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The Brilliance of the New Konga Strategy

The Brilliance of the New Konga Strategy

The Punch wrote a piece today where it quoted the CEO of Konga, Nick Imudia. The business leader revealed his strategy to redesign not just Konga but the entire Nigerian ecommerce sector.

Commenting on the acquisition, Chief Executive Officer, Nick Imudia stated, “Our mission is to revolutionise e-commerce, not just in Nigeria, but the whole of Africa and Kong is at the heart of this bold move.

“On the short term, we would re-position the business on the path of profitability. Our mid-term goal would see to the establishment of more stores across Nigeria, while our long-term plans will be focused on seeing Konga well established in many other African cities.”

The key sentence is thus: “Our mid-term goal would see to the establishment of more stores across Nigeria”. Yes, the new Konga would be opening physical stores across Nigeria. Certainly, that is a great winning business model. Besides the money being in the physical space, having stores will reduce the marginal cost challenges associated with pure play ecommerce. The piece quoted me as it argued the brilliance of pursuing this hybrid commerce for Konga.

An entrepreneur and professor of electrical and computer engineering, Ndubuisi Ekekwe, observed that “Online commerce is the future; it would keep growing and that is certain. In Nigeria, it has been noted that, ‘online commerce makes up less than N0.01 out of every N10 in Nigeria.

“In other words, for every N1,000 spent in Nigeria, only N1 is spent online. Again, I expect that number to keep moving north. (Please note that I said ‘online’, not ‘electronic or digital’. The distinction is very huge as you work on your strategy. The POS and the ATM are electronic but not online.)”

Simply, if the money is in the physical space, why must we build a business that is exclusively online? Unless for pride and fancy, it makes no sense. The new Konga understands this and is working to enter the race where the opportunities abound. With these stores, the new Konga will crash its marginal cost and that would help it to take advantages of the online elements to deepen its competitive capabilities in the physical. As it does this, Konga would become the most respected retail chain in Nigeria.  There is no other company that would come close because what we are witnessing is the birth of a new category and Konga will be the undisputed category-king. For years, Nigeria has failed to create a retail chain: Konga is bringing one with the unbounded and unconstrained capabilities of the internet fused with atoms of stores across Nigeria.

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Simply, we need a hybrid commerce strategy in Africa if we want to be on the path to profitability. Marginal cost of ecommerce is dominated by atoms and not (direct) bits. (Sure, information is physical, but let us avoid that complexity here.) Hybrid commerce will require returning to offline partners, and we need to make that work for Africa. It may not be complex if our companies are open to work together and where possible merge

I hinted that need for merger in November 2017 and later called in December 2017 for Konga to sell itself. It did and now great things are happening in the sector.


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