We’ve all read about what likely went wrong with Konga. I wrote a piece about that as well, but before then I had written about how I believed Konga could have restructured its business. We’ve all read about how Nigeria’s ecommerce space might have shown up before its time. We have also suggested that the online/offline model will likely be the game changer in the industry.
In previous articles, I have written how online businesses are using offline means too capture real value for their customers. Some of the cases highlighted in the article were – Iroko TV’s Kiosks and Data-free Movie Download feature, Wakanow’s Travel Centres, Pay on Delivery options amongst others.
Now, let’s leave the past and focus on the future. We can’t correct what had happened, but we can definitely shape the future outcome, hence the reason for this publication. My goal is to put myself in the position of the 2 CEOs of Konga online and Konga offline and try to determine how make the enlarged Konga a more successful company than it presently is.
Expanding Konga Offline
Konga offline is important to me because over 95% of trade and commerce in Nigeria are still done offline. If only 600k debit cards in Nigeria have been used on any digital platform, then you will agree with me that the online market is not as large as it looks.
Information from NIBSS recorded an abysmal N129.24bn web payment transaction value for the first 3 quarters of 2017, comparing that to N4.61 Trillion in ATM transaction value (mostly cash withdrawals), you will agree with me that most of Nigeria’s transactions or at least, a disproportionate volume and value of transactions in Nigeria are still done offline. I did not mention this in context of the size of Nigeria’s GDP. This means that for a company to make any significant dent in Nigeria, the offline component must be taken seriously.
If we understand the infrastructural challenges (especially internet access and availability) facing the adoption of digital methods of payment, then we’ll understand that having an offline strategy is not a nice to have.
I believe Konga Offline should position to becoming a full fledged departmental store, just like Hubmart, Spar, Game amongst others. This will position it to stock up variety of goods from Cereals to shovel and not leaving out TV sets, DVD, Mobile Phones, Laptops, Freezers and other white goods.
Konga offline should then think of distribution. By this I mean operating a Hub and spoke model, where a large hub is established in a densely populated area, while smaller stores are created to feed off the main one. An example of this is, setting up a major store at Maryland, while setting up smaller stores at Opebi, Ikeja GRA, and Ogudu and Ilupeju (This is just an example ooo). The larger hubs can be in partnership with a Mall, where Konga Offline becomes one of the anchor stores within the mall – A role currently being played by Shoprite, Game and Cinemas.
This offline strategy can be implemented in all the 36 states of Nigeria, including those states Konga Online will never reach. This will mean Konga having a presence in all (or most) state capitals and other tier 2 cities within a state. Imagine Konga in Abeokuta and Ijebu Ode in Ogun State, or Konga in Ilorin and Offa in Kwara State as well as Konga in Kaduna and Kafanchan in Kaduna State. These hubs across the country will serve as warehouse for the operations of Konga Online (I will explain this better when discussing Konga Online)
The wide distribution of Konga Offline will also improve the brand recognition of Konga Online. This will potentially break the trust issues associated with online shopping.
Konga Offline can then begin to pioneer a digital offline strategy in Nigeria, similar to “Amazon Go” or Alibaba’s “Tao Café”, where you don’t have to endure really long queues after buying your goods (if you doubt me,, visit Shoprite on a Sunday afternoon), where you can just walk in, pick what you want to buy and just walk out. This will no doubt improve the user experience of the customers. You can call it “Konga Go” or “Kon’Go”. Thank me for the name later.
As part of the Digital Offline Strategy, customers could also be given the chance to order from a specific Konga Offline Store. For instance, I live in Gbagada and needed some household items, I could easily order those items from the nearest Konga Offline Store to me. While the delivery infrastructure of KOS Express is activated to get those goods to me. This is similar to how customers currently order Pizzas from their favourite pizza joint.
Leveraging Offline Distribution
Konga Online is currently a marketplace. However, there are some goods labelled “Sold By Konga”. This is the first place Konga Online should leverage Konga Offline. These goods “Sold By Konga” should be sourced from the Konga Offline Stores. Don’t forget, I had suggested that Konga Offline should position to become a full fledged departmental store. This will mean that most of the things that Konga Online Customers want to buy can be available on Konga Offline. This will then mean that Konga Online will just build a distribution Network around its offline businesses to ensure a more efficient delivery.
Imagine I ordered a Laptop from Konga Online, and my delivery location is at my Office in Victoria Island, all Konga Online will do is too push that order to the nearest Konga Offline location to me for fulfillment, thus reducing the number of days it takes to process and fulfill an order from an average 5 day to 3 hours.
However, the inventory management system of Konga Offline should be in sync with that of Konga Online, in that once a customer picks up an item from an offline store, that number of items available on the Online platform is updated as well, so that there will be no case of a customer ordering an item that is not available.
With this method, Konga Offline Essentially takes the current warehousing and storage cost of Konga Online since the goods being sold are currently being displayed at their physical stores scattered across the country.
This strategy might challenge the business of Konga Online’s current merchant base (as a marketplace) – since Konga Online now sells the same goods that its merchants are meant to sell on the platform. This will however bring about some form of competition to ensure that only merchants with genuine goods remain on the platform, while working to deliver greater value for the customers.
With this Online and Offline strategy, the enlarged Konga can then truly position to becoming Nigeria’s largest (online) mall.