Oxford Business Group: Juliet Anammah, Chairwoman, Jumia Nigeria; and Head of Institutional Affairs, Jumia Group
On adapting to changing preferences
What has been the impact of the Covid-19 pandemic on Africa’s e-commerce sector?
JULIET ANAMMAH: It is important to recognise that we are currently facing a public health crisis that is having a significant impact on people’s lives. Nonetheless, it has been interesting from a business perspective to adapt to the evolving situation. At Jumia our primary concern is business continuity. To that end, we have had to adapt from a platform where at any time consumers can buy whatever they want to a platform that primarily makes sure consumers can access basic essentials, such as food, sanitary items and personal hygiene products.
Another important aspect was working to make the right kind of partnerships to guarantee that customers could purchase goods at affordable prices. We have also had to adapt to the lockdown situation, during which our operations were permitted to continue due to exemptions granted for warehouse operators and delivery services. To ensure that we were given an exemption, we worked to educate the government on the importance of e-commerce during this time. This entailed a lot of engagement and discussions. However, some of our sellers did not meet this criteria and could not bring us the items once an order had been placed.
One of the areas that was notably affected was payments, as there was concern about the cleanliness and safety of cash transactions. To address this, we migrated to contactless deliveries, and made sure that that our deliverymen had hand sanitiser, wore masks and dropped items at the front doors. This shift had to happen in the space of one month. We benefitted from the fact that, as an e-commerce company, a significant part of our business is already online, and due to our geographic spread across the continent, decision-making, team meetings and brainstorming sessions have always been done online.
To what extent do you think this crisis can help bring more of Africa’s population online?
ANAMMAH: This crisis will help bring more people online. We are already seeing positive signs of this in Nigeria, where the governor of one of the states reduced the costs of the right of way for laying broadband cables to such a degree that 1km of right of way now costs less than $200. This was a significant drop from where it used to be, and has traditionally been a critical cost component for telecoms firms looking to lay cables for broadband access. The move was a good signal and recognition of the importance of remote access, especially in remote areas.
Many are realising that for people to social distance, they need the tools to make it happen. Internet access is one of them. However, for penetration rates to reach their potential, high smartphone costs need to be addressed. Ensuring there are no tariffs on smartphones, especially on more affordable models, will help individuals in villages afford the technology. This will encourage more people to migrate from traditional mobiles to smartphones, thus increasing internet access and penetration.
In what ways will the Covid-19 pandemic change the nature of financial transactions throughout the region?
ANAMMAH: The Covid-19 pandemic will encourage more people to move away from cash transactions to the extent that they have a choice. In fact, we have seen recently that many of our customers in Nigeria do not want to use cash if possible. This choice is based on multiple factors, such as access to devices with digital payments, the cost of the transaction and payment solutions. It is important to breakdown all these elements to make sure the cost of digital transactions is low to encourage more people to go digital.
How do you see the combination of lower oil prices and the pandemic impacting e-commerce in Nigeria in the short to medium term?
ANAMMAH: To some extent, we saw a similar situation in 2016, when oil prices plummeted and the value of the naira fell dramatically. We expect a similar scenario to unfold now due to the combination of the Covid-19 pandemic and falling oil prices. In times of crisis we have seen that customers change habits. They are willing to purchase less-expensive brands, instead opting for value brands. However, at the same time the volume of transactions has increased because people make purchases more frequently.
When you consider the Covid-19 pandemic, the public health aspect adds an additional layer of complexity. Brands must ensure that they make products accessible from a price perspective, while also ensuring that they do not expose consumers to health risks. This can be a significant opportunity for brands to make sure that within their product portfolios there are offers for different demographics and price points. We expect that the shift will likely be more brand focused as consumers look for value within the brands they are familiar and comfortable with.
What are the main changes that you expect to see in the e-commerce space moving forward?
ANAMMAH: It is likely that in the future you will see more small and medium-sized companies that previously had no online operations want to be available on e-commerce platforms. We are seeing now an increase in interest from these companies, and this is expected to continue. It is our responsibility to identify ways in which we could bring more parties online. Most people assume that selling online is simply listing your products, but there is a lot of capacity building, training and knowledge transfer that needs to occur for the process to be successful. Recently, for example, we launched a partnership in Uganda with the UN Development Programme in which we bring local, informal market sellers of basic items to our platform.