|Emerging Segments of eCommerce and Growth of e-commerce in Nigeria|
E-tailing is emerging as the fastest growing segment of e-commerce.Some of the major players in the e-tailing segment include amazon.com, jaldi.com, fabmart.com, etc.
The trendsetter in this segment has been amazon.com which is an online superstore dealing in books, music, video, software, toys, games, etc. it claims over 13 million customers.
The e-retailing model is already steadily disinter-mediating second rung retailers in the real world.
These are e-commerce models having the essential characteristics of providing specialized and precise information to customers. Its simplest manifestation is a search engine.
For instance, CharlseSchwabby.com is the largest online broker in the world providing services such as investment planning tools, industry and company analysis, daily price charts and company headlines. Its clients include domestic and international individual investors, investment managers and institutions and its revenues include commission from online trades.
Naukri.com is the leading employment infomediary in India handling nearly 10,000 job advertisements in India. Its revenues include hosting charges paid y recruiting companies, resume hosting and circulation charges paid by job seekers, commission from placement agencies and resume development charges.
E-banking offers remote banking facility electronically. It enableas the web user to make purchases online and pay for the same using an online banking facility. The system has been only recently introduced in many countries. For instance, ICICI.com has launched “Infinity”, and internet banking service that offers services such as account information, funds transfer within accounts, bill payment, requests and intimations for cheque books, stock payment instruction etc, communication with account manager etc.
Electronic Payment Mechanisms
Electronic payment mechanisms are being revolutionized with the introduction of a variety of mechanisms in which monetary value may be stored in the form of electronic signals. These signals are stored either on plastic cards, known as a stored value card system, or on a computer drive or disk, known as the digital money system.
Factors determining security are as follows:
Identity of payer and cash issuer
Acceptability of payments
Irrevocability of payments
Handling of small value payments
Whichever may e-commerce develops, it would definitely need the support of a fast, reliable and secure financial system. An e-cash system transfers value between persons without a face to face involvement. This has been discussed in detail in the chapter on ‘Enforcement issues in electronic commerce’.
Growth of e-commerce in Nigeria
e-commerce, which literally means electronic commerce, consists primarily of the distribution, marketing, buying and selling of products or service and transfer of funds on the internet.
Experts are of the opinion that banks have been particularly instrumental to the commencement of e-commerce in Nigeria with the introduction of internet banking services, which allow customers to conduct banking transactions online, from the convenience of their homes or offices.
With over 30 million chip/PIN credit/debt cards in circulation nationwide, the adoption and growth of ATM transactions, according to experts, are also strong indices of the country’s fledgling e-Commerce.
With over 10,000 ATMs and 15,000 PoS terminals deployed across Nigeria, e-Commerce is believed to have largely been driven by e-payment in the country.
The e-payment Providers Association of Nigeria has said the payment card industry in the country is worth over N23.4tn while monthly ATM transactions are N80bn and payments on PoS terminals, N1.4bn.
However, the coutry’s e-Commerce has not recorded similar growth in online transaction as it has in transactions on ATMs and PoS terminals.
Many Nigerians are yet to embrace online transaction even when there are platforms where such transactions can be carried out because they barely understand how it works and there is very low awareness in that regard.
The reason for the low adoption of online transactions in Nigeria is low awareness outside the big cities; poor electricity supply; cost of computers; poor access to the internet; poor infrastructure; poor hinterland networking; and lack of relevant local content were the key challenges facing online transactions in Nigeria.
Despite the availability of few online transaction platforms in the country, Nigerians are yet to embrace online grocery shopping because there was no framework through which buyers and sellers could ascertain product delivery or through which buyers could protect themselves against the failure to deliver by the sellers.
Barriers facing web transaction in Nigeria can be categorized into socio-political and cognitive.
The economic obstacles include slow internet connection, unavailability of credit cards, unavailability of a physical delivery system and low bandwidth.
The socio-political barriers are released to government regulations involving privacy and security, lack of business laws for e-commerce, and lack of legal protection for internet purchases.
The cognitive hindrances are caused by a number of factors, which led to a negative cognitive assessment of e-Commerce by individuals and organizations. These include a lack of awareness and understanding of potential opportunities; lack of confidence in service providers and the postal network; and computer illiteracy.
The low adoption of web transaction in Nigeria can be attributed to prevalent internet fraud, inadequate legal framework and, most importantly, infrastructural shortfalls. Nigeria’s cash-based economy is also one of the hindrances to web transaction in Nigeria. Nigerians are predominantly a cash-carrying people, since for most Nigerians that is the only way to demonstrate their affluence.
The challenges of web payments in Nigeria are multi-faceted, hence legislative and social challenges must be addressed to leapfrog web transaction in the country. When a major technical change is introduced in the society, we cannot claim to be fully successful until we do justice to the other two legs are legislative and social challenges. For legislative issues, we must first ensure that all enabling laws are put in place to ensure a fair adjudication in cases of disputes between parties to a transaction. What does our evidence act permit. How knoeledgeabe and prepared are our judges, lawyers, police and other judicial officers in the interpretation of e-Commerce transactions, particularly where all evidence is electronic.
“Secondly, to achieve critical mass, there must be a concerted sensitization of the entire populace about their rights and obligations pertaining to e-Commerce. While the technology for ensuring online payment may seem basic to technology savvy people, the back-room processing that takes place to ensure delivery of value for the money exchanged could be a very complex gamut of activities; starting from ensuring that goods are delivered to the appropriate addresses where they are intended for.”
For e-Commerce to be successful and effective in the country there must be proper addressing of streets while GPS technologies should be deployed for locating physical addresses. Hence we still have a very long way to go in Nigeria regarding eCommerce. Designing and implementing a national framework would be beneficial to the growth of web for transaction (e-Commerce) in Nigeria. This with particular reference to the legal regulations related to internet filtration, as well as postal and banking services.
Furthermore, inasmuch as the basic challenges have been identified, it is expected that all parties involved including private entities, regulators/government institutions and the public must come together and address these challenges. Until such collaboration is achieved, we cannot expect transactions in Nigeria is huge; therefore stakeholders in the industry must see the growth of online transaction as a collective responsibility.
To draw Nigerians onto the web for transaction, the challenges facing online transactions must be overcome. Web content must be made relevant, convenient and sites secure. This is necessary owing to the fact that based on internet world statistics, internet usage in Nigeria has grown form three per cent in 2006 to 16 per cent in 2009, making it one of the fastest growing in Africa. By global precedence, a lot of the successful online payment-driven businesses like ebay, paypal and amazon, are private-sector led. Today, our government is in a position to accelerate growth by resolving the challenges within its control.
In industrialized nations, in Europe and America, e-Commerce has contributed significantly to the growth of businesses and the economy at large. Researchers of the United Nations Conference on Trade and Development have argued that African countries can exploit the rapidly expanding opportunities for profitable commercial ventures on the internet. Nigeria should lead the way in embracing e-commerce and popularizing it.