If I were to be confronted with this question in a vox pop, my most likely answer will be “not anytime soon”. But after distilling a 2013 State of Digital Media Report a senior colleague shared with me; I found, among other intriguing revelations, four things worth your attention.

One, that as at 2011, 62.4bn out of the 200bn currently exchanging hands in Nigeria’s retail sector is controlled by e-commerce. Two, that 91% of the population surveyed liked the idea of online shopping. Three, that 78% of Nigeria’s 56 million internet users are between the ages of 19 and 35. And four, that 61% of online shoppers said they will make a repeat purchase.

What are the implications of these figures and why should Real Estate people care? One, in 2014, when one of the most attractive Real Estate ventures for local and foreign investors is retail; 25% of that stream being controlled by e-commerce presents a course to worry. Two, minus the reservations of most Nigerians online (which I will discuss later), 91% of them will love to shop without going to the mall(s). That will land a huge blow on retail spaces! Three, that the 19-35 year olds, who are those really given to the “shopping-at-the-mall” culture are those controlling the internet space and this population constitute about 40% of Nigeria’s 160 million population. So, the future is here.

I know figures are boring. So in plain language, if this trend continues, the implication is that there will be reduced demands for retail spaces. All that will be needed are perhaps some warehouses in lowbrow areas where all the purchases made online can be posted to different locations, and a few retail outlets around town. For movie-junkies like me, we can only pray Netflix and Hulu plus do not try to open a rent-subscription shop in Nigeria soon. Again, that won’t eliminate the movie-culture, but it will reduce demand for it and subsequently demand for commercial spaces.

On the flip, increased spending power which in principle, is a function of per capital income seems to be in favour of retail Real Estate; going by recent release by NBS. Also, the urban regeneration move of most major cities is another enticing sizzle in the sandwich for retail investors. If these trends continue, spending power will increase and open up more axes to developments of retail and residential spaces; including infrastructure and asset management expansion. This will speed up economic life in the suburbs.

However, there are still a few clogs in the wheel of E-commerce. Should retail real estate pray they are never resolved? That may be up for a debate.

One of the major issues slowing down the activities of retail online is payment and payment options. Nigerians don’t trust the system and online scam is a huge phenomenon due to lack of proper documentation (we can only wait to see results 0f the latest CBN mandate for banks to properly document their customers). For example, if you’re lucky, it will take seven “business days” to retrieve your money if ATM “swallows” it. Though most online shopping houses have devised a pay-on-delivery alternative, it has not solved the problem. The cost of having their personnel coming to deliver at shoppers’ door step is factored into the cost of the products, thus making it more expensive to shop online. Now, this is an aside: NIPOST should really be thinking of filling this space.

The second major issue is very expensive internet services. About 70% of Nigerians online use mobile devices; and your guess is as good as mine – Black Berry is the usual suspect! For what it is worth, it is no fun viewing or making purchases with phones. It most of the time takes forever to open. And to purchase internet data at N1, 000 per 200mb and shop online with it – viewing pictures and sometimes videos, is almost a no-no for average Nigerians.

Third, customer service is an integral part of E-commerce. Customers who are not satisfied with information online may want to make further enquires, and in some situations complain, and at other times, return their purchases in exchange for money. One, if you’re lucky to get a customer service representative to pick up the phone, you can be sure most of them are not knowledgeable about the products. Two, either by accident or coincident, the few times I have called telecommunication customer services to complain, they hung up trice of the time. When I visited their office, I was made to return several times and the problem was still not solved – and I can write a whole article on the attitudes of the personnel. Finally, you must have been living in Jupiter or Mars to think you’ll ever make a purchase and return it for cash. Here, if you don’t like the product again, you’ll be lucky to be compelled to take another one or wait until they stock for your preferred ware; and when they stock, you can be sure you’re not the first to be attended to.

From the foregoing, it is unlikely that e-commerce will shoot retail real estate in the feet anytime soon. But with the market making itself attractive, it won’t be long to have the likes of EBay, Amazon and other online retailers coming to create a system that works and tap hugely into our internet space.

In conclusion, either of my submissions you want to go with; the reality is that this development poses a substantial threat to Retail Real Estate now and especially in the future.

What should Nigeria’s real estate business owners do about this? It’s your turn to say something. Please leave your comment below and engage me further on twitter. I’ll like to have your thoughts.

Written by: Olusesan Ogunyooye

*The State of Digital Media Nigeria report was put together by Terragon Limited – A new media Agency.

 

2014-02-17