Five Reasons why E-commerce is a Boost to Informal Retail

Having existed in the background for centuries, Nigeria’s informal retail market is witnessing massive rejuvenation, thanks to B2B e-commerce brands applying technology to resolve the chronic market problems.

In the last three years, new market routes have emerged for retailers, as the industry gradually embraces the digital revolution. Discussed in this article are five ways e-commerce will further boost the informal retail market.

Price stability: Fast moving consumer goods are the everyday necessities that make informal retail thick, but those familiar with the market would know that prices of these goods are constantly unstable. One major improvement e-commerce brands bring to this market is to help regulate price of products.

“With our services, we have not only eliminated the need to allocate revenue to transport fares and market fees, we have also regulated the prices of products. Thereby, we ensure that our informal retailers are not affected by unreasonable price-hikes.

As evidence of this, 96% of our retailers say that our prices are fair and competitive compared to other suppliers,” said market expert and CEO of Alerzo Limited, Adewale Opaleye.

Open market options: The current market structure has lasted for ages, but retailers who are the major link to consumers still mostly end up with the short end of the stick.

A chat with these retailers will show that current market arrangement leaves them at the mercy of distributors: unpredictable prices and scarcity of products, especially during peak demand periods, are few of the many prevalent issues.

Majority of them would gladly embrace another market route to rival the current distributor/marketer chain. Interestingly for retailers, e-commerce brands not only offering cheaper restocking routes, but also an efficient option which will lead to a competitive and ultimately a more vibrant market.

Improved distribution chain: The activities of e-commerce players in the industry will not only benefit the retailers, but the whole distribution value chain. Since their entry into the market, the B2Bs have reiterated that they are here as market aggregators, who see the current league of wholesalers/distributors as partners, and have no aim of displacing them.

Also, facilities of these B2B e-commerce platforms can be of benefit to distributors. A platform like Alerzo said it provides warehousing and fulfilment solutions to suppliers.

The company said it currently owns over 200 vehicles and 20 warehouses to serve thousands of retailers on its platform. Some B2B players have also said current suppliers and distributors serve as a source of product supply for them in certain regions of the country.

Market insight for manufacturers: By their business model, B2B e-commerce brands penetrare hitherto marginalised and underserved retailers mostly in rural settlements. This ability to penetrate rural communities make them good data banks, as they are able to gather information from their first hand interaction with retailers.

Such data will come in handy for manufacturers, by providing them insights into present customer behaviour and ultimately help proper planning and development of suitable products.

Better business experience for retailers: Customer relationships and retention for informal retailers are major metrics of success while running their stores.

By offering an easy and convenient inventory channel,  e-commerce will help retailers deliver better customer services. By ordering inventory online, a retailer saves time and energy, thus having more time for customer interaction.

Added to this is improved access to funds for business growth. About 85% of informal retailers settle transactions in cash, not out of choice but because the credit system financially marginalises them.

Informal retailers who embrace these digital platforms also have the opportunity of building transaction records on e-payment apps that will facilitate access to loans. Some e-commerce platforms like Alerzo also provide sellers with training and advisory that helps improve their digital skills and open them to more opportunities to grow their businesses.