Naspers shuts down OLX, the classified ecommerce company in Nigeria, Punch reports. Over the weekend, Konga was sold to Zinox. Naspers had invested in Konga.
There are indications that OLX, an online marketplace owned by Naspers, has shut down its offices in Nigeria, a move that will affect over 100 of its employees.
It was gathered that the workers were formally informed of the decision on Tuesday through a notice of termination, which will commence in March, and will be followed by the management team in April.
In an emailed response by the Public Relations and Communications Lead, OLX Nigeria, Uche Nwagboso, the company confirmed that it made a decision to consolidate its business operations in Nigeria.
According to her, the company has made provision for financial compensation for the workers that will be affected.
“We made a difficult but important decision in Nigeria to consolidate our operations between some of our offices internationally. Our marketplace will continue to operate here – uninterrupted – as it has since 2010, and we remain committed to the many people here who use our platform to buy and sell every month,” Nwagboso said.
She added, “We continue to be focused on constantly innovating to make sure that OLX remains the top classified platform in the country. Of course, we are committed to helping our affected colleagues during this transition and have already offered them meaningful financial and other support.
“As we’ve expressed to them directly, we are extremely grateful for their many significant contributions to OLX’s success.”
Naspers is Africa’s largest company by market capitalization, hitting excess of $100 billion in the Johannesburg Stock Exchange. It made it big in when in invested in China-based Tencent. But repeating the luck in Tencent has eluded it for years. From Mocality to Kalahari, from Konga to OLX, it has struggled to repeat China in Africa.
Africa’s largest company by market capitalization which is so big that the whole of the Nigerian Stock Exchange is not up to 40% of its value is still searching for another winner. It saw alpha when it hit glory with investments in China’s Tencent. Naspers has seen many disappointments in its broad internet (ecommerce) investments in Africa. It shuttered Mocality, a digital business directory, and also killed Kalahari, one of Africa’s foremost ecommerce companies. In all these entities it closed, it complained of one thing: lack of profitability.
Largely, the ecommerce business in Nigeria would see more massive redesigns. As I have written in the Harvard Business Review, the sector could be profitable but it would take time for that to happen. The unit economics does not make sense due to logistics issues which increase marginal cost with growth. I have preached a strategy that depends on aggregation construct for alpha.
Distrust: Rich Africans have yet to embrace online shopping, due to online fraud. In Nigeria, for example, where phishing is common, people are skeptical about putting their credentials online.
Cost of broadband: Africa enjoys tremendous growth in mobile internet which is the popular means for people to access the web.
Logistics: Amazon.com and eBay are great companies that depend on the U.S. postal system to serve their customers.
African open market: In Africa, there are “markets” everywhere, starting with the security guards who run stores in front of their masters’ mansions.
Fragmented markets: For all the efforts to make Africa appear as one market, it is not.
Literacy rates: Even if all the infrastructure and integration issues are fixed, illiterate citizens may be unable to participate directly on e-commerce sites that require reading and writing skills.
OLX joins Efritin.com Nigeria which folded in 2015, citing “high cost of doing business as reasons”. You can also add Tradestable and Ady in that list as companies that exited the sub-sector.