The growth of online market in Africa has significantly transformed the business landscape in the continent. In fact, in seven African countries today, e-commerce makes up around 3 percent of GDP, and it is expected to make up 10 percent of total sales by the year 2025. Furthermore, it is predicted for that number to increase by 40 percent annually, over the next 10 years. The automobile industry has, perhaps, been the most impacted with this trend. In Nigeria, that influence is more than obvious.
More than 40 percent of population in Nigeria has access to internet, and that number grows for an additional 5 percent each year. These statistics are fueling the e-commerce industry and the entire business landscape. Although all the businesses are influenced by the moving of retail services online, car retailers are on a good path to find a way to leverage the impact of e-commerce.
One of the main changes is that car buyers trust what they read on the internet more than what they hear from the salesman himself. According to Carmudi’s car dealer survey in 2015, up to 80% of auto buyers turns to the web and social media, while the offline research (auto expos, newspapers, etc.) are declining as a source in Nigeria. The importance of the modern day word-of-mouth is proven by more than 90 percent of Nigerian car buyers who read blogs and forums to get information and experiences about an automobile and retailer.
Based on the changes in customer’s research process, Nigerian retailers have shifted their focus to the internet as well, especially when it comes to marketing. Around 80 percent of the dealers are advertising their products primarily online. Still, only around 20% of them use all the marketing potential of social networks which is a big mistake, knowing that only Facebook has more than 11 million of active users from Nigeria.
We can say that Nigeria has jumped on the bandwagon just in time, because the shift to online car purchases is still taking place in the rest of the world, and the less developed countries still have a chance to outdone more mature markets like Japan, U.S., U.K., etc. The car buying experience is completely changed by these happenings, and buying an automobile without seeing it or going to a physical store, does not seem to out of the ordinary to Nigerians any more. It seems that the second-hand market is even more aware of this opportunity, both in Africa and the rest of the world, while new car dealerships are still struggling to find their place in online space. The growth of the online market in the region is actually very stimulating and it is clear that retailers from different countries can learn a lot based on the experience of others. Following Nigeria, Tanzania is the second country in Africa where car shoppers are starting their purchasing experience online, and these regional changes will drive more and more dealerships to keep up with the trends and provide their customers with e-commerce services.
Many dealerships do not have the resources, whether human or financial, to create and service such online platform. A common way to get a piece of online cake without starting their own web store is joining forces with third-party e-commerce platforms, which are enabling retailers to connect with potential customers directly on already established playing field. These websites have already perfected virtual showroom, infrastructure, knowledge and resources to provide a pleasant user-friendly experience for the more and more demanding virtual shoppers.
Another thing to consider is the fact that the growing smartphone market in Nigeria, which dictates the need to optimize e-commerce stores for mobile search. Smartphones indubitably have a significant impact on the way Nigerians are making their purchases, and soon, that impact will become obvious in automobile industry too.
Parallel with the shifts in dealerships, there is also a change in the mindset of the shoppers. They are more demanding than ever and they do not tolerate poor user experience. Furthermore, with the ever growing presence of internet in Nigeria, shoppers are learning how to scrutinize the web for the best value and deal. Consumers are entering e-commerce stores well armed with information and request in order to make smarter buying decisions. It is also quite obvious that younger population is driving the online highway and definitely shaping the future of African online shopping environment.
Not only automobile industry, but small and medium enterprises in general are heavily affected by the shift toward e-commerce industry. It is a major opportunity for them to tap into the world of bigger players and present their products to wider demographics. Finally, there is a chance for evening out the odds and allowing the customers to make their decisions based on the information they get from each side. The growth of e-commerce industry in Nigeria and in whole of Africa has just started, and it is expected that, in some time, it will completely change the buying and selling experience.