Connect with us

E-commerce

Rising Fraud Rates Undermine Confidence in Nigeria’s E-commerce Industry

Published

on

E-commerce - Investors King

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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

E-commerce

Jumia Shares Triple in 2024 Amid Strong Q1 Performance

Published

on

Shares of African e-commerce giant Jumia (JMIA) surged to $8.67 on Monday, a significant milestone in the company’s remarkable recovery this year.

This price represents the highest the stock traded in 2024, starting at a modest $3.36. The gain highlights investor confidence following the company’s strong Q1 2024 results.

Despite not yet achieving a unicorn valuation, Jumia’s market capitalization has climbed to an impressive $872 million.

This turnaround is primarily attributed to the company’s strategic shift under the leadership of CEO Francis Dufay, who took over in 2023.

Dufay has focused on cost-cutting measures and driving revenue growth, a departure from Jumia’s previous struggles with profitability.

In Q1 2024, Jumia reported a 70% reduction in losses, thanks to significant cuts in advertising and sales expenses. Meanwhile, the company saw an 18.5% increase in revenue.

These results are particularly noteworthy given the economic challenges in some of Jumia’s major markets, including high inflation and currency devaluation.

“The impressive Q1 results have renewed investor confidence,” said an industry analyst. “Jumia’s ability to cut costs while growing revenue in such a challenging environment is a testament to their strategic realignment.”

Dufay’s leadership has been pivotal in this transformation. He has made bold moves, including shutting down the loss-making Jumia Food vertical and relocating UAE-based executives to Jumia’s key markets.

Also, the launch of a new 30,000 square meter integrated warehouse in Lagos has enhanced Jumia’s logistics capabilities, reducing delivery times and improving customer satisfaction.

“The shift in business model and operational focus is showing positive results,” commented Dufay. “We are committed to sustaining this growth trajectory and building a robust, profitable business.”

Jumia’s stock performance has drawn positive reactions from investors, particularly given the broader economic challenges in Africa.

The company’s turnaround is seen as a promising sign, especially as competitors like Amazon begin to make inroads into the African market with their launch in South Africa.

Jumia’s initial public offering in 2019, listed on the New York Stock Exchange (NYSE) at $14.50 per share, generated significant excitement.

However, the subsequent years were marked by fluctuating share prices and ongoing struggles with profitability. The recent surge in share price reflects a renewed optimism about Jumia’s future under Dufay’s leadership.

As Jumia continues to navigate the complexities of the African e-commerce landscape, it remains focused on achieving sustainable growth and profitability. The recent stock surge is a clear indication that investors believe in the company’s potential to thrive in a competitive market.

“Jumia’s journey has been challenging, but our commitment to innovation and operational excellence is unwavering,” Dufay stated. “We are excited about the opportunities ahead and remain focused on delivering value to our shareholders and customers.”

Continue Reading

E-commerce

Jumia Plans Warehouse Consolidation in Lagos Amid Nigeria Focus

Published

on

Jumia - Investors King

Jumia Technologies AG, the Nasdaq-listed e-commerce giant, has unveiled plans to consolidate its warehouses in Nigeria.

This decision is part of the company’s broader strategy to prioritize Nigeria, Africa’s most populous nation as it endeavors to turn profitable amidst challenging market conditions.

The consolidation initiative will see Jumia merging its three existing warehouses in Nigeria into a single expansive depot spanning 30,000 square meters, strategically located in Lagos.

Francis Dufay, CEO of Jumia, emphasized the cost-cutting benefits associated with this move, highlighting the company’s commitment to optimizing its operational efficiency.

Speaking about the rationale behind the consolidation, Dufay expressed confidence in Nigeria’s potential to provide Jumia with the scale needed to achieve profitability.

Despite facing headwinds such as currency fluctuations and a challenging economic environment, Jumia views Nigeria as a key market for growth, anticipating positive developments in the medium term.

Jumia’s decision to streamline its operations in Nigeria comes against the backdrop of its ongoing efforts to navigate the complexities of the e-commerce landscape.

Despite reporting an operating loss of $8.33 million in the first quarter of the year, the company remains optimistic about its prospects in Nigeria, where it continues to witness steady revenue growth.

The e-commerce giant’s commitment to Nigeria underscores its long-term vision and determination to succeed in the region.

With plans to expand its footprint to additional cities across the country, Jumia aims to capitalize on Nigeria’s vast market potential and consumer demand.

However, Jumia’s journey to profitability in Nigeria is not without its challenges. The country’s economic landscape has been marred by currency devaluations, infrastructural deficiencies, and logistical hurdles.

Yet, amidst these obstacles, Jumia remains resilient, banking on Nigeria’s economic revival efforts and policy reforms to fuel its growth trajectory.

As part of its strategy to adapt to evolving market dynamics, Jumia has introduced innovative initiatives such as buy-now-pay-later financing options to cater to customers grappling with rising prices.

Also, the company remains vigilant in monitoring pricing dynamics, ensuring competitive pricing to meet the needs of price-conscious consumers.

Continue Reading

E-commerce

Alibaba Eyes Gulf Expansion, Seeks Partnerships in Saudi and UAE Markets

Published

on

Alibaba CEO Jack Ma gestures as he is introduced to participate in a panel discussion at the APEC CEO Summit in Manila

Alibaba Group Holding Ltd., the prominent Chinese e-commerce giant, is actively pursuing expansion into the Gulf region, notably in Saudi Arabia and the United Arab Emirates (UAE).

Alibaba’s president, Michael Evans, revealed the company’s strategy during a panel discussion at Dubai’s World Government Summit, highlighting a commitment to local partnerships as a key aspect of their approach.

Evans underscored Alibaba’s recent endeavors in Saudi Arabia, indicating a concerted effort to deepen its presence in the region’s burgeoning e-commerce landscape.

The move signifies Alibaba’s strategic pivot towards collaborative ventures following a period of strategic realignment prompted by government scrutiny and leadership changes.

The Gulf’s growing ties with China, driven by mutual economic interests and investment diversification initiatives, present an opportune moment for Alibaba’s expansion efforts.

However, geopolitical complexities, including heightened US scrutiny of China-linked entities, add a layer of challenge to Alibaba’s Gulf aspirations.

As Alibaba seeks to reclaim its leadership position in the global tech industry, the pursuit of partnerships in Saudi Arabia and the UAE underscores the company’s adaptive approach to international expansion.

The success of these ventures could potentially reshape the Gulf’s e-commerce landscape and deepen economic ties between the region and China.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending