Congratulations on the new products and services which you’re about launching. I know you have budgeted some funds for that massive online advertisement. I have a message for you: hold that money and do not waste it.
But before I share my suggestions, read this case. Procter & Gamble, the global consumer giant, noted that after a $100 million cut to online ad spending, sales was not affected. CEO David Taylor said to WSJ: “We’re not going to follow a formula of how much you spend or share of voice…We want every dollar to add value…”
Sure, there are many companies that online advertising works. But to many, it adds marginal value. It has never worked for me in my small shops. iROKOtv, run by Jason Njoku, has no online ad budget.
This is my suggestion: commit to building organic traffic to your business by delivering value (your call!). Key element of African business is still offline. Most people with money rarely spend online. Traffic is nice but also an illusion because the day you stop the ad campaigns, they disappear. Minimal conversations abound. What works in Africa is WORD OF MOUTH. You must have meatspace presence for digital success. That means you cannot be too gently. You must hustle for online space unless you want to get a paid job.
P.S.: “Word of mouth” has evolved beyond talking on phone. Today, it means demonstrating domain expertise across platforms, online and meatspace. Entrepreneurs must invest in that and build that presence. This is different from throwing money on display ads on social media when no one is watching. A nice post on Facebook that someone shares about your business is modern “word of mouth”. My point here is that you cannot rely on display ads, you need to take action and be engaged online to have results. Sure – online ads can work but most times, the value is marginal.
Today, the Nigerian government unveiled the 21 sectors which will enjoy “pioneer status” as it works to accelerate investment into the country, and subsequently diversify the economy from minerals and hydrocarbons. One of those sectors is ecommerce.
The government of Nigeria has released the full list of the 27 key industries and products included in the ‘pioneer status’ incentives for prospective investors.The benefits include tax relief, mainly for corporate income tax. … Here is the full list of the 27 industries to enjoy the pioneer status….21. E-commerce services;
Nigeria’s corporate income tax (CIT) has averaged 30% over the last few years.
Resident companies are liable to CIT on their worldwide income while non-residents are subject to CIT on their Nigeria-source income.
The CIT rate is 30%, assessed on a preceding year basis (i.e. tax is charged on profits for the accounting year ending in the year preceding assessment).
Simply, CIT is 30% and it is a huge part of the profit. If you are not required to pay this money, the implication is that, you can decide to pass the gain to your customers. This will help the Nigerian ecommerce sector if they decide to pass the gain to customers.
Why This Matters
Just like that, the Nigerian government has made shopping online cheaper. The savings here could be up to 30% of profit provided the ecommerce companies decide to pass the whole gains to customers. This means that if a shoe commands a profit of N1,000, without the pioneer status, an ecommerce company can now sell it for N700 without any material change in its bottom line. This is because the difference of N300 would have been sent to government as tax, without the pioneer status in place. But since government is forgiving that tax, the online seller can sell at N700 without any change in its financials. This assumes that the seller is transferring all the benefits to the buyer.
Depending on how government implements this, selling things online should be cheaper in Nigeria for companies. This mirrors the U.S. model which helped Amazon.com. The ecommerce giant was not collecting local taxes thereby making things artificially cheaper to buyers compared to physical stores which do collect local taxes. So if a product is $100, and the local tax is 7%, buying at Amazon will command only $100 while in the local store, the price will be $107. For Amazon Prime members, the shipping is waived, and that immediately pushes many to shop online as they can save the tax money. That gave online stores a huge edge over their physical store counterparts across America. (By law, the local buyers are expected to self-report the tax; that does not usually happen though).
According to federal law, a retailer does not have to charge sales tax on purchases made in a state where it does not have a presence. And thus the argument has been that online-only retailers — which have only distribution centers instead of a massive fleet of stores dotting every state in the country — have enjoyed an advantage over their brick-and-mortar counterparts because they could effectively beat them on price by not having to charge that tax.
Technically, we should be seeing items cheaper in Konga and Jumia compared to physical stores and supermarkets once the pioneer status kicks off. While the challenges of ecommerce remain, in Nigeria, I will not go there today. This is a moment because this is a significant deal.
All Together
The Nigerian ecommerce players will have more room to profitability now they can keep all their profits if they choose. (This assumes they make profits.) Also, depending on how they plan it, online shoppers will increasingly see products to be more price-competitive compared to brick and mortar stores. As the government rolls out the modalities, more insights will come. This could possibly open more investments in ecommerce sector in Nigeria.
Our world is going through a redesign. Technology is restructuring the core elements of our economic systems. The essence of firms, the reduction of the friction that exists between buyer and seller, is challenged. In a friction-less market, the buyer and seller will connect directly without intermediaries (the firms). If savers can find people to lend directly, one of the core pillars of banking will go.
A firm is installing biochip implants in staff making it possible for them to shop and move around in offices seamlessly. That will go mainstream and humans will become nodes, just as we have IP addresses of modern computing and mobility. Add blockchain, the constructs of self-organizing systems will emerge. Even a dislocation in government powers will emerge.
As AI (artificial intelligence) evolves and machines increasingly become more cognitive, bosses will become algorithms. You go to work, you report to AI which will supervise your work. Because the AI can understand more complex systems, at scale, than humans, it has an edge.
The amalgam of brainy machines with humans as nodes under the control of blockchain will reduce the cardinal drivers of firms across sectors. Why do you need school when your brain is an extension of the internet? Unbounded possibilities; it’s ON.
The government of Nigeria has released the full list of the 27 key industries and products included in the ‘pioneer status’ incentives for prospective investors.The benefits include tax relief, mainly for corporate income tax. (You could be keeping up to 30% of your profit with this.)
Here is the full list of the 27 industries to enjoy the pioneer status.
Mining and processing of coal;
Processing and preservation of meat/poultry and production of meat/poultry products;
Manufacture of starches and starch products;
Processing of cocoa;
Manufacture of animal feeds;
Tanning and dressing of Leather;
Manufacture of leather footwear, luggage and handbags;
Manufacture of household and personal hygiene paper products;
Manufacture of paints, vanishes and printing ink;
Manufacture of plastic products (builders’ plastic ware) and moulds;
Manufacture of batteries and accumulators;
Manufacture of steam generators;
Manufacture of railway locomotives, wagons and rolling stock;
Manufacture of metal-forming machinery and machine tools;
Manufacture of machinery for metallurgy;
Manufacture of machinery for food and beverage processing;
Manufacture of machinery for textile, apparel and leather production;
Manufacture of machinery for paper and paperboard production;
Manufacture of plastics and rubber machinery;
Waste treatment, disposal and material recovery;
E-commerce services;
Software development and publishing;
Motion picture, video and television programme production, distribution, exhibition and photography;
Music production, publishing and distribution;
Real estate investment vehicles under the Investments and Securities Act;
Mortgage backed securities under the Investments and Securities Act; and
The villagers saw a special breed of “bird” which fell from the sky. They gathered to get it. They aimed their arrows because even though the bird was already down, it was still moving. Too bad, the animal is a drone.
The bad thing in this video is that the actors are Africans which is a bad stereotype.
