I like ecommerce, but I struggle with the business model. My concern has been the logistics. I think hard about the business, nevertheless, because everyone knows that internet is the future. So, the earlier we figure out what works on the web, the better for everyone.
Today, after a meeting, I tasked myself to come up with an idea on what could be a solution to the logistics challenge, which I could share on this platform, within 10 hours. The challenge has been that sending men on motorbikes across Lagos to deliver items may not be optimal.
This is my solution on how we could improve the ecommerce business in Africa, using the three category leaders in Nigeria here:
- Let Jumia, Konga and Yudala come together and build drive-thrus in some strategic locations in Lagos and other big cities in Nigeria. The drive-thrus will look like the typical ones seen in McDonald’s, a U.S. fast food (think of Tantalizers or Mr. Biggs in Lagos). The only difference is that the drive-thru will be bigger and will have many outlets, enabling multiple service points. (A drive-thru enables customers to pay for fast food and pick the items without leaving their cars.)
- A customer goes to Konga, Jumia or Yudala website to buy a product. Say the customer has bought a shoe and will need to pick it up within 6 hours. At checkout, he will specify the location of the facility where he will like to pick up the item. The ecommerce companies will specify the turnaround time to get the product ready for pick-up. For example, if you place an order for shoe before 6am, you can drive to the outlet between 8am-8pm that day to collect it. If not, you will have to reschedule the pick-up date and time online.
- When customers drive to the facilities, they will drive to the particular ecommerce company they had ordered the items online. They will put a code in a system (think of McDonald’s voice ordering system except that this will be a typepad to punch a number). The code will help the sorting system to bring out the specific items as the customer drives to the collection point. This facility will be advanced and heavily automated to save labour cost. The customers will not have to leave their cars as the items are loaded in their cars.
- The facilities will be strategically located in the cities. One will be built as people are leaving 3rd Mainland Bridge into the Lagos Mainland. So people that placed orders in Victoria Island could pick the items as they return from work. By positioning these pick-ups, the ecommerce firms will reduce or phase out home delivery. Essentially, the deal is that these customer pick-ups could reduce the need of going to homes or offices to deliver items.
- The ecommerce companies must have a well synchronized system that mimics the legendary McDonald’s’ below 5-minute wait rule. The idea is that when the customer enters the facility, he or she should be done within 10 minutes. To avoid delay, only customers who have already paid for their goods can use the service. There will not be any pay on delivery.
- The ecommerce companies can setup a joint venture that will run this for them. In other words, all of them will pool capital and build the facilities. This could be the model ecommerce needs in Nigeria.
I do think if they can come together and do this in Lagos, Port Harcourt and Abuja in some strategic locations, they will reduce their shipping and logistics costs, while also expanding the product appeals.
Note that I have focused on logistics which I think is the weakest point of the ecommerce business in Nigeria. They already have nice websites (lol) but the logistics is broken. And to get it right, they need to come together and cooperate. Yes, we need coopetition in the ecommerce business in Nigeria.
Coopetition is the act of cooperation between competing companies; businesses that engage in both competition and cooperation are said to be in coopetition
Of course, if we have a functioning postal service, this will not be necessary. When that happens, the new true dawn of ecommerce will begin in Nigeria. But do not count on a functioning postal system in Nigeria anytime soon.
----REGISTER for my Innovation for Growth Workshop, Lagos, Sept 2018.
---Visit our Store for my books, cases, frameworks and more. Now, enjoy our consolidated subscription for all contents (past, present and future).
-- We offer Advisory Services (tech, strategy & Africa).