By JONAH NWOKPOKU
One of the most notable features of online shops, since online retail debuted in Nigeria, is its cheap prices of goods. Compared with the offline market prices, these online shops, despite free shipping services and high cost of logistics, still manage to maintain clear edge in terms of price while still offering quality goods. One of the online shops that has maintained this tradition since inception is Nigeria’s pioneer online retailer, Jumia.com.ng.
They have consistently maintained competitive pricing in almost all items on offer. How do they accomplish this? How have they been able to sustain this despite the recent devaluation of the Naira? Why are their products always cheaper? Are they packaging counterfeited products online and selling to Nigerians? This is because most times, their prices are so ridiculously low that they can’t but arouse suspicion.
An investigation into some of the prices Jumia offers for some products showed a consistent competitive pricing with even international online retailers like Bestbuy.com and Amazon. Take for instance the Samsung Galaxy S5 – Copper Gold. This goes for about $569 on Amazon.com which when converted into the local currency, the Naira will be about N119, 000 depending on the exchange rate.
The same product goes for $499.99, about N105, 000 on another international retailer, Bestbuy.com. These prices exclude the shipping cost including the customs and clearing duties, should one decide to buy from these stores. However in Nigeria, this same product goes for between N100, 000 and N105, 000 in different online stores. It’s only Jumia.com.ng that sells the product at N95, 230, according to the price information available at their website at the time of this report.
Take also the Blackberry Passport. This could only be obtained at Jumia.com at N119, 500 against the N126, 000 to N130, 000 that it could be obtained from other online stores nationwide. This price also comfortably beats a retailer like Bestbuy.com where the device goes for about $667 which is about N133, 400. Besides the electronic segment, home appliances also enjoys favourable rates on Jumia such as the Emel Plastic Electric Kettle-P006-White which goes for about N10, 875 whereas the cheapest price it can be bought elsewhere is about N12, 200.
More so, in categories like fashion, their prices also beat that of their competition by at least 2 per cent. For instance, a pair of Vanessa’s secret’s shoes which cannot be found anywhere below N9, 000 in other online stores is available at N6, 495 on Jumia.com.
There is no gainsaying it, that with many online retail shops springing up in recent times, the price reduction has been motivated more by the quest to beat competition. This has also meant some compromises on the quality of goods. In some unregulated online marketplaces, the prices are even so ridiculous that one only needs some common sense to realise there has been compromise on quality.
In this regard, some shoppers who have shopped from Jumia said from their experience, the quality of goods offered on the platform is not compromised. Chukwudi Ozonna told Vanguard, “I was sceptical about this online deals especially the quality of the products since they are always willing to offer cheaper prices. But then one day I needed a television for my children’s room. I saw a 22 inch LG TV on Jumia at N21, 900. I was sceptical about it but then after I prized it offline and saw that the same TV goes for N29, 000, I decided to give it a try.
I have used that TV for two years now; it has never had any fault. It was an original LG product. I don’t how Jumia does it but I do know they do sell quality products at very affordable rates.”
Jumia and affordability
Speaking to Vanguard in an exclusive interview on how Jumia Nigeria maintained its cheap rates, Co-Managing Director, Jumia Nigeria, Dr. Jonathan Doerr said: “Jumia does not sell at cheaper rates because it offers inferior products. We are able to offer products at affordable prices which are less than other online retail companies and those of brick and mortar stores due to its wide assemblage of brand partners.
You just name it, from Apple to Infinix to Lego, Samsung, L’oreal and more, Jumia has been able to forge lasting and favourable partnerships with the biggest brand who are able to offer Jumia their products at reduced tariffs and sometimes even exclusively. These brands are happy and always willing to work with Jumia due to a proven track record of service delivery, customer satisfaction and guaranteed volume of sales.
According to him, the company leverages on its huge customer base, and its resultant economies of scale to drive down cost. He said, “Speaking of guaranteed volume of sale, in economics, there is a concept called ‘Economies of Scale’. This concept explains that there are cost advantages which certain enterprises enjoy due to their larger size, output and scale of operation.
Being that Jumia Nigeria is the biggest online retail store in Nigeria, accessible and patronized daily by tons of Nigerians nationwide, it only adds up that unlike the others, Jumia Nigeria can now afford to plummet profit margins and provide lesser priced products to customers due to a reduced overall operating cost.” He added: “Another clarification as to why you can expect to get the best deals on Jumia is the company’s fascination with sales promotions for customers.
You can describe it as Jumia giving back if you may but Jumia is always happy when it’s customers are happy whether we are making profit or not. Just about every week, one can expect to find a sales promotion on Jumia with products being sold at puzzling and ground breaking prices. Customers who take advantage of these deals are always quick to tell the stories of their endeavours.”