Nielsen Survey Reveals Nigeria’s Online Shopping Potential

The new Nielsen Global Connected Commerce Survey has found that Nigerian’s are outpacing global purchasing rates across several categories in online retail, pointing to what the Survey suggests is “the new retail reality”

The new Nielsen Global Connected Commerce Survey has found that Nigerian’s are outpacing global purchasing rates across several categories in online retail, pointing to what the Survey suggests is “the new retail reality”, as digital devices and ecommerce enable Nigerian consumers to shop wherever and whenever they choose.

The Survey polled more than 13,000 consumers in 26 countries including Nigeria; based only on the behavior of respondents with online access.

Nielsen Africa Retailer Services and Ecommerce Managing Director, Harsh Sarda commented: “The shift towards mobile purchasing reflects a larger trend that is occurring in retail: proximity shopping. Across all regions, smaller format stores that are close to work or home are growing fastest, and nothing offers greater convenience or proximity than the mobile device in consumers’ pockets.

“As more consumers adopt an ‘on-demand lifestyle’ and turn to mobile devices to shop, the most successful retailers will be those that optimise and differentiate their mobile experience to enhance the in-store experience of shoppers, using ‘personalisation’ to adapt to the specific realities of each market.”

Mobile shopping

Based on these findings, it’s no surprise that the Survey found that more than three quarters of Nigerian respondents who are online or connected have used their laptop and fewer than half have used their smartphone to purchase packaged grocery food; 69 percent and 48 percent respectively to buy beauty and personal care products, 67 percent and 42 percent for fashion-related products, and 52 percent and 46 percent for restaurant deliveries or meal delivery services.

In terms of the types of activities potential shoppers engage in online, half of Nigerian respondents said they looked up product information, with 32 percent saying they used it to compare prices and 31 percent for product reviews.

Online purchasing

When engaging in this prolific online shopping behaviour, cash-on-delivery and debit card payments are the most common form of payment methods -76 percent and 59 percent respectively - for Nigerian online shoppers, with direct debit from a bank accounting for the third highest at 38 percent. Cash-on-delivery is normally popular where credit card penetration and trust are low. This is borne out in Nigeria where 19 percent of online respondents do not have a credit/debit card to buy online and more so by the 63 percent who said they do not trust giving credit card information out online.

Sarda said: “An ideal payment gateway has two core characteristics: It is secure, and it allows consumers to pay with whatever method fits their needs (and wallets) best. Not every payment method works everywhere. However, for ecommerce to really take off, it has to migrate towards cashless delivery. To build trust in online and mobile transactions, retailers need to educate consumers about the means they’re taking to protect their personal information, and they must find ways to deliver a better experience than what consumers get from cash.”

Cross-border ecommerce

Consumers are also increasingly expanding their shopping to online retailers outside their geographic region. More than half of Nigerian respondents who shopped online in the past six months say they purchased items from an out-of-country or foreign retailer.

Sarda added: “Retail has been one of the last globalisation holdouts, but technology is giving consumers access to a world of products that were previously unavailable and is one of the key drivers of online shopping.

“In many developing markets, the growing upper and middle-class is demanding greater assortment not found at their domestic retailers. Consequently, these consumers are looking abroad to purchase authentic foreign brands, often at lower prices than they can find in their home country.”

Online advantage

Product assortment is a key area where online retailing has a unique advantage over the physical store because product ranging is not limited by square-footage space. This is particularly true in Nigeria where informal retail formats are the norm. Given that product availability is a strong motivator for online shopping in many developing countries, more than half of Nigerian respondents said they shop online for products they cannot find in physical stores and 63 percent said they shop online to access stores not available in their area or local stores.

One of the biggest barriers when it comes to online shopping in Nigeria for consumable categories includes the inability to inspect goods, with 78 percent of Nigerians citing it as a deterrent. This is undoubtedly tied to Nigerians uncertainty about product quality and concerns about freshness and produce/expiration dates of products when shopping for groceries online.

Sarda summarised that while branded, modern-trade retail penetration is still low in Nigeria, ecommerce retailers have the opportunity to leapfrog the challenges of the physical store environment, enabled by the growth in smartphone penetration. “The challenge is, however, that current online shopping growth is primarily driven from new, standalone ecommerce retailers, rather than the physical offline channels expanding into an online environment, where their advantage lies in bringing products and assortment previously unavailable,” he said.