video Finance Videos

Buying into Africa's online retail boom

Monday, April 14, 2014 - 02:20

Apr 15 - Online retail is growing rapidly in Nigeria and as Sonia Legg reports US investment and traffic jams are helping Jumia create an Amazon-style operation in what is now Africa's largest economy.

▲ Hide Transcript

▶ View Transcript

It's Africa's answer to Amazon. And Jumia has big ambitions. The Nigerian online retailer sells everything from fashion and toys to electronics and home appliances. Jeremy Doutte is its Co-CEO. (SOUNDBITE) (English) JEREMY DOUTTE, CO-CHIEF EXECUTIVE OFFICER, JUMIA, SAYING: "We want to re-empower the Nigerians with their time and if we can build a service and a company in two years whereby people can shop everything at anytime." A 26 million dollar investment from venture capital firm Summit Partners - plus contributions from other foreign investors - have helped Jumia become one of the biggest online retail stores in Nigeria. It has 100,000 customer accounts there and sales are increasing by 15% a month. It also has operations in Morocco, Ivory Coast, Egypt and Kenya. (SOUNDBITE) (English) JEREMY DOUTTE, CO-CHIEF EXECUTIVE OFFICER, JUMIA, SAYING: "Usually in emerging markets, people shop online for price. Why? Because the online website is just a great comparator, you can compare the prices and see they're reliable. I think that Nigeria maybe one of the only countries in the world, emerging markets where people shop online for convenience, and are ready to pay the price." Nigeria has just overtaken South Africa as the continent's biggest economy. And the man who invented the term BRIC - and now favours MINT, which includes Nigeria - sees vast potential. Former Goldman Sachs Chief Economist Jim O'Neill says he's been to the country almost as many times in the past year as he's visited the States. (SOUNDBITE) (English) JIM O'NEILL, FORMER GOLDMAN SACHS CHIEF ECONOMIST, SAYING: "By 2050 Nigeria could be as big as the U.S. population-wide so if they got things right, and consumers really get income support, for a lot of consumer companies Nigeria is a fantastic story," It's not just Nigeria's population of 170 million that's fueling the online retail business - its traffic jams are also a factor. It can take 45 minutes to simply get to the car park at a shopping mall. But Jumia and others like them have their challenges too - not least the poor infrastructure. Port delays and supply chain woes are common. So is online fraud in Lagos. But consumers are beginning to trust some websites with their bank details - and while Jumia isn't profitable yet - it is grabbing a share of a market with a great deal of potential.