Konga, Jumia automate jobs to boost profitability amid thin margins

by | December 4, 2017 12:05 am

Nigerian e-commerce firms are using technology to automate their operations, forcing many employees to adapt or find new positions or ultimately cut down on human staff, BusinessDay findings show.
Recently, Konga.com, one of Nigeria’s first online retail store laid off 60 percent of its workforce and stopped the ‘pay on delivery option’ as part of its business strategy.
Jumia is also still burning through cash, losing 28.5 million in the third quarter of 2017 on turnover which was up 19 percent to 20 million euros, the firms parent company Rocket Internet said on Thursday.
Analysts suggest that economic slowdown and thin margins on online sales might be a contributory factor to the job cuts across the industry.
“So many companies suffered the blow of recession last year but it was tougher for e-commerce because as you know, the industry is quite young and Nigerians were just beginning to trust shopping online. But with less disposable income, not many people were thinking of shopping online in the last one year,” Subomi Sodipo, industry analyst and CEO, CF mobile told BusinessDay.
In a press release made available to BusinessDay, Konga said that it will lay off staff “as part of its business development strategy whereby it reviews staff strength every 6 months. Konga has been doing this consistently over the last 2 years and usually let go of staff that still go on and do great things elsewhere.”
In the latest development, according to Quartz, “Shola Adekoya, CEO of Konga informed staff of the cuts on November 30 and said the company will adopt a leaner business model.”
Industry watchers say that this move is not peculiar as most online retail platforms have been integrated into Facebook and other social networking sites and others have been planning to get on board with this new development as brands have seen the need to adjust their social media marketing strategies to accommodate this trend, cutting down on back end staff.
In October 2017, Jumia introduced the first e-commerce chatbot in Nigeria to essentially play the role of a customer care representative by attending to the detailed needs of customers through online chats on social media.
The ‘bot’, also known as a web robot is a software application that runs automated tasks over the internet through messenger apps.
“In the context of evolution, upgrades in e-commerce systems will make it difficult for large online businesses to succeed without the use of chatbots which essentially bridges the gap between businesses and customers, making it somewhat conversational,” Ojuolape Asuquo, Head of Engagement Marketing, Jumia Nigeria, told BusinessDay.
With this, it is presumed that Jumia will have to let go of some of its customer care representatives whose jobs have been taken over by this latest technology. The company earlier this year merged two of its subsidiaries, Jumia market (Kaymu) into Jumia mall which resulted in some job losses.
However, contrary to expectations of a failed Black Friday for Nigeria’s e-commerce sites as a result of economic recession, online retail chains say they have witnessed surprisingly high customer interest in the 2017 Black Friday sales.
Yudala, the composite online and offline retail chain says it experienced huge turnout and sales in its month long black Friday campaign which is still ongoing.
“Scores of enthusiastic shoppers took advantage of the amazing deals in Yudala’s Mega Black Friday promotion tagged 11/11-12/12. You know because it goes on for a whole month, people have more time to shop,” Gideon Ayogu, Head, Corporate Communications, Yudala told BusinessDay.
A report analyzing the performance of Jumia during its 30 days Black Friday festival said the firm sold 174 percent more items on the actual day of black Friday (November 24 2017) compared to the number of items sold in 2016. The report also states that Jumia has had more than 14.4 million visits since the start of the sales event, its biggest since the commencement of Black Friday sales in 2013.
“This year’s explosive Black Friday numbers demonstrates the increasing capacity and flexibility of the online retail space in Nigeria,” said Juliet Anammah, CEO of Jumia Nigeria.


Jumoke Akiyode- Lawanson

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