Jumia vs Konga – Who is winning the war? YNaija Investigates the numbers, the hype, and the CEOs

by Adegoke Oyeniyi, for YNaija

On the first anniversaries of Nigeria’s leading (and feverishly competing) e-commerce companies, we go beyond the deluge of Google and Facebook adverts, and look at the character, future and people behind these attractive brands

konga logo

On 17 June this year, Jumia Nigeria announced its first anniversary – reeling out plans to open a 90,000 sq.ft warehouse, relocate to an impressive 10,000 sq.ft e-commerce campus and host the first Nigerian e-commerce conference in grand style, and, for good measure, two days after the one year anniversary of its major competitor.

[READ: Opinion: Nigeria’s e-commerce rise and the legitimate opportunities it brings]

On July 10, that competitor, Konga Online Shopping clocked one. For anniversary, the retailer with a smiley face as logo had a relatively more low-key cocktail party at the Muson Centre with its ambassador, singer Omawumi and other celebrities attending. But that wasn’t all, in addition to its anniversary sale, the company’s chief executive, top management and Omawumi took a trip and surprised their very first customer, Kehinde Laleye at her Victoria Island with gifts worth thousands of naira, all accompanied with a media blitz.

Two moneyed retailers fighting for our attention and money, and both proclaiming to be Nigeria’s largest online mall? A cheeky observer would add as footnote: game on.

[READ: “Jason Njoku is just trying to distract everyone”: YNaija Investigates the iROKO TV business]

Hello, Africa

Jumia is the flagship e-commerce company of German internet company incubator, Rocket Internet – in Africa. Jumia Nigeria initially began operations in June 2012 under the brand name Kasuwa, later merging with another Rocket Internet ecommerce start-up, Sabunta to birth Jumia.

According to a founding employee, who asked for anonymity, Kasuwa was founded with a $10 million dollar investment from Rocket Internet – the South African Managing Director Dr. Hendrik Harren co-founding it with a Ghanaian Notore Industries regional head, Raphael Afaedor.

“Among the ventures I founded is Africa’s most successful e-commerce venture: Jumia Nigeria,” Hendrik proudly says on his LinkedIn profile.

[CLICK: See our pick of the top 10 Nigerian websites of 2012!]

At the time Harvard Business School alumni Tunde Kehinde, who is now co-chief executive, was first hired to head the business development unit, it was just before Kasuwa consolidated with Sabunta, and Jumia Nigeria emerged.

Konga was founded coincidentally (or maybe not), a month after Kasuwa.

Sim Shagaya, founder and board member of profit-making E-motion – the digital outdoor advertiser that owns the riveting electronic cube at Lagos’ Lekki Phase 1 roundabout – left the helm at another successful company he founded, DealDey.com to focus on establishing a reliable retail network in Nigeria.

“I want to dedicate the next 20 years of my life to this,” he said to me in a recent interview.

Mo’ money

Shagaya sold some of his shares in E-motions to fund Konga and eventually flew to Stockholm to meet Kinnevik – an investor in E-motions and DealDey – to secure a multi-million dollar investment.

Despite the instructive shout-out by Nigeria’s coordinating minister of the economy, Ngozi Okonjo-Iweala (“online vendors like Konga.com, and Jumia.com report about 100,000 unique visitors each day and this has grown the value of online shopping by 25% amounting to N62.4 billion in 2011 from N49.9 billion in 2010,” she said in presenting the president’s mid-term report), e-commerce in Nigeria is at its infancy. Because of this, there is very little published industry data and analysis.

Players are keeping mum and even smaller competitors like SmartBuy, Taafoo, Kamdora and WebMallNG are on a hush-hush, but it is possible to trace the monies that gave these two titans life.

From indications, Rocket Internet’s Jumia seems to be larger in size than Nigeria’s Konga. Recent online reports exaggerate the amount raised as “about $70 million”. The official figures are not as huge, but they are impressive enough: “Jumia has raised over USD $50 million from renowned investors J.P. Morgan, Summit Partners, Millicom and Rocket Internet…,” official statements available to me say.

Its parent Africa company raised $26 million in March, then a couple of Rocket Internet clones including Jumia received another $35 million from Millicom recently – although some reports have inaccurately summed up the Jumia Africa investments as for Jumia Nigeria alone.

“Investors that can add value to you, open doors and help you network, will help you run faster against competition,” Kehinde explained their competitive advantage in an interview with Ventures Africa.

He was speaking about Rocket Internet, founded by Samwer Brothers in Berlin in 2007. Rocket has indeed done an impressive job of contacting and convincing foreign investors to secure massive capital for the Afaedor and Kehinde led-Jumia.

[READ: Opinion: Nigerian technology startups and their tendency to be unreliable]

Compared to this dollar rain, Konga is certainly the little brother. Though Kinnevik and investment giant Naspers MIH have made undisclosed amounts of cash for equity investments in the company, its initial capital was below $10 million.

All bets are on

jumia logo

Shagaya tells me the task of convincing investors to commit long-term to Nigeria’s online retail market is extremely difficult. Nigeria’s economic prospects may be bright for Internet retail and the rewards could be tempting, but there are not immediate – or certain.

To hear him tell it, this is all dependent on the rise of the per capita income of the average Nigerian and the economic performance of the Nigerian government.

“With more income comes more purchase; e-commerce investments are a bet on Nigeria,” he tells me, calm and sure; a man who has done it all before. “No one operating at our size is making profit now. Konga is investing in and building infrastructure and nationwide network and before this thing is done, we would have to raise between $100 million to $150 million over 6 years.”

He certainly knows what he is talking about. Nasper MIH, his South African investor, had run two e-commerce units in Nigeria, Kalahari.com.ng and Mocality.com.ng, without turning a profit. They eventually had to shut down operations last year due to short-term projections of unforeseeable profit.

According to reports however, Naspers chief executive officer, Koos Bekker is keenly interested in the Nigerian market and looks set to pour more investments in its new found love, specially since social media suggests Konga is building a loyal customer base. But that hasn’t happened yet.

[READ: $1billion! 90,000 sq.ft! Tens of thousands of dollars!: YNaija Investigates Jumia vs Konga (Conclusion)]

So, Konga appears to have doubled down on its strength – superior customer service. So, “Konga appears to have doubled down on its strength – superior customer service,” says Vconnect Marketing manager, Hiren Parikh.

Where Jumia trumps with aggressive expansion, Konga thrives with exceptional customer service.

Spot the difference

It is difficult not to be intimidated by Jumia’s seemingly inexhaustible pool of funds however. The deep pockets have turbo driven its Alexandrian expansion campaign from Lagos, Abuja and Port Harcourt to Warri, Kaduna and Benin, while Konga’s offices and centres are only in the first three states.

*The concluding part of this piece has been published here.

Comments

1 Comment

  • Olumide says:

    Narrative writeup. One thing I know is that, all things being equal, their battle for the soul of online retail in Nigeria will last for a very long time even despite Jumia’s deep pocket.

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