In ecommerce, logistics and many sectors, the B2B business model has outperformed across many metrics in Nigeria. With the B2B model, your marginal cost positioning improves while the B2C model in some of these sectors is hopeless.
Do not waste your time starting a B2C ecommerce right now in Nigeria; focus on the B2B business model! You are likely going to run out of cash and fold on a B2C model because you are unlikely going to be profitable, no matter how hard you try.
In 2018 I wrote: “The easiest way to waste money and destroy value in Nigeria is to start an ecommerce business with B2C model. As I have noted many years ago in a seminal piece in Harvard Business Review, making money on ecommerce in Africa would happen but would take a really long time… But before then, it is putting good money in a value-destroying venture that would bleed cash until the owners give up. Ecommerce today in Africa at B2C is simply a loss-making online endeavor only people with deep pockets can do. You can be in it if you do not care for profitability.”
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But B2B has shown to be superbly amazing and many innovators are unlocking value therein. Remember: your business model determines to a large extent how successful you could be. So, think deeper before you launch that business.
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Comment 1: Interesting take but my experience is totally different with B2C ecommerce I am currently the director of ecommerce at 9 figure ecommerce store, I have worked with ecommerce businesses and I am in multiple communities with other ecommerce business owners and I can tell you that ecommerce is a very successful venture if you know how to do it right. I have seen people lots of people that started with less than a #100,000 and their businesses are currently worth over 50 million and some as much over a 100 million.
An e-commerce business natural girl wigs just expanded into the US market and has done over 14,000 orders in her US website alone under the space of 4 months
So it depends on where you are beaming your touch light, let me give you 2 places to point your touch light
Instagram Vendors
Facebook COD vendors
My Response: I wrote “Startups”, not “small business store”. Selling a wig online is a small business. That is different from running a startup. A startup grows and ramps up fast. A small business does not grow, and you do not start a startup with N100k. Also, a business worth N100m is great but that is just a small business. In startups, you are looking at billions of naira to start.
That wig seller after two years may have just 10 staff but a startup may have 400 staff. I did not say that an online B2C store is not a good idea, I said a B2C ecommerce startup which means it is designed and built to scale rapidly serving millions of users, not not 500 people or so.
“14,000 orders in her US website alone under the space of 4 months “ – that is nice for an online small business. But a startup with that data has not started. You want to see 50,000 orders in a week. And also, this 14k is in the US, not in Nigeria which is the focus of the piece.
Comment 2: I believe it’s not accurate to claim that running a B2C e-commerce is a waste of money and time. It depends on the approach and the tactics used. There are some B2C platforms that make strides with limited funds, while some B2B e-commerce ventures still spend heavily to sustain their models. The key factor isn’t whether it’s B2B or B2C, but rather the underlying business model and strategy employed.
My Response: “but rather the underlying business model and strategy employed’ – could you share
“There are some B2C platforms that make strides with limited funds,” -any names? I can share many B2B like Tradedeport, Allerzo, Cinderbuild, Tradegrid, etc. These are big companies which have executed B2B at scale.
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Do most people even know the difference between e-commerce startup and selling online? It does not seem like, so if you open a website or social media page and get some orders you charge as you like, it means that e-commerce at consumer level is working at scale! We are too micro to get involved in certain business conversations, that has been quite obvious.
For B2C to thrive, both the purchasing power and logistics infrastructure have to be there. If the cost of delivery is higher than the goods purchased, you have no business.
How we define growth is another topic all together.