Nigeria e-commerce space is poised for competitive fireworks as a result of the sale of Konga to Zinox Group, an integrated information and communication technology firm and the owners of Yudala, another promising platform.
Details of the deal which broke on Saturday, 3 January, show that Zinox Group which now holds 99 percent equity would assume ownership of the e-commerce platform Konga.com; KOS-Express, the logistics arm of the business; and KongaPay, the company’s integrated mobile money payment channel with over 100,000 subscribers.
Surprisingly, Gideon Ayogu, corporate communications manager, Zinox Group told BusinessDay that the new owners have no plans to marry Yudala and Konga into a new platform. Konga, which was launched in 2012, will remain as a separate entity from Yudala but there are plans to expand to other African capitals.
A decision not to marry the two platforms may come as a surprise to some analysts who predicted its imminence. To be sure, the search for a buyer has been on for quite some time. In fact, Zinox completed negotiations after months of back-and-forth with foreign investors Naspers and AB Kinnevik.
Konga under CEO Shola Adekoya, began to show symptoms of a company undergoing serious financial stress when in November 30, 2017 it sacked over 300 members of staff – around 60 percent of its total workforce.
Prior to this event, the company had in January, 2016 announced that its then CEO Sim Shagaya was stepping down. Two weeks later, the company sacked 10 percent of its staff.
After the sack of 300 staff in 2017, the company told its customers in 2018 that it was ending its pay-on-delivery (POD) model.
“The reason Konga pivoted from POD was because Fedex and UPS pulled the plug on delivery as the return rate was too high,” a source close to the Zinox deal told BusinessDay.
In an article posted on Medium on 2 February 2018, Shola Adekoya disclosed that the return rate was as high as 25 percent; however, ending it has reduced the number to 1.9 percent.
A marriage between Yudala and Konga, according to some analysts, could put Zinox on the right footing to compete favourably with Jumia, the number one e-commerce platform in Africa. But, the Zinox Group has said it is not happening.
One thing though the market can expect is that Konga is not just competing in Nigeria alone anymore but will take Jumia on the African level too. The market will win and the consumers most of all will win.
“Yudala has been mostly hype and no substance. Those who play within the switches see minimal transactions,” the source told this writer. It could explain why no marriage is taking place.