, not only in Nigeria. We have a security operation centre for 24/7 monitoring on-call. We take security very seriously and have a dedicated team of experts who take care of such aspects of cyber as data security and privacy, resilience, incident response and more. We build our security program in accordance with NIST Cybersecurity Framework and make sure we are compliant with all regulatory requirements of the countries we operate in.
What is the future of SMEs in Nigeria?
SMEs remain the bedrock of the Nigerian economy, contributing around 50 per cent of the Nigerian Gross Domestic Product and more than 80 per cent of employment in the country. Despite these numbers, Nigerian small and medium enterprises have been starved of funding and services. The trend is likely to be that more and more tech solutions are developed to help grow the economy and the opportunities for these businesses.
Last year, we studied the challenges SMEs face after the pandemic times and in an online era. It was an international survey of more than 3,200 decision-makers in small and medium-sized enterprises of the food, restaurant, and retail industries. Some of the results that this study showed were that small and medium enterprises are in survival mode and they require aid from platforms and tools to help them get the best out of their products and services. SME owners know that if they want to remain competitive, they need to invest more in marketing, social media and online activity since consumers are stricter and want customised services increasingly. With this panorama, we have decided to take a step further and create Glovo Local, a new program for small and medium enterprises to enable them to digitise their products and services to boost their growth. In Nigeria, local businesses can pick and choose solutions based on their needs and wants through a single site. We are confident that this initiative will bring value to SME businesses in the country, and we will help them grow and develop.
