People, be ready for the long-haul if you are going into the e-commerce sector. It demands a lot of efforts and money. You need to build logistics and become your own Post Office. Unlike in America, where there are postal systems, in Africa, you need to build your own.
So, these e-commerce companies are not making money. They are there because they have war-chest of tons of cash to burn. Never think you can do same unless you have a big-time backer. You need millions of dollars.
Tekedia predicts that it will take at least five years for these e-commerce companies like Konga and Jumia to break even. Shipping a book of N2,000 ($10) across Lagos on motorbikes will need many miracles to be profitable.
According to a great piece in Fortune, Jumia is burning cash.
Given the nascence of Nigeria’s tech sector, it’s hard to say which company is dominating. For online traffic, Jumia ranks sixth and Konga seventh in a list of top-visited Nigerian sites. Konga has yet to release financials but claims revenues grew 450 percent in 2014. Per Rocket Internet’s 2014 public listing, Jumia had $28 million in net revenues, with $32 million in losses.
Now you know the strategy. It is market share and not profitable. This is not a website business. This is a logistics business. You need cash to participate!