Inventive, Audacious... That’s Jumia

Mr. Tunde Kehinde

Co-founders of online retail portal, Jumia Nigeria, Mr. Tunde Kehinde and Mr. Raphael Afaedor speak with Amaka Eze on the company’s experience one year on after launch of their audacious business

As graduate students of Harvard University, co-founders of arguably Nigeria’s largest virtual store, Tunde Kehinde and Raphael Afaedor took classes on retail and online businesses and had an excellent platform to interact with individuals from across the world brimming with ideas about launching a start-up.

School over, both veered into different online businesses catering to people in different parts of Africa but scarcely found the fulfilment they craved. So they sought to have a change of scene. They found inspiration in Nigeria’s blossoming internet space and the contrasting huge gap in the electronic commerce to build an online shopping portal that will significantly be organised across board. The online portal is today known as Jumia.com.

As co-founders of Jumia.com, Kehinde and Afaedo told THISDAY that they decided to come into the e-commerce market with the goal of not building a small site which already existed but to build something significantly organised across board.

“Although there were a few smaller sites trying to sell a variety of things online in some particular cities like Port Harcourt, Abuja, Lagos, or different pockets across the country, Nigeria’s ecommerce space remained mostly dormant until the entrance of Jumia Nigeria.

“Jumia Nigeria which came into limelight in June 2012 debuted as Nigeria’s largest e-commerce retail mall and sells everything from fashion to phones and computers across the entire country enabling Nigeria’s e-commerce space grow rapidly. What we have done differently since coming into the market is that we realised the need to raise a significant amount of money to be able to build the kind of business people wanted. Travelling to Italy and some other parts of the US to pick a few items to be placed on a store shelf cannot grow the kind of organised retail Nigerians needed,” Kehinde said.

“The Jumia story is an example of the possibilities inherent in the e-commerce space and is no doubt changing the traditional method of shopping and doing business in the country,” Afaedor said.

He explained that the rapid adoption of e-commerce has indeed brought with it large numbers of e-commerce business models which has made the Nigerian space a lot more competitive. The growth, he said, has been spurred by the integration of electronic payment system into Nigeria’s financial institution and the wide acceptance of card technology.

He said: “Wide selection of goods, convenience and competitive prices are some of the factor that can boost ecommerce in any online store today. The e-commerce industry works like any other business where the business owner buys his goods and charge whatever margins that would enable him pay bills.

“The key thing to make the industry profitable in Nigeria is being able to convince a typical Nigerian who used to walk into a typical brick and porter store to actually go online and shop from a wide variety of items. To make that possible, we have to ensure that the prices of goods online is as competitive as the prices of goods offline, and also ensure that the convenience factor is much high.” Of course, there’s also the selling point that buyers are saved the strain that goes with shopping in a bustling metropolis like Lagos since goods are delivered to their homes.
Jumia which prides itself as the leading online retail store in Nigeria was ranked the fourth most visited site in Nigeria by Alexia recently and has almost concluded plans to move into a 90,000 square feet location that can house its 500 employees as well as 700 sundry staff.

The online portal also claims to have raised a significant amount of money which has enabled the company record an impressive growth above over portals that launched at about the same time. “Raising smart money guaranteed us credibility and success. It also guaranteed us knowledge and a means to run a smarter business and the way we run our business is to rigorously measure what we do.

“On a daily basis, we receive reports that tell us all the items sold on the site. It tells us how much we paid for an item, how much it was sold for, how much it cost us to deliver the item to the customer, how much it cost us for the customer service, and the profit made from the item. In essence, it gives us a marketing cost,” Kehinde added.

Afaedor was also quick to add that measuring their business gives them a flexibility advantage. “Given these facts, we used money to bring the real talents and real retail experience back home and contribute to organised retail locally; to be able to achieve the best local talent.” he said. “Structurally there were other people in the market but Jumia brand out did all of the others because we managed to take the online retail business to the people through assured logistics infrastructure that is able to deliver to remote village through our solid customer service team.

“As early as 2010, it was obvious that e-commerce growth was imminent because of certain basic elements that were in place; people had mobile phones that connected to the internet; people had cards with which they could shop online and the banks actually allowed people transfer money from one account into another. As the ecommerce space of Nigeria grows, more industry players will flood the market and this will further heighten competition.”

Despite the commendable achievements, the journey hasn’t always been smooth, as they have had to contend with a number of challenges which intermittently slowed down the growth of their business. “It has not been easy for us in Nigeria because we’ve had to build everything from the scratch,” Afaedor explained.

According to him, “service providers that serve the e-commerce industry in the US or in Europe did not have to build a delivery fleet, because they already had fleets like the USPS to deliver goods for them which is the reverse in Nigeria.”

Trust, said Kehinde, was also a major challenge when the company launched given the reluctance of many people to use their cards for online transactions for fear of fraud. “People are still more sceptical in this part of the world where we still don’t have a lot of credit cards in circulation. In that instance, if something happens to the card, it hits the bank account balance directly.”

However, Kehinde explained that to curb such cases of fraud, Jumia has partnered Mastercard to use its Internet Gateway Service to make card payments safer and easier for its customers. “In order to retain the people’s trust and confidence, Jumia went out of its way to strengthen the security channels and today, people just swipe their cards and pay without even seeing the goods they ordered yet.”

Citing another challenge faced by the company as it grew its business, Afaedor said people were hitherto not sure they could get authentic and genuine products and if the product would actually be delivered to them in good time. “We addressed that fear  through our world class customer service organisation.

We had to ensure that a product was delivered at the said time to a customer no matter the condition. This meant hiring the right people, and giving them a lot of training,” he said.

For Kehinde, managing growth and customer experience as the company expanded its physical footprint was a bit more challenging. “Nevertheless to ensure that the shopping experience for our customers stayed very high as our customer base grew to almost a million, we made sure that all locations in every part of the state were managed by top notch professionals skilled in logistics and planning.

“We also had to ensure that inadequate power supply, bad roads and other infrastructural challenges were well-managed to succeed because at the end of the day our customer is still king and the right system must be put in place to serve them.”

Kehinde offers a recipe that would help start-ups and small businesses surmount such challenges: the government should slash the taxes paid by such companies.

“Also, creating opportunities and funding for the training of employees at affordable rates would see a boost in the country’s GDP as well as create an opportunity for a new breed of entrepreneurs in the country.” He however concedes that within the past few months, Nigeria has seen greater appreciation for infrastructure fixes from the three tiers of government although people are yet to feel the impact as much as they should. “If the government engages more, we hope that next year’s achievements would surpass this year’s so that the environment would be more attractive and conducive for international investors who are knocking on daily basis.

“Fifty years after Nigeria got her independence, it remains amazing that in a country of almost 170 million people, there is no large retailer like the Walmert and Amazon in the states. What Jumia have seen in the last one year is that the market abounds and the impacts of that prosperity comes increased jobs, increased prosperity for people who sell these things, and also a fourth big industry for Nigeria. We are big in oil and gas, telecommunication, banking and finance.”

Kehinde calls for a collaborative effort from all stakeholders so the immense opportunities inherent in e-commerce can benefit small and medium scale entrepreneurs “who only have to put their goods on Jumia warehouse to take charge of while they concentrate on expanding their business and employing more people”.

For the aspiring entrepreneur, his advice is instructive even if somewhat cliched: “Find what you are passionate about and go for it. Over analysing the situation will never change things. We don’t learn to swim by dipping our toes into the water; we just have to jump into the water and see it through.”