VENTURES AFRICA – Online shopping in Africa has blossomed in recent times, riding on the back of improved broadband access. Nigeria, Africa’s largest economy, is leading the way in e-commerce growth, with 65 percent of the country’s 50 million internet users having at one time or the other shopped online.

This is according to a recent study conducted in Nigeria by Ipsos, a global market research company, on behalf of PayPal. Those who have not shopped online, making up 24 percent of the country’s total internet users expect to do so in the future.

The results of the study confirm Nigeria as Africa’s leading e-commerce nation in the amount of potential and existing online shoppers, which is at 89 percent, compared to South Africa’s 70 percent and Kenya’s 60 percent.

Drivers of Growth

There are several key drivers that would encourage even more e-commerce in Nigeria. Out of the 500 adults involved in the survey, 53 percent of those who have shopped online in the past said faster delivery of goods would encourage them to shop online more often.  40 percent indicated that safer ways to pay was a key driver while 31 percent indicated lower product costs as a driver to do more shopping online.

Although Nigerian shoppers have identified reasons to increase online shopping patronage, some concerns have been raised.  These concerns are major impediments to increasing the number of people who shop online in Nigeria.

Security of Online Payment and Delivery Costs

The research shows that security of online payments and delivery costs are among main concerns preventing consumers from conducting more online shopping. 31 percent of those who have not shopped online give concerns about security of payments as a reason for not currently shopping online, and 27 percent say that the cost of delivery is a reason for not currently shopping online. However, the cash on delivery option provided the much-needed alternative to putting account details online.

Fear over security of online payments means that cash on delivery is still the most used and preferred payment method when shopping online. The study sponsored by Paypal noted that 39 percent of online shoppers use cash. 32 percent also described cash payment as a preferred payment method for online purchases.

“Online security matters. This is why PayPal provides a simpler, easier and more secure way to shop and pay on millions of websites around the world,” says Efi Dahan, Regional Director for Africa and Israel at PayPal. “The fact that PayPal does not share financial information with the seller when authorizing a transaction keeps the consumers’ financial details more secure”.

Although PayPal has been present in Nigeria for up to a year, consumers who already know the payment service agree PayPal is a fast (85 percent), convenient (83 percent) and safe (73 percent) way to pay online. 72 percent of online shoppers aware of PayPal agree that it is the safest online payment method.

Popularity of Mobile Online Shopping

According to the research, another driver of online shopping in Nigeria is increased mobile penetration. The results show the overwhelming usage of mobile phones to shop online. 90 percent of online shoppers that own a smartphone or a feature phone have used it to shop online while 51 percent use their device to shop online once a month or more.

Shopping on mobile browsers seems to be the most popular way to do mobile shopping with 43 percent of Nigerian mobile shoppers stating a preference to shop using the phone’s browser, compared to 34 percent who prefer to shop from an app.

However, some barriers remain for mobile shopping. Security of payments was flagged as a concern to Nigerians with 30 percent of mobile shoppers saying security of online purchases from a mobile device is a reason for not shopping online using a mobile phone more often, while 30 percent also flagged concerns about internet usage costs on mobile as a barrier to mobile shopping.

What Nigerians Buy Online

Nearly half (47 percent) of online shoppers in Nigeria purchased digital goods in the past year, followed by 39 percent that purchased adult clothing, footwear & accessories online, and 33 percent that purchased physical entertainment such as books and CDs online. The research also found that one in every four Nigerian online shoppers purchased consumer electronics online in the past year. 40 percent – 69 percent of online shoppers have indicated they expect to spend the same or more on the following categories next year: digital goods (62 percent), adult clothing footwear & accessories(69 percent), physical entertainment(60 percent), jewelry and watches (53 percent), consumer electronics (54 percent) and children clothing(40 percent).

A Regional Perspective

The study also considered how often Nigerians purchase goods online from other countries on the continent. The results showed that intra-African trade is significant with 36 percent of Nigerian cross-border shoppers buying from elsewhere in Africa in the past 12 months. South Africa is the main destination with 30 percent of Nigerian cross-border shoppers buying from the country in the past 12 months. It is followed by Kenya with 2 percent, Egypt with 1 percent, and the rest of the continent with 3 percent.