Rising Fraud Rates Undermine Confidence in Nigeria’s E-commerce Industry
Nigeria’s e-commerce industry, once hailed as a promising frontier of economic growth, is now grappling with a growing menace: fraud. Industry stakeholders have voiced their concerns, pointing out that the prevalence of fraudulent activities is eroding confidence and hindering the sector’s development.
In a recent statement, Henry Owolabi, the Country Manager for DPO Pay, a leading pan-African payment service provider, shed light on the complex challenge posed by fraud. He revealed that the local economy suffers losses amounting to hundreds of millions of US dollars each year due to fraudulent schemes. The implications for the e-commerce sector are significant, as both merchants and consumers become increasingly wary of engaging in online transactions.
Owolabi emphasized the detrimental impact of fraud on the industry’s growth trajectory. Merchants face chargebacks, incurring financial losses, while consumers worry about sharing their card details, fearing potential compromises and unauthorized access to their accounts. Startlingly, research conducted by DPO Pay indicates that nearly 60 percent of users prefer pay-on-delivery options over online payments, highlighting the loss of confidence in existing payment systems.
The consequences of rising fraud rates are far-reaching. Nigeria’s population, once eager to embrace the convenience of online shopping, has now become cautious and hesitant. Owolabi’s company found that users perceive e-commerce as a high-risk endeavor, leading to reduced sales and stifled growth potential for new merchants. The absence of trust in the payment ecosystem has resulted in an environment where online sales occur but with suboptimal conditions, depriving users of a seamless customer experience.
Adelola Agbebiy, the Managing Director of Network International, Nigeria, emphasized the urgent need for payment service providers and their technology partners to take proactive measures to ensure the safety of merchants and consumers. Implementing real-time risk monitors, specialist risk teams, smart pattern identification, real-time payment confirmation, and round-the-clock fraud monitoring are crucial steps towards bolstering trust and combatting fraud.
A 2021 fraud report by the Nigeria Inter-Bank Settlement System (NIBSS) revealed a startling increase of 187 percent in overall fraud attempts between 2019 and 2020. Web-based fraud accounted for 47 percent, followed by mobile (36 percent), ATM terminals (9 percent), and point-of-sale (POS) terminals (7 percent). The report serves as a stark reminder of the evolving tactics employed by fraudsters, requiring heightened vigilance from the Nigerian public.
The rising tide of fraud in Nigeria’s e-commerce industry demands immediate attention and collaborative action from all stakeholders. Failure to address this issue effectively will continue to undermine the sector’s growth potential, impeding economic progress and stifling opportunities for budding entrepreneurs. Restoring confidence in the e-commerce ecosystem should be a top priority, ensuring that Nigerians can enjoy the benefits of secure and seamless online transactions.
Nigerian e-Commerce startup Sabi, Raises $38 Million in Series B Funding
Nigerian e-commerce startup Sabi has secured $38 million in series B funding, bringing its valuation to $300 million.
The funding round involved investors including Janngo Capital, Commerz Ventures, Norrsken 22, Fluent Ventures, Proof VC, and CRE Venture Capital, a pan-African early-stage investor.
Sabi, founded in 2020 by CEO Anu Adasolum and co-founder Ademola Adesina, is Africa’s leading provider of enabling infrastructure for the distribution of goods and services. Its platform empowers a diverse ecosystem of users, enabling merchants, importers, exporters, distributors, and manufacturers to expand their businesses using Sabi’s technology.
Sabi complements intermediaries in the B2B e-commerce retail chain, serving stakeholders such as manufacturers, distributors, wholesalers, and retailers. It utilizes offline agents, call centers, merchant partners, and supplier centers as channels to connect with the various parties in the value chain. The company offers tools for inventory management, sales, tracking, digital invoices, and analytics, aiming to professionalize informal trade and improve operational efficiency for small businesses.
Sabi’s technology-enabled platform streamlines transactions, reduces friction, and enhances transparency by providing access to information about products and transaction participants. This helps address trust issues within complex supply chains.
As of late 2021, Sabi had over 175,000 merchants on its network, with an annualized Gross Merchandise Value (GMV) of $200 million. Currently, the company boasts more than 300,000 merchants and over $1 billion in annualized GMV.
In 2021, Sabi closed a $6 million bridge round to support its rapid growth and expansion into Kenya. In 2022, the company extended its operations to Johannesburg, South Africa, tapping into the country’s $9 billion informal economy.
Sabi’s mobile app offers customized features like an eCommerce shop (Merch Buy), inventory purchase, credit options, and business performance tracking for registered businesses. The “My Shop” feature allows businesses to monitor customer sales, improving service delivery. By leveraging technology to create a connected and transparent trade ecosystem, Sabi contributes to growth and development across Africa.
Amazon Downsizes Workforce in Its Advertising Unit, as Part of Its Cost-Cutting Efforts
Giant e-commerce company Amazon has laid off some of its employees in its advertising unit, as part of its cost-cutting efforts.
The information about the layoffs was passed across by the company’s senior vice president Paul Katos on Tuesday via a memo, to employees informing them of the layoffs.
The memo reads,
“I wanted to share that this morning we took the difficult step of informing Amazon Ads team members who were impacted by role reductions in the U.S. and Canada. In other regions, we are following local policies which require additional time and process steps, including consultation with employee representative bodies.
“We will communicate with affected employees in other regions in accordance with those policies and timelines. We recognize that this news is significant for all our team members and, therefore, want to provide you with additional context on both the decision to eliminate roles and how we are supporting our impacted colleagues. As Andy shared a few weeks ago, throughout the 2023 planning process, we’ve been scrupulously prioritizing resources to maximize benefits to customers and the long-term health of our business.
“For Ads, this process has involved reallocating resources by shifting team members, slowing down or stopping certain programs, or concluding we didn’t have the right skills in place to address our priorities. As a result, we have made deeply-considered decisions about how best to move forward, resulting in role eliminations for a small percentage of our organization.
Katos further disclosed that affected employees will receive full pay and benefits for the next 60 days (90 days if in New York and New Jersey), plus an additional severance package and outplacement support to help with finding their next role outside of Amazon.
Investors King understands that Amazon’s recent layoff of employees in its advertising unit is part of the previously announced job cuts by the company, which are expected to affect 9,000 employees.
Amazon’s CEO Andy Jassy is currently taking on a broad overview of the company’s expenses and slowing growth in its core retail business, as it seeks to navigate the current economic downturn.
It is however interesting to note that Amazon is undergoing the largest layoffs in the company’s history after it went on a hiring spree during the covid-19 pandemic.
Amazon CEO Andy Jassy Total Compensation Plunged in 2022, After Taking 99% Pay Cut
Amazon CEO Andy Jassy’s total compensation plunged in 2022, after he took a 99% pay cut, earning less than the company’s founder Jeff Bezos.
In the document released by the company, Jassy was paid a total of $1.3 million in 2022, including a $317,500 base salary plus another $981,000 in 401(K) plan contributions. His 2022 total compensation was a major decline from $212,701,169 earned in 2021.
Jassy’s lesser compensation in 2022 was a result of him not receiving any stock awards during the year. According to Insider, Jassy vested $31.9 million in 2022 and is expected to vest $18.9 million in 2023. The filing shows that the pay ratio of Amazon’s median employee globally to Jassy was 1 to 38 in 2022, or about $34,000 compared with the CEO’s $1.3 million in salary and benefits. In 2021, the ratio was 1 to 6,474.
Although his total compensation dropped, Jassy who has been the CEO of the company for two years, saw a major salary increase of $317,500 from $175,000 recorded in 2021.
In a letter, Jassy acknowledged that some of the cost-cutting steps Amazon has recently taken are challenging, but he believes that the company would greatly benefit from it in the long run. To date, the e-commerce giant company has let go of about 27,000 workers in a major cost-cutting effort.
Amazon has also shut down several operations to reduce costs and has put more emphasis on areas that will help the business to grow. Jassy disclosed that each initiative’s long-term potential would drive adequate revenue operating income, free cash flow, and return on invested capital by taking a deep look throughout the organization business by business.
He said “We will put in a lot of effort to manage our spending to keep a lean culture. We recognize the need to consistently foster a cost-conscious culture, especially in a company that experiences net losses. We prefer to focus on growth at this time because we think that scale is essential to realizing the promise of our business model”.
He further disclosed that the company would continue to add to its workforce and would continue to compensate its stock option rather than cash.
Investors King understands that Andy Jassy is not the only CEO who took a pay cut among the top tech companies. Apple CEO Tim Cook will earn $49 million in 2023, about 40 percent less than what he was paid in 2022. Google CEO Sundar Pichai also received a lower compensation in 2022, compared to the previous year.
Several other such as Morgan Stanley CEO James Gorman, and Goldman Sachs CEO David Solomon are just a few examples of high-profile CEOs who have taken salary cuts to support their employees and businesses. While these pay cuts may not solve all the company’s challenges, these CEOs have shown a commitment to responsible leadership and a willingness to make tough decisions to keep their businesses afloat.
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