Yudala, Konga merger: new dawn or false hope
A few months ago, there was a major disruption in the e-commerce sector in Nigeria with the announcement from the Zinox Group that it had acquired Konga. The report took many by surprise as Konga was considered a much bigger outfit, with deeper market ties, compared with Zinox’s Yudala.
And in order to harness Konga’s strong brand recognition and strategic market positon, Zinox, the buying company, made the unusual decision to retain Konga as the brand name of the new entity which is a merger between, Yudala and Konga. The merger is expected to facilitate operations that will see the new Konga become the biggest organized retail and e-commerce/marketplace outfit on the African continent.
Before the acquisition by Zinox, Konga was said to worth over $34 million, has 184,000 active users which is 80% mobile based. Yudala on the other hand has an expansive network of fully stocked offline stores, spread across more than 20 cities, with a plan to have at least one store in every local Government in Nigeria.
The strategic merger decision will see the new company leverage the combined strengths of both platforms to broaden the scope of organized retail and e-commerce in Nigeria and deliver more value to customers and merchants. Chairman of Konga, Mr Olusiji Ijogun, while announcing the merger, stated that: “Combining forces to power the new Konga will enable us effectively achieve our goals of platform expansion and accelerated growth, as we embark on an ambitious journey to redefine the retail ecosystem with the industry’s most advanced technology”. Effective from May 1st, Yudala will now operate under the name KONGA, with dual CEOs in the persons of Nick Imudia who will be in charge of online among others and Prince Nnamdi Ekeh who will be responsible for offline.
Imudia’s appointment points to Konga’s ambition to become a major player not just in Nigeria but on the continent. Imudia, formerly based in Finland is a global tech expert and former Vice President at Nokia. He has a clear mandate to deliver the firm as number one e-Commerce company in Africa.
“This merger will further strengthen our position in the Nigerian retail market as we creatively position Konga as the first profitable e-commerce company in Africa” he added.
Speaking on the efficiency of Konga he said “the efficiency of Konga’s cutting-edge online platform, access to thousands of merchants and Yudala’s expansive network of fully stocked offline stores is poised to give our customers the best shopping experience imaginable.
The CEO in charge of offline, Prince Nnamdi Ekeh said: “We are very excited about the operational merger between Yudala and Konga into the new Konga. A merger of this magnitude has never been experienced in Africa. We will be leveraging on Konga’s strong technology backbone and online experience as well as Yudala’s offline experience, network of retail stores and operational efficiency.
“In the near future, we plan to have a Konga store in every local government area in Nigeria”. The Konga Business platform will now include two fully integrated aspects including Konga Online, the e-commerce/marketplace platform and Konga Retail, the offline arm of the business. Both will be supported by Konga Pay, a CBN-licensed mobile money platform and Konga Express, a world-class logistics company with advanced delivery capabilities for internal and external customers.
From all indications, the boost that such consolidation will bring to the sector, will see Nigeria play a major role in the global e-commerce sector where massive growth is being anticipated in the next four to five years. Globally, the electronic commerce market is worth around $22.1 trillion, according to latest UNCTAD estimates. In 2017, retail e-commerce sales worldwide, was valued at $2.829 trillion while e-retail revenues are projected to grow to $4.48 trillion by 2021.
Here in Nigeria, the e-commerce sector has an estimated worth of over $13billion which is approximately N4.01trillion, and could rise to over $50 billion by 2027. The London based Economist Intelligence Unit , EIU, released a report in 2017 which identified three Nigeria based online retail platforms; Jumia, Konga and Jiji, as leading the African e-commerce space to compete among world technology based retail businesses. The report, described the three as serving a mass-market clientele, despite reduced patronage, witnessed among Nigerians in the last few years, due to lean pockets during the recession.
Analysts say that merging Yudala, which itself was servicing requests worth almost N5 million daily with Konga, already listed among the three top ecommerce companies, represents a new dawn in the country’s e-commerce sector.
A Lagos based financial analyst, Godwin Eboighan said: “this acquisition is not only for Zinox as a company but a pride to Nigeria as a country and Africa as a continent. Although Konga started in Nigeria, foreigners eventually took over a larger share of the firm having put in so much money. So getting it back is a national pride. “Besides, the firm is about one of the biggest online retail platforms in Africa. What this acquisition means is that a combined effort of Yudala and BuyRight Africa .com owned by the same Zinox group, will eventually make it the biggest.
Another dimension to the acquisition is the inevitable change in the e-commerce competitive landscape. Until now, Jumia leadership has been unchallenged, but Konga is now better positioned to offer genuine rivalry, in terms of innovation, technology, talent and especially market drive. Ganiyu Olowu, Lagos based marketing expert told MARKETNG EDGE that he expects that in the coming weeks there will be a flurry of marketing activities as both brands engage each other in a race to win consumers’ trust and patronage. “Jumia has been market leader from the onset of the industry; they are not likely to want to give that up without a fight. We are likely to start seeing waves after waves of promo from both companies to woo consumers and merchant.”
Olowu noted that the marketing fireworks that is likely to ensue between both companies may be a re-enactment of the good days of e-commerce when the sectors was the cynosure of all eyes.
But another marketing expert, Bolaji Okusaga, CEO, Precise, a reputation management company in Lagos didn’t sound so excited. He noted that the e-commerce sector in Nigeria s already stressed and Konga’s acquisition is not likely to reverse the trend.
Indeed not many people agree with Okusaga’s position. There have been a much more positive analysis of the outcome than negative but the true picture can only become clear in the coming months.
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