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How payment on delivery threatens e-commerce growth in Nigeria

By BusinessNews Staff on May 11, 2015

Founder/CEO of Drinks.ng, Lanre Akinlagun has identified payment on delivery, prevalent among online retailers in Nigeria, as one of the greatest impediment to the growth of the sector. He disclosed this at a news conference to announce the acquisition of a 200Sqr ft warehouse in Lagos, in a strategic move to integrate offline platform into the online drinks seller to drive visibility while boosting distribution.

He said, “Payment on delivery is a bad idea and it is bad for businesses in Nigeria. In a country where you are introducing new concept, it is very bad to introduce new bad habit at the same time.” Akinlagun said payment on delivery is a bad idea because consumers are as indecisive as they are choosy thereby raising businesses’ operational cost when they reject delivered items.

“Generally as a people, we are very indecisive, but we are also very choosy. So when a delivery person arrives your house and you don’t like the item, you send it back at the cost of the company that is trying to deliver. So I just think that because of the indecision of the consumers, payment on delivery is not a good idea. Also there is high cost of logistics. And there is also the issue of inconsistency in fuel delivery, including lack of time keeping by consumers,” he added.

On the integration of the offline platform, Akinlagun told the newsmen that the move was basically to connect with more consumers through effective offline distribution system He said, “We have integrated offline into our platform for two reasons. The first is to improve our distribution. Nigeria is a very unique country. A lot of things happen differently here. So drinks are one of the things that as much you can get them anywhere, it still relies much on impulse purchases.

For instance, people know they want to drink but they don’t necessarily plan for it. This makes it very difficult for people to purchase drinks online. But there is a trend we noticed with other online ventures which we are building on. We have realised that a lot of people research online and purchase offline. So people are able to go to our website, see our stock and the prices we offer, and then book it and tell us to keep it at the store and then come by the store later and pick it up.

“It is that physical element that is prevalent in Nigeria’s business environment that we are trying to key into. People will not impulsive buy and pay for drinks online, they want to see it first and that is why I think the Iroko style where people research online and buy offline is what is most suitable for products like ours”

He added: “The reason why we have moved offline is not to become big player in the offline world but to merge our online visibility with our offline distribution. And also to give people more reason to trust with our physical presence. It’s also for an extension of our marketing tool because it is easy for us to get referrals through word of mouth, if we have offline presence. But the main point is to increase our distribution.

There are people who come into our stores and make orders now because with certain products, there has to be a physical element.” Akinlagun said this business model will also help the business reduce operational cost and improve logistics.

[Vanguard]

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