COVID-19: E-commerce As A Recovery Conduit For SMEs


By Ayomide Oriade

COVID-19 global health crisis unleashed a far-reaching socio-economic impact that forced thousands of firms to fold up and put several thousand at the risk of being forced out of business. Most affected are Micro, Small and Medium-sized Enterprises (MSMEs) who are the major economic drivers.

Global economy pre-COVID was estimated at $90 trillion. Following the pandemic, estimates so far indicate that the virus could trim global economic growth by 3% to 6% in 2020, global trade could also fall by 13 to 32%, assuming there’s no second wave of infections.

Bringing it home, the World Food Programme (WFP) of the United Nations initially predicted that COVID-19 pandemic may lead to loss of 13 million jobs in Nigeria. As the pandemic hit hard on the Nigerian economy, Zainab Ahmed, the Minister of Finance, Budget and National Planning stated that the COVID-19 pandemic is projected to have affected 21 million jobs in the country.

MSMEs account for over 65% of jobs and employment in Nigeria. It thus takes a simple economic calculation to decipher that these job losses are results of businesses forced to close shop in the thick of the pandemic and its resultant restrictive measures. Apt pointer to this is the report of a research conducted by the Nigeria Consultative Association (NECA), which revealed that 74.2% of businesses in Nigeria stopped operating due to the pandemic.

Online marketplace as a conduit for sales

With the realities of COVID-19, businesses are being forced to learn, unlearn, rethink and restrategize their model, and ecommerce has emerged the surest route to survival and sustenance, especially for SMEs. The pandemic is moving a key component of the marketing mix, (place – the meeting point for customer and seller) to online platforms, businesses are thus required to increase online presence and grow sales using digital tools.

Buttressing this, the Enterprise Development Centre of the Pan-Atlantic University recently conducted a survey on the impact of coronavirus on small businesses. About 88% of MSME owner-respondents said they would tinker with their business models, with 47% likely to consider new businesses due to the harsh realities of the pandemic. These are mainly due to the influence of technology which has now re-defined the way business is done.

For SMEs in the Nigerian economic space, the ecommerce industry appears to be channeling a path to recovery, by providing a meeting point with customers in the emerging shopping order. “In the last few months, we’ve seen that e-commerce is crucial to the Nigerian economy, with more people shifting their activities online at a faster pace: working and shopping are coming online faster than we thought and imagined before. Jumia became a place where communities across Nigeria came to buy all sorts of products: groceries, fashion.  During this time, more brands come online to partner with Jumia by putting their products and services on our platform or advertising offers on Jumia Advertising,” said Jumia Nigeria CEO, Massimiliano Spalazzi.

How Ecommerce helps SMEs

The framework for ecommerce operations are flexible, cost-effective, and offers wider reach- which is crucial for SMEs during this time. Using Jumia as a case study, SMEs can easily leverage the offerings of the platform to reach more audience and make more sales. “Sellers interested in listing his products/wares on the platform can easily apply on the site.

We verify the authenticity of the products and checks if the seller has all the legal prerequisites to sell, especially for products sold only if recommended by an expert. We thereafter train the seller on how to use the website and make revenue. It’s as simple as that,” said Chief Commercial Officer, Jumia Nigeria, Omolola Oladunjoye.

Interestingly, the display of products on ecommerce platforms such as Jumia, Konga, Jiji and the likes within the Nigerian space attracts no hidden charges. Aside from benefiting from the clout of ecommerce brands, the financial investment needed for marketing is also covered for sellers by these platforms.

This is a huge overhead SMEs can do without in their COVID survival battle.  Ecommerce platforms like Jumia bear financial requirements for online and offline advertising, search engine optimization, and social media exposure for sellers on their platform. There are also special campaigns like Tech Week, Black Friday and Anniversary Campaigns during which sellers on ecommerce platforms benefit from high customer traffic to improve their sales volume.

Getting rent off the bill will be a huge relief for any business in these tough times, and this is where warehouse facilities of ecommerce platforms come in handy for sellers. Most ecommerce companies have large warehouses in almost all major cities. For instance, Jumia has its largest warehouse in Lagos.

There are other storage warehouses owned by the company in commercial nerve centers across the country. Jumia has hundreds of pickup stations in Nigeria, while Konga also said it has improved on warehouse sites nationwide. Another crucial benefit is the speed and ease of shipment sellers can leverage on ecommerce platforms. Given the recent surge in online patronage triggered by the pandemic, Nigeria ecommerce  leaders like Jumia and Konga said they have upped their last-mile capacity with more delivery partners and associates.

From all indications, embracing the marketing features of online stores would be key for SMEs in their quest for survival and sustainability in the new market realities imposed by the pandemic. The good news for Nigerian SMEs is that the ecommerce landscape also provides several options that can be leveraged for their business revival.