Isnt there a downplaying of social media as THE e-commerce market Nigerians chose, as opposed to dedicated e-commerce platforms? Business didn't stay offline in my view, it moved online but not where we expected. And since bank transfers dominate these transactions, the payment processors that should be positioned to benefit from an e-commerce boom are bypassed completely. So many Instagram businesses with and without physical stores. The framing that businesses haven't moved online or e-commerce didn't show up doesn't align with the lived reality of Nigerians. What is clear is that the commerce didn't take the shape and form that these players expected. Those best positioned to capture it, as has played out, are those who built business and consumer banking, not those who only wanted to take their processor fees and be on their jolly way.
I already explained this nuance in the article: "Everything remained offline, away from organized storefronts. Yet that didn’t mean people didn’t shop online.
Once a consumer sees a local product while doomscrolling on Instagram, they message the seller, haggle or reach a price, wire the money to the seller via bank transfer, while the seller dispatches the item to the customer using a third-party logistics service. In this transaction loop, from product discovery to consumer payment, e-commerce platforms received zero revenue, and payment providers got nothing. Yet an online trade concluded successfully, but via social commerce and peer-to-peer transfers."
The comment wasn't that it wasn't mentioned but it is downplayed. Repeatedly saying businesses stayed offline and those who chased offline did better, and online as only when it is organised storefronts a la e-commerce, downplays social commerce as THE online route the market chose. I'm saying it's not a sidebar nuance and I agree to disagree 👍🏾
Nigeria's embrace of social commerce is an anomaly caused by the inefficiencies of existing storefronts. (A key premise of this article.) It's a very messy and informal way to do e-commerce.
All the features that make e-commerce scale successfully for buyers and sellers — such as product discovery, inventory management, business analytics, payments, product quality control, user reviews, anti-fraud mechanism, merchant product ads, among others — are missing or fragmented in Nigeria's mainstream social commerce practices. In short, it doesn't work well.
The existence of platforms like Selar tackle one aspect of the market (digital products) and that's good. But there's room for innovation. This is what Remita, Paystack Store and Flutterwave Store were aiming to solve, but things worked out differently. (The lede of the article.)
Fintechs like Moniepoint and Paystack recognize these inefficiencies and that's why they're bundling several business tools for merchants, especially those who sell largely offline and have no idea how these tools can transform their business. Whether these businesses go social commerce, digital store front, or remain offline, these fintechs are poised win on the back of this relationship with merchants. That's the big picture.
But isnt that the Nigerian way of things? It isn't an anomaly. Cards didn't get ubiquitous, and transfers took off. ATMs didn't reach scale and we today use POS terminals in its place. Mom and pop store are now operating as mini banks since commercial banks didn't do branch expansion en masse.
The features you mention that make e-commerce scale are not useful for fragmented, mostly single-employee businesses, which dominate the current social commerce space and, by extension, Nigeria's trade sector. Thus, those bundling merchant businesses tools now (Moniepoint) are targeting very specific businesses, a smaller category of offline-first, medium-sized businesses that have larger footfall and turnover.
What the paystack and Flutter stores attempted to solve for relies on an already successful e-commerce market. A market where the ecommerce players were struggling, a la Jumia and Konga, was not going to see success with storefronts.
Nigeria's "anomalies" need to be treated as what they are, the country's default. They are the constraints within which innovators can work, and they can't continually be treated as footnotes or sidebars to fit the global context.
There's no such thing as the "Nigerian way of things" in this context; it makes it seem like whatever behaviour we see is the default and should be treated as such. That's not true. It defeats the whole idea of innovation. And empirically, we've already seen how incentive-based marketing can change mass market behaviour. OPay and agency banking proved this im Nigeria more than 10 years after mPesa (elsewhere}, Paga and QuickTeller pioneered their respective MoMo models.
"Cards were not ubiquitous" is not true. Cards were widespread among consumers, but they weren't always accessible on the merchant side partly because most businesses were informal thus couldn't be properly banked and POS devices were limited in general even for banked businesses. Hence, the long ATM queues that were mostly available at the limited bank branches across the country. Even the CBN data I cited highlight this — if there were few cards in circulation, ATMs wouldn't have shown up on that chart. All of these issues have been extensively written about for a long time.
"Mom and pop store are now operating as mini banks." Again, this is not new. It started with Paga and accelerated eight years ago. So it's not recent and I have extensive body of work from even six years ago explaining this trend and its impact.
"The features you mention that make e-commerce scale are not useful for fragmented, mostly single-employee businesses." This is demonstrably false and I'm not sure why you're trying to say otherwise. EVERY business, digital or offline, needs anti-fraud mechanisms and payment tools to protect themselves from criminals or accept transactions, regardless of the size of the business. And for digital commerce, it's a no-brainer.
Plus, no business wants to be small forever. They all want to scale, want data so they can sell better, want more sales, want more visibility, want more data on their performance, they want to use all of these information to raise funding, including debt, for business expansion. Informal businesses in the past couldn't get this, but now they can because regulation and fintech innovation are enabling it.
Equally important, informal businesses don't equal "small businesses" or "mostly single-employee businesses". There are many medium and relatively large businesses that are informal for various reasons, plus this sector is the largest employer in the country. Moniepoint and others serve this industry, otherwise the huge payment volumes they're recording can't be attributed to only "single-employee businesses".
Fascinating piece. The social commerce loop - discovery on Instagram, payment via bank transfer - is something that doesn't show up in traditional payment metrics. Fintechs that figured out how to get back into that value chain with open banking made a smart bet.
I'd say this is a different problem than the fintech one we're discussing. This Uber "offline" trend is essentially fraudulent behavior by drivers who are trying to avoid paying platform commissions. It's not a fintech problem. Uber just has to find a way to punish errant drivers.
Great to call out that the e-commerce + payments boom never materialised. I wonder long term if they succeed in moving more payment activities from offline to online. - Are they doing the hard work of onboarding and customer acquisition for the banks
Isnt there a downplaying of social media as THE e-commerce market Nigerians chose, as opposed to dedicated e-commerce platforms? Business didn't stay offline in my view, it moved online but not where we expected. And since bank transfers dominate these transactions, the payment processors that should be positioned to benefit from an e-commerce boom are bypassed completely. So many Instagram businesses with and without physical stores. The framing that businesses haven't moved online or e-commerce didn't show up doesn't align with the lived reality of Nigerians. What is clear is that the commerce didn't take the shape and form that these players expected. Those best positioned to capture it, as has played out, are those who built business and consumer banking, not those who only wanted to take their processor fees and be on their jolly way.
I already explained this nuance in the article: "Everything remained offline, away from organized storefronts. Yet that didn’t mean people didn’t shop online.
Once a consumer sees a local product while doomscrolling on Instagram, they message the seller, haggle or reach a price, wire the money to the seller via bank transfer, while the seller dispatches the item to the customer using a third-party logistics service. In this transaction loop, from product discovery to consumer payment, e-commerce platforms received zero revenue, and payment providers got nothing. Yet an online trade concluded successfully, but via social commerce and peer-to-peer transfers."
The comment wasn't that it wasn't mentioned but it is downplayed. Repeatedly saying businesses stayed offline and those who chased offline did better, and online as only when it is organised storefronts a la e-commerce, downplays social commerce as THE online route the market chose. I'm saying it's not a sidebar nuance and I agree to disagree 👍🏾
Nigeria's embrace of social commerce is an anomaly caused by the inefficiencies of existing storefronts. (A key premise of this article.) It's a very messy and informal way to do e-commerce.
All the features that make e-commerce scale successfully for buyers and sellers — such as product discovery, inventory management, business analytics, payments, product quality control, user reviews, anti-fraud mechanism, merchant product ads, among others — are missing or fragmented in Nigeria's mainstream social commerce practices. In short, it doesn't work well.
The existence of platforms like Selar tackle one aspect of the market (digital products) and that's good. But there's room for innovation. This is what Remita, Paystack Store and Flutterwave Store were aiming to solve, but things worked out differently. (The lede of the article.)
Fintechs like Moniepoint and Paystack recognize these inefficiencies and that's why they're bundling several business tools for merchants, especially those who sell largely offline and have no idea how these tools can transform their business. Whether these businesses go social commerce, digital store front, or remain offline, these fintechs are poised win on the back of this relationship with merchants. That's the big picture.
But isnt that the Nigerian way of things? It isn't an anomaly. Cards didn't get ubiquitous, and transfers took off. ATMs didn't reach scale and we today use POS terminals in its place. Mom and pop store are now operating as mini banks since commercial banks didn't do branch expansion en masse.
The features you mention that make e-commerce scale are not useful for fragmented, mostly single-employee businesses, which dominate the current social commerce space and, by extension, Nigeria's trade sector. Thus, those bundling merchant businesses tools now (Moniepoint) are targeting very specific businesses, a smaller category of offline-first, medium-sized businesses that have larger footfall and turnover.
What the paystack and Flutter stores attempted to solve for relies on an already successful e-commerce market. A market where the ecommerce players were struggling, a la Jumia and Konga, was not going to see success with storefronts.
Nigeria's "anomalies" need to be treated as what they are, the country's default. They are the constraints within which innovators can work, and they can't continually be treated as footnotes or sidebars to fit the global context.
There's no such thing as the "Nigerian way of things" in this context; it makes it seem like whatever behaviour we see is the default and should be treated as such. That's not true. It defeats the whole idea of innovation. And empirically, we've already seen how incentive-based marketing can change mass market behaviour. OPay and agency banking proved this im Nigeria more than 10 years after mPesa (elsewhere}, Paga and QuickTeller pioneered their respective MoMo models.
"Cards were not ubiquitous" is not true. Cards were widespread among consumers, but they weren't always accessible on the merchant side partly because most businesses were informal thus couldn't be properly banked and POS devices were limited in general even for banked businesses. Hence, the long ATM queues that were mostly available at the limited bank branches across the country. Even the CBN data I cited highlight this — if there were few cards in circulation, ATMs wouldn't have shown up on that chart. All of these issues have been extensively written about for a long time.
"Mom and pop store are now operating as mini banks." Again, this is not new. It started with Paga and accelerated eight years ago. So it's not recent and I have extensive body of work from even six years ago explaining this trend and its impact.
"The features you mention that make e-commerce scale are not useful for fragmented, mostly single-employee businesses." This is demonstrably false and I'm not sure why you're trying to say otherwise. EVERY business, digital or offline, needs anti-fraud mechanisms and payment tools to protect themselves from criminals or accept transactions, regardless of the size of the business. And for digital commerce, it's a no-brainer.
Plus, no business wants to be small forever. They all want to scale, want data so they can sell better, want more sales, want more visibility, want more data on their performance, they want to use all of these information to raise funding, including debt, for business expansion. Informal businesses in the past couldn't get this, but now they can because regulation and fintech innovation are enabling it.
Equally important, informal businesses don't equal "small businesses" or "mostly single-employee businesses". There are many medium and relatively large businesses that are informal for various reasons, plus this sector is the largest employer in the country. Moniepoint and others serve this industry, otherwise the huge payment volumes they're recording can't be attributed to only "single-employee businesses".
Fascinating piece. The social commerce loop - discovery on Instagram, payment via bank transfer - is something that doesn't show up in traditional payment metrics. Fintechs that figured out how to get back into that value chain with open banking made a smart bet.
Kmt. I want to write what I think but I can’t remain intellectually honest lmao. I hate when I enter an uber and I’m told to do OFFLINE? Bruh.
I'd say this is a different problem than the fintech one we're discussing. This Uber "offline" trend is essentially fraudulent behavior by drivers who are trying to avoid paying platform commissions. It's not a fintech problem. Uber just has to find a way to punish errant drivers.
Great to call out that the e-commerce + payments boom never materialised. I wonder long term if they succeed in moving more payment activities from offline to online. - Are they doing the hard work of onboarding and customer acquisition for the banks