This might sound very unorthodox of me, but localizing your web start-up is the way to go in some countries in Africa. Don’t get me wrong, It is not a myth that the internet creates a global frontier for your web based business, nevertheless global sales requires certain tools and experience to guarantee patronage not to talk about even a success.

It would be myopic  to underestimate the potential of your local nationwide market, with an effort to target a global market from inception. Targeting a global market from inception creates a huge burden on your small business and presents a lot of logistical challenges.

Lets take an example of your web shop in Nigeria with an inventory located in Nigeria with a global market target. Here I am assuming the shop accepts credit cards and is able to deliver its products to anywhere in the world within 7 days.

I am also assuming that the products cost you about $10 USD from your supplier, and you want to sell it at a 10% mark up price for $11USD. I am also assuming that the credit card gateway you are using charges about 2% per transaction, and your per unit shipment cost comes to about 40% of the cost price of your product.

This makes your total selling price of the product to come up to $15.20 USD. You would realise that, for every product costing you 1 dollar,you would end up selling it for about an approximated 52% above the cost price per unit, whereby I am assuming that you provide free shipment for your products. Now would that make your products very costly? Yes?

So what should web based shops in this locations do?
Web based Shops in a disadvantaged location should focus on their local nationwide market. This would allow them to create enough volumes, which thereby could allow them to benefit from overhead cost reduction through the law of economics of scale. By localizing you would be able to understand running a business on the internet, learn from certain mistakes, experiment with certain  with a much lower cost in a more controlled environment. In the future you could always consider expanding to the global frontier, and all the experiences gained from the local market would come in handy.

Economies of scale, in microeconomics, are the cost advantages that a business obtains due to expansion. This are factors that cause a producer’s average cost per unit to fall as output rises. : Wikipedia

Do you have a localized or a global web based business in Africa?
Tell me your story through your commentaries.

I have been a little bit troubled by our standards in evaluating startup solutions that are worthy of celebrating and that which are not worthy of celebrating, in our dotcom industry. I am using the “our” in this context, to address dotcom start-ups in Nigeria, as I am a role player, and because I don’t want to be accused of being a “traitor” to the Nigerian dotcom industry.

I have on several occasions came across start-ups being featured on Nigerian technology blogs without benchmarks and in-depth scrutiny on the quality, effort, standards and even whether the solutions help or contribute to the targeted community in any way.

What I believe this mediocre start-ups need, is an in-depth objective analysis to help them improve on what they are lacking or doing wrong, and also how to become a case study worthy of celebrating.

I am not going to point fingers as that defies the purpose of this entry. Rather, I would make an effort in not celebrating mediocre Nigerian start-ups.

I don’t see how celebrating mediocrity would help in encouraging young Nigerian start-ups to grow and develop in the competitive world of today?

I would start featuring Nigerian dotcom start-ups that are worthy of mention, and from time to time I would feature mediocre start-ups with an objective analysis and an in-depth scrutiny on why they should go back to their labs.

Do you have a Nigerian startup you want me to review?

Yes? No? Until then, I leave you till tomorrow with

“Think not those faithful who praise all thy words and actions; but those who kindly reprove thy faults.”
Socrates quotes (Ancient Greek Philosopher, 470 BC-399 BC)

The bad news is, our business in Nigeria, is facing a lot of challenges,  in the battle of the US Dollar vs the Nigeria Naira. The US Dollar appreciation against the Naira, has caused our business tremendous pain and agony. Our business in Nigeria has lost about 50% of its revenue to the currency market this year alone. Its disheartening. At 180 Naira to a dollar from 120, our bills cost us 0.50 USD cents more for every dollar we spend paying the same bills we paid last year.

We rely on a US backbone in running our services to our customers in Nigeria, hence 90% of our cost of running the business goes to the USA in Dollars.

What Strategies have we considered

1. Increasing the cost of our products and services (This could hurt our customer acquisition efforts)
2. Hedging against the dollar (its too late, because it seems that the Dollar against the Naira its at its best high)
3. Doing Nothing, and hoping the position would reverse soon (This seems to be our best shot as we are not aquiring any loss yet, winks:)

Is your business affected by the appreciation of a foreign currency?
Let me know through your commentaries.

This post was inspired by an entry on “Ubigen” titled “In business, are you a Chef or a Cook?“. His post was more directed towards answering

What should a business be? A cook? Or a Chef?

I am going to deviate a little with my own perspective of business itself.

So My question would be, Does your business develop products and services that taste like chicken or beef? If either, how does your business cater for “vegetarians”. Or does it cater for meat lovers only, because it is niche oriented? Or perhaps not?

My questionable analogy delves into various debatable areas, such as what a business should look like and should run like, in general.

What should a business look like?
A business should look like a very particular dinner party thrown by a host that catered for all the invited guests that still remains memorable in our mind.

When you design a business, even if its a niche based business, all your customers for that particular type of business should be catered for, in the way your business presents its products and services.

This can be done through analysis on the kind of customers your business expects and how this customers are different from one another. This is done through developing a product and service that caters for all your expected customers, thereby giving all your different type of customers the perception that the business was specifically developed for them.

When you design a business environment, you need to keep in mind, what makes your products and services acceptable to all your targeted customers, hence during designing your product or services, you should keep all your customers needs and expectations in mind.

What should a business run like?
A business should run like a charity that takes money for a thoughtful cause.
Your business should run like a charity, and treat every single customer like a contributor with a thank you note. A charity treats all their contributors with great respect, understanding and unmeasurable appreciation for donating. Your business should do the same.

Your business should also be able to operate with or without you, through the design of a system that ensures that all your business process can be done with or without you.

Now what do you think a business should look like, and run like?
Let me know through your commentaries.

Most smartphones of today including the one I use, The HTC Touch Pro support
1. MMS
2. 3G
4. Cut and Paste
5. and even stereo bluetooth.

To Apple marketing department this is a “COOL” feature, and I guess they got that right with the “WOW” buzz they created with the release of their iPhone OS 3.0 software, which according to them is the next version of the world’s most advanced mobile platform. I am sure this would lock in new buyers.

Perhaps I should get one too?

WOW

Yes she is..The time magazine (March issue) had an interesting coverage on Investing in Africa with a case of a bank in Togo “Ecobank”. Ecobank employs 11,000 people and has 620 branches in 26 countries with an excellent balance sheet of $8 billion dollars, and not only that, it actually makes money in the current world economical crisis; it made a whooping 32% profit in 2007 amounting to $104 million dollars and its up 47% this year.

Why is Africa the perfect destination for investment today?
1. Africa’s average annual growth from 2004 to 2008 according to the IMF is more than 6%, which is better than any developed economy.

2. According to the world bank Africans living on $1.25 a day or less dropped from 59% to 51% from 1996 to 2005, and has decreased further.

3. According to the February Issue of AllAfrica Journal, two Oxford University economist by the name of Collier Paul and Witney Schneidman wrote in an advisory to President Obama during his campaign and I quote “Africa, usually the poorest performing region in the world economy, is now likely to be among the best performing”.

I could go on and on with references, which beats the point.  It seems that Investors from China are the only investors actually flocking to Africa for business opportunities. This is acknowledged by the fact that trade between Africa and China has grown to an average of 30% in the past decade, topping $106 billion last year.

The rest are busy either saving Africa from poverty and sickness through pumping money into ineffective aid programs or watching Africa with Scepticism. This needs to change, as Africa is open for business.

Do you think, Africa is the best place to invest now?
Let me know through your commentaries.

Social Networks are extremely addictive and bad for you and I. I am loosing my discipline !! Not only me, even some of my friends are lamenting, as they have grown from spending 2 hours a day browsing the Internet to spending more than 6 hours parading social networks, from one network to another, depending on which connects them to friends, to which allows them to share their pictures and even to which tells their friends and colleagues what they are up to at that particular moment. The variety of what you can use social networks for today, is alarming.

Social networks developer’s themselves don’t make it easy on you, as they have spent millions of dollars and would continue to do so, into building a platform that glues you to their sites and help them convert the dollars into more dollars, hence making their shareholders happy.

A social network like Facebook, allows you to stay  updated with your networked relationships.  Twitter on the other hand allows you to communicate on what you are doing at a particular moment to your followers, and  I can see that many members are already using it as a chatting platform, to blabber their thoughts away and get responses to the blabber. I doubt that the developers had such usage in mind, during development.

How many Hours do you spend on social networks?

Do you spend more than 2 hours a day on any social network? If you do, then you surely need help. You can start by helping yourself make a list of things you gained through spending such an amount of time on a social network and comparing it with your daily goals in life.

I spend approximately 2 hours on week days and perhaps more on weekends, that I have been missing my book and magazine reading timetable.  I  spend most of my time reading up on picture commentaries, following up on status post, and even the links in facebook. I feel sorry for myself, as I have started deteriorating intellectually, on a daily basis, thanks to this social networks. Don’t get me wrong they have their justifiable usages and perhaps applications, but certainly wasting my precious hours in them, is not one.

I don’t learn anything new on this social networks, hence they are more of an instrument to waste of my time than a platform to actually benefit from.

How to avoid wasting your precious time on social networks?
1. Have a list of things to do online and assign time to them.
2. Don’t go drifting into checking every status and picture commentaries you see on this networks.
3. Use the logout button once your time expires, I mean it. Staying logged in would lure you into checking out something else.
4. Make a list of why you visit this social networks and ensure that you actually benefit from the lists.
5. Ensure you follow 1-4 religiously.

There are some usage of  social networks which doesn’t fall under this category such as
- Business Networking
- Public Relations for Businesses
- Marketing
- Organisational Collaboration
and even
-Keeping in touch with distant friends

Do you feel or think otherwise? Let me know through your comments…

In my previous entry, I covered Internet shops in Nigeria and how disappointed I was at the fact that there aren’t many to cover.

To Run a successful Online Shop in Nigeria, requires an in-depth understanding of the Market and its Consumers. I learnt this the hard way in the past 5 years or so. The Nigerian consumer behaviour and the market dynamics is very different from what you would experience in the USA or even in the UK.

Havent said the later, Are Nigerians really ready to Buy things online?

The good news is, Yes, Nigerians would buy from a local shop that does it right and have a personalised approach to selling the items to them. Here is how to develop a successful online local shop in Nigeria for Nigerians.

The Product

The product you want to sell must be at the right price. The product must be available, cheap in comparison to local shops and of good quality. When choosing a product to list, ensure that the product cost price + the logistic cost is less than the cost of the product in the shop.

Your ultimate formula in determining whether a product is worthy of listing is
PRODUCT COST PRICE + LOGISTICS COST PRICE <=  LOCAL SHOP PRICE

Not all your products would make you a profit,  Products that would allow you to break even would support the selling of your inventory to reach your profit goals..

Do’s
1. Product Inventory: Ensure you have a supplier that can deliver your listed inventory at the right price regularly.
2. Product Description: Ensure that your product description in thorough, you don’t want to spend time answering questions about the listed product rather than just selling and providing after sales support.
3. Promotions: Always have weekly promotions even if it means selling it at cost price, that would allow you to lock in customer loyalty over a long period of time.

Dont’s
1. Lose Focus: if you want to sell electronics, don’t start listing under-garments and prepaid cards, stick to your niche and create another platform for the other products. Product Listing overload is not for the Nigerian consumer.They get confused easily.
2. Over Price: Don’t sell your products for more than the selling price at the local shop. No Nigerian consumer would buy a product for as little as 1 kobo more than the price they would get it at their locality.
3. Don’t choose a product that would not break even.

Most Nigerian consumers if not all, would not patronize an online shop for convenience. They would rather patronize an online shop for the pricing of its product. Hence having the right product at the right price would surely ensure a success.

Payments
Methods of payments in Nigeria has been a problem for a while, but the good news is internet banking, bank deposits still work fine. If you can afford the GTB Interswitch, do get them, but they are highely unreliable. The Most reliable way to accept payments in an online shop in Nigeria is through bank deposits, and bank transfers.

Logistics
Shipping your items within Nigeria is quiet cheap. The best approach would be to have special arrangements or contracts with the logisitics companies so that you would be able to lock in the cost of shipment with them.

There are a few local courier services like

Citylink Courier Nigeria Ltd
Air and Sea Freight, haulage, warehousing, parcel express, cargo handling and clearing etc.
Website: http://www.citylinkcourier.com

City Flex Express
Total logistics solution
Website: http://www.cityflexexpress.com

DHL Worldwide Express Int. (Nig.) Limited
Website: http://www.dhl.com.ng

The Identity
Your shop identity plays a very important role in getting customers to patronize you. No Nigerian would patronize a shop that has no identity. There are two ways to solve this problem, the personal approach or the corporate approach.

The personal approach entails writing a detailed page about yourself and putting down all your contact details. This type of identity declaration creates trust.

You do not need a registered company to start an online business in Nigeria, but if you can afford a registration do so, and there comes the corporate approach, where you introduce your company with all the details about your company.

Sales Platform
The sales platform is where you sell the products in your inventory. This involves a little investment on your part. You would need to get a Domain name for your shop and also a hosting account to host the domain name.

Example of opensource shopping cards are Opencart, Oscommerce and Zencart

There are many reliable web hosting and domain registration in Nigeria that would help you in setting up an opensource shop for as little as 6,000 Naira a year. One example of such companies is Nairahost, which is a leading provider of web hosting and domain registration in Nigeria.

Security
Security is also a very important and crucial component to ensuring the success of your online shop. To begin with, I would encourage the buying of a SSL Certificate to secure the transaction process. Consumers feel more comfortable shopping in a shop that has an SSL Certificate, in fact most consumers would not purchase products from a website that has no SSL Certificate. Most Hosting providers would install it for you for free after purchasing it.

Shipping and Returns Policy
This is the section of your website where you explain your policies regarding the shipment of purchased products and the kind of warranties your product has. This is a must as it creates a confidence in your listed products.

Marketing
Don’t spend money advertising on Google or Yahoo or even any advertisement network, this advertisement networks would not be able to deliver your advertisement to Nigerians, and it would be way too costly, for you to convert  enough sales to cover the cost of the customer acquisition through this channels.

So what should you invest your marketing budget on?

a. Search Engine Optimisation
- Ensure that your shop is searchable in major search engines, this is a must, there are a few SEO experts in Nigeria, that would charge a reasonable fee in ensuring your shop is search engine friendly and your content are properly indexed in search engines.
b. Paid Review Blogs
- There are many popular Nigerian blogs that would make a coverage on your blog for free, but many would do a thorough coverage at a fee.
c. Specific Blog ads slots
– Some Popular Nigerian blogs have a space for advertisement, like mine, you can enquire from the owners on how you can get your shop advertised by them.

And Lastly consistency, weekly promotions, regular newsletters to your existing customers on your new products and renewing the domain on a yearly basis would ensure that you not only become successful running an online shop in Nigeria but a profitable one.

Consultation

I provide free consultation on internet solutions and business systemization, but I charge on the implementation stage, if required of me. But  I would happily guide you through the setup of your online business for absolutely free. So Feel free to use my contact form if you are interested in my free consultation.

Can you purchase any product you want, from a local online shop in Nigeria?

This question popped into my head yesterday, and I decided to “Google” out of boredom on things a Nigerian in Nigeria can actually buy on the internet from a local internet shop  and get it delivered at their doorstep the following day or even days later. The revelation was very disappointing. I came across only one, and the old ones I featured in my post titled “E-commerce key player’s in Nigeria. are all dead.

I “Googled” for Electronics, Clothings, Shoes, Perfumes, airline tickets, Cinema tickets, Movies, and even Food. I would like to cover all the aforementioned categories.

The criteria is :-
1. The Online shop must have a product.
2. The Online shop must have a working shopping cart.
3. The Online shop must accept any form of payments.

Electronics
Buy Right according to their website is a subsidiary of Pragmatic Technologies Ltd, and evolved from ComputerPort and Xtaples both of which were founded in 2001 as Nigeria’s first online computer and office supplies stores respectively.

BuyRight product line includes, Computer Products, Personal and Home Electronics, Fashion, Sports Equipment, Personal Health Equipment, Toys, Office Supplies and Vehicles.

Buy Right Accepts Interswitch etransact and bank payments, and also delivers ordered products nationwide using DHL express

Do you have an Online Localised store in Nigeria?
Let me know by commenting, so I can Introduce it in Online shops in Nigeria Part 2

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I become very excited when I come across success stories of businesses in Africa. Blue Skies a Ghanian Fruit packager, that pre-packes fruit salads and juices for export to Europe was featured in BBC yesterday. In a coverage titled “Ghana’s juicy economic lesson“, Blue Skies was said to employ about 2,000 workers  made a whooping $20m (£15m) last year.

Such a success story not only re-assures African businesses their potential in Agricultural type of businesses, but inspires them on how they can create employment opportunities in the continent.

An Interesting thing to note is that Blue Skies is currently exploring the Ghanian market because sales have been affected by the economic crisies and suprisingly their sales are catching up locally.

According to Kennedy Afful the Finance Manager:

“The local market has grabbed our juice in such a fantastic manner,” said Kennedy Afful, who looks a little more cheery than when he was discussing the falling exports

“In March last year we were taking in just 200 cedis ($145; £105) a week from the juice sold in Ghana. But last week we took $7 000 from local sales and we anticipate by end of year we will reach $14,000 a week.”

They have a well designed website with lots of information about their products and market too. You can visit their website at
Blue Skies