Nigerian tech startups go back to basics

In February 2017, the online video streaming platform iROKOtv made free downloads available at its kiosks across Lagos.

The company’s agents transfer files directly to customers’ devices using Wi-Fi, thus enabling them to bypass the high cost of mobile data in Nigeria. This is rather a bold offline move for an essentially online tech company.

In a blogpost, iROKOtv founder Jason Njoku explained the reasoning behind the kiosks, which first appeared late last year and will soon number around a hundred. Many potential customers “aren’t necessarily tech savvy,” he said.

Hence, the kiosks provide customer education and support as well as generally promoting the company. He also said that the number one challenge for iROKOtv and its subscribers was the “data burden” – the high cost of mobile data in Nigeria. The need to overcome it led to the delivery of videos by Wi-Fi at the kiosks.

 Offline moves

iROKOtv is not the only Nigerian tech company making offline moves. The year 2015 saw the launch of Yudala, which aims to seamlessly incorporate ecommerce and physical stores into its business structure, with a target of 512 stores across the country by 2018.

The Yudala Experience Store functions as a physical shop where people can walk in and buy goods; it also serves as a pickup location for those that choose to shop online instead. Yudala’s founder, University of Lancaster alumnus Nnambdi Ekeh, says that the decision to have offline stores wasn’t due to low confidence in the online landscape, but rather to the wish to offer the consumer more options.

“Yudala is unique in the sense that we are the first true composite retail platform in Africa,” he told Nigeria’s This Day newspaper in June 2016. “We are the first to combine a world-class ecommerce platform with an offline chain of retail stores. This model immediately sets us apart from competition.”

Travel and hotel booking services have seen companies move offline. One such is Wakanow.com, which started as an online travel booking platform but has now developed a physical presence, with travel centres at airports, malls and shopping centres across the country.

Founded in 2008, in its early days Wakanow relied strongly on offline marketing, sending its sales teams to airports across Nigeria. Hotel booking platforms have also said that winning the online battle is heavily dependent on offline strategies such as running campaigns in airports and bus terminals and at events.

Traditional model

Adewale Oladipupo, business development lead at tech news blog TechCity, says: “I don’t think the tech ecosystem in Nigeria is as mature as we perceive or make out to the world at large. Many tech founders and CEOs are so enthusiastic that they are like babies who want to walk before they can crawl.” 

He argues that the traditional model of business in Nigeria is still very relevant, and he sees Nigeria’s ecommerce giant Jumia as adopting traditional business model. “Jumia is one of those who have adopted the traditional business model and are combining it with their internet model,” he says. “An example is the Jumia J-force, a field sales force who mobilise and drive offline prospects. After it was tested and it worked, they have introduced the model into their hotel booking and the new Jumia Travel. No doubt we are doing considerably well with the power of the internet; however, it is important to note that the traditional model still has its relevance in business here in Nigeria.” 

Some big industry players speaking on condition of anonymity confirmed that they were pursuing the offline channel as a way of reaching targeted consumers in more personal ways. “Even though we are very optimistic about the online channel, we also use the offline ones that can enable us to reach even more people with our services, says a startup founder whose company has a similar model to Yudala’s.

“The aim of our offline efforts has always been to encourage customers to try our services for the first time. Then we direct them to the online platform.” But the desire to attract customers often leads to giving the customer false impressions about how the service works.

“This is often counterproductive since the customer will think the offline channel will always be there when he or she needs to access the service. This is why many startups will continue to provide offline services beyond just attracting new customers,” says Oladipupo.

Internet penetration

Another factor is pressure from investors to meet high targets, which often compels startup founders and their teams to explore all possible means to make profit. But despite all the various concerns that are driving startups to jettison online channels or pursue offline ones, Oladipupo ultimately argues that this development is in line with the number of citizens that can access online platforms in the first place.

“Smartphone penetration in Nigeria is increasing but internet penetration that can move business to fully function online is still limited,” he says. Until this significantly improves, tech startups in Nigeria and elsewhere will have to explore other avenues to keep their companies alive and investors pacified.

Paul Adepoju