By Ray Umukoro
WED, APRIL 25 2018-theG&BJournal-It was the biggest corporate coup in Africa’s ICT ecosystem. Nobody saw it coming but the ambitious acquisition of Konga by Zinox Group and now its merger with Yudala, another market maverick under the Group has completely reset Nigeria, nay Africa, e-commerce market.
Under the Zinox Group, Konga is in safe hands after the company went through a stint of lull and lapse such that it had to even lay off some of its staff in an inevitable restructuring to stay afloat. The scenario gets greener with the merger of Konga and Yudala, a marriage of youth, experience, zest, zeal and unfeigned ambition.
It is expected that in the coming months and years, the impact of this acquisition and merger would not only reverberate in Nigeria’s e-commerce circuit, it will resonate across the continent. The indicators point to a company on a flight to continental dominance.
Konga, trading under the e-commerce platform Konga.com is one of the frontline e-commerce companies in Nigeria with established pedigree of quality and integrity in service delivery. Aside e-commerce business, Konga also boasts a logistics arm, KOS Express, and a mobile money payment channel, KongaPay. All of this are part of the acquisition mix.
Yudala is Africa’s first truly composite e-commerce company offering both online and offline experience. Before the merger, it has positioned itself to be the first profitable e-commerce company within its first five years of operation in Africa. Driven by ambition, passion and a good mix of youth and experience, Yudala has already etched its name as a disruptive force, running ‘lean and mean’ to dominate the marketplace.
Zinox Group is Nigeria’s flagship ICT conglomerate with interests spanning manufacturing, systems integration, technology warehousing and distribution, software engineering, telecoms, e-commerce, Internet services among others including a wide-range of non-ICT investments. It is the pride of sub-Sahara Africa being the leading hub for service and systems distribution for most of the global ICT brands.
Promoted by one of Africa’s most fecund minds, Leo Stan Ekeh, Zinox Group has over the years imprinted Nigeria’s name in the global ICT map, pioneering the manufacture of globally-certified systems in Nigeria (desktop computers, laptops, handhelds, power storage devices etc). It is also the forerunner to the fast evolving e-commerce buzz in the country when it founded BuyRight Africa, an e-commerce outfit that came ahead of its time; pioneered composite retailing with Nigeria’s first online-offline platform, Yudala, as well as pioneered integrated bulk technology distribution with its flagship outfit, Technology Distribution Limited. Zinox Group has been an outstanding model on how to grow an enterprise in a challenging environment where ease-of-doing business is almost non-existent.
This is the combination that has birthed the new e-commerce company, arguably the biggest in sub-Sahara Africa. In yet another smart move, the promoters of the acquisition and merger, which takes effect from May 1, 2018, have decided to trade under the name Konga. This is considered smart thinking because many Africans are familiar with the name Konga.
Year after year in the past two decades, Nigeria has ranked poor in the World Bank ease-of-doing business index. It is worse for technology companies who have to function as enablers for other businesses. Lack of steady power supply, requisite skills set, frustration of losing your staff after investing in them to rivals and other sectors, poor forex management resulting in inadequate forex to sustain growth and create new opportunities, among others are the drawbacks that assail businesses in this clime. Add to that, a consistently poorly cobbled government policy that promotes patronage of exotic goods and services at the detriment of indigenous goods. Yet, Zinox has been able to surmount them to stay in commanding position ahead of its competitors in more advanced and less volatile economies.
Analysts have attributed the Zinox success story to the leadership quality and tenacity of its founder, Mr. Ekeh. His ability to always assemble a team with rare mix of youth and experience has kept his empire at the cutting edge. This is why many believe that the recent acquisition of Konga will place the e-commerce outfit on the cusp of a growing curve of profitability, efficiency and vision actualization. The possibilities and opportunities of the newly acquired e-commerce buzz house, many predict, will outstrip the competition given the energy and momentum that Zinox will infuse into it.
With all the paper works concluded, Zinox Group is now set to claw deeper into the deepening global e-commerce market which is expanding year on year.
Statistics show that in 2016, an estimated 1.61 billion people worldwide purchase goods online. In 2016, global e-retail sales amounted to $1.9 trillion while in 2017, retail e-commerce sales worldwide amounted to $2.829 trillion. Projections show a growth of up to $4.06 trillion by 2020. Broken down, Asia Pacific e-retail sales accounted for 12.1 percent of global retail sales in 2016. A minute 1.8 percent of retail sales was ascribed to the Middle East and Africa for the same period.
Market pundits have predicted a great leap upward for African market with increasing mobile penetration driven by growing broadband awareness and adaptation. Africa is therefore a frontier market with the possibility of exponential growth in e-commerce. This is where the Zinox acquisition of Konga makes the most business sense. The African e-commerce market at the moment falls into the business to consumer (B2C) category. This includes online retail or online shopping on a diverse range of products from consumer goods, lifestyle products, etc.
This is the sense in which Zinox acquisition of Konga will not only sizzle the Nigerian market, it is expected to stir up the African e-commerce bourse given the vision and focus of Zinox to widen and deepen its operations on a continent-wide dimension. Zinox business in-roads in the Middle East and the rest of Africa will come handy in the envisaged expansion of Konga operations. Such expansion will not only create direct jobs but thousands of ancillary jobs.
With growing African fashion, entertainment and food industries as well as other local content but globally appealing products, the new Konga will serve as a reliable off-taker for most of the young African entrepreneurs. It will also satiate the hunger of an increasing army of upwardly mobile and stylish young Africans and non-Africans residing on or visiting the continent. Either way, it’s a win-win both for the investor, Zinox Group, and the African economy.
It gets even more exciting as more and more people get connected to mobile devices. In recent years, mobile shopping has reportedly been on the rise, with customers increasingly using their mobile devices for various online shopping activities.
A March 2016 study regarding mobile shopping penetration worldwide says that 46 percent of internet users in the Asia Pacific region and 28 percent of those in North America had purchased products via a mobile device, whether smartphone or tablet computer. Smartphones are now the number one device in terms of retail website visits. During a 2017 survey, 11 percent of online shoppers stated that they shopped online via smartphone on a weekly basis.
These statistics speak to a rosy future for e-commerce, not just globally but much more in Africa where mobile communication is daily widening. The seamless acquisition also underscored a growing grasp of the rudiments of mergers and acquisition in the Nigerian business clime where in times past, many of such transactions have kicked up more dust than they were intended to settle.
By Ray Umukoro, online analyst and ICT pundit
