E-Commerce in Nigeria

-
A qualitative study on challenges in the
Nigerian E-Commerce landscape and
solution approaches

MASTER THESIS
PROGRAMME OF STUDY: Digital Business
AUTHOR: Tom Alexander Boßerhoff1 & Jasper Andreas von der Decken2
TUTOR: Tommaso Minola
JÖNKÖPING 23. May 2022
1boto20xk@student.ju.se
2voja20zz@student.ju.se

All at Jönköping International Business School, Jönköping University, Gjuterigatan 5, 55318

Jönköping, Sweden
Master Thesis in Business Administration

Title: E-Commerce in Nigeria – A qualitative study on challenges in the Nigerian

E-Commerce landscape and solution approaches

Authors: Tom Alexander Boßerhoff & Jasper von der Decken

Tutor: Tommaso Minola

Date: 2021-05-23

Key terms: E-Commerce, Nigeria, E-Commerce Awareness, Logistic, Sustainability,

CBEC, Distribution Channels, Challenges, Solutions

Abstract

Background:
E-Commerce is a type of commerce that has become increasingly important worldwide in the
last 20 years. Especially the Covid-19 pandemic has once again strongly catalyzed this
development. However, there are still difficulties in implementing and conducting E-
Commerce, especially in developing countries such as Nigeria. Much research has been done
to determine what challenges companies face when implementing E-Commerce solutions in
Nigeria. However, overcoming these challenges still needs to be elucidated by research.

Purpose:
This study aims to discover what challenges exist for E-Commerce companies in Nigeria and
what solutions could help overcome them. By identifying these challenges and solutions, our
study aims to provide a deeper insight into the E-Commerce world of the developing country
Nigeria and thus show companies how they can deal with these issues.

Method:
We conducted a qualitative study using a grounded theory approach. Semi-structured
interviews with experts, E-Commerce-, logistic- and FinTech-companies provided insights into
the E-Commerce landscape of Nigeria.

Conclusion:
The study revealed that there are still many challenges in the E-Commerce sector in Nigeria.
However, there are many solutions to the issues, especially in terms of E-Commerce awareness,
logistics, and sustainability, which ultimately underlines the potential of E-Commerce in
Nigeria.
Table of Contents
1 Introduction 1
1.1 Background 1
1.2 Problem Statement 2
1.3 Purpose/ Research Question 4
2 Literature Review 5
2.1 E-Commerce in General 6
2.1.1 Definition of E-Commerce 6
2.1.2 Development of E-Commerce 7
2.1.3 Types of E-Commerce 9
2.1.4 Benefits and Downsides of E-Commerce 10
2.1.4.1 Benefits and Downsides of E-Commerce for the Seller 10
2.1.4.2 Benefits and Downsides of E-Commerce for the Buyer 12
2.1.4.3 Benefits and Downsides of E-Commerce for the Government 13
2.2 Integrating E-Commerce in foreign market entry mode theory 13
2.3 Cross-Border-E-Commerce as a foreign market entry mode 15
2.4 E-Commerce in Nigeria 18
2.4.1 Development of E-Commerce in Nigeria 18
2.4.2 Challenges of E-Commerce in Nigeria 21

3 PEST Analysis - Nigeria 25

4 Methodology and Method 28
4.1 Research Philosophy 28
4.2 Research Approach 29
4.3 Research Design 31
4.3.1 Data Collection 32
4.3.2 Sampling Strategy 33
4.3.3 Interview Design 33
4.3.4 Qualitative and ethical implications 36
4.4 Data Analysis 38
4.5 Research Quality 39
5 Empirical Findings 42
5.1 Status Quo 43
5.1.1 E-Commerce Development and Prospects 43
5.1.2 Distribution Channels 45
5.1.3 Cross-Border E-Commerce 48

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 5.2 Challenges 51
5.2.1 Cash-On-Delivery 51
5.2.2 Inflation 52
5.2.3 Logistic Infrastructure 53
5.2.4 Distribution Chain 54
5.2.5 Technological Deficits 55
5.2.6 Lack of Market Research 55
5.2.7 Governmental Instability 56
5.2.8 Trust 57
5.2.9 Employment 58
5.2.10 Price Wars 58
5.3 Solutions 60
5.3.1 FinTech 60
5.3.2 Integrating Offline-Stores 61
5.3.3 Efficient Delivery 62
5.3.4 Local Manufacturing 63
5.3.5 Education 63
5.3.6 Brand Building 64
5.3.7 Niche Markets 65
5.3.8 Customer Service 65
5.3.9 Return Policy 66
5.3.10 Collaborations 66
5.3.11 Innovations 68
5.3.12 Shared Value 69

6 Analysis 70
6.1 E-Commerce Awareness 71
6.2 Logistics 73
6.3 Sustainability 76
7 Discussion & Conclusion 79
7.1 Conclusive Remarks 79
7.2 Theoretical Contribution 79
7.3 Limitations 81
7.4 Future Research 82
References 84
Appendices 94

iv
Appendix 1: Information Sheet & GDPR Consent Form 94
Appendix 2: Final Coding 97

v
List of Figures
Figure 1: Supply Chain of Traditional Cross Border Trade (Wang et al., 2015)....... 15
Figure 2: Supply Chain of CBEC with the platform being in Country B (Wang et al.,
2015). ................................................................................................................................................ 15
Figure 3: Supply Chain of CBEC with the platform being in Country A (Wang et al.,
2015). ................................................................................................................................................ 16
Figure 4: Supply Chain of CBEC with the platform acting as an intermediary (Wang
et al., 2015). ................................................................................................................................... 16
Figure 5: Initial Framework to present Findings ....................................................................... 42
Figure 6: Initial Framework - Status Quo ...................................................................................... 43
Figure 7: Initial Framework – Challenges ..................................................................................... 51
Figure 8: Initial Framework – Solutions ........................................................................................ 60
Figure 9: Final Framework to answer RQ ..................................................................................... 70

List of Tables
Table 1: Benefits for Sellers ..................................................................................................................... 11
Table 2: Downsides for Sellers .............................................................................................................. 11
Table 3: Benefits for Buyers ................................................................................................................... 12
Table 4: Downside for Buyers ............................................................................................................... 12
Table 5: Challenges of E-Commerce in General .......................................................................... 22
Table 6: Challenges of E-Commerce in Nigeria........................................................................... 23
Table 7: Overview of Interviews .......................................................................................................... 35

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List of Abbreviations
API Application Programming Interface
AFCFTA African Continental Free Trade Area
B2B Business to Business
B2C Business to Consumer
C2C Consumer to Consumer
CBEC Cross Border E-Commerce
CEO Chief Executive Officer
C-Level Chief-Level
E-Business Electronic Business
E-Commerce Electronic Commerce
EDI Electronic Data Interchange
FDI Foreign Direct Investment
FinTech Financial Technology
FMST Federal Ministry of Science and Technology
GDP Gross Domestic Product
GDPR General Data Protection Regulation
GT Grounded Theory
HDI Human Development Index
INT Interviewee
ICT Information and Communication Technology
IT Information Technology
OECD Organization for Economic Co-operation and Development
PEST Political, Economic, Social and Technological
R&D Research and Development
ROI Return on Investment
RQ Research Question
UNCTAD United Nations Conference on Trade and Development
US$ US Dollar
VAN Value Added Network
WATRA West Africa Telecommunications Regulators Assembly
WTO World Trade Organization

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1 Introduction
----------------------------------------------------------------------------------------------------------
The following chapter consists of the background, the problem, the purpose, and the
research question discussed within the thesis. In the background section, the reader will
be introduced to the Nigerian E-Commerce landscape, getting an overview of the topic.
The purpose section highlights the scope, outlining which areas will be discussed. As a
result, the underlying research question will be presented.
----------------------------------------------------------------------------------------------------------
1.1 Background
The rapid development of information technology has drastically impacted and changed
the business environment over the last decades. With the help of computing power, the
internet, and other technology, Electronic-Commerce (E-Commerce) emerged and
transformed how business is conducted. E-Commerce refers to the digital exchange of
any information, products, or services with the help of international networks, allowing
parties worldwide to interact with each other. Furthermore, E-Commerce facilitates the
automatization of manual processes, which sustainably changes how businesses operate
(Bajaj & Nag, 2001). Since the emergence of E-Commerce, sales in this field have
skyrocketed every year. From 2014 to 2022, sales multiplied almost fivefold, accounting
for a revenue of 5.5 billion US$ in 2022 while at 1.3 billion US$ in 2014 (Chevalier,
2022). Besides that, the global Covid-19 pandemic forced many companies to shift their
business focus to an online environment because restrictions and rules prevented them
from practicing their usual business activities. Even though restrictions are mostly lifted
now, many companies seem to bear the fruits of their online activities and continue
conducting E-Commerce (Chevalier, 2021). Summarized, E-Commerce is an ever-
changing phenomenon, which is highly relevant for conducting business nowadays.

While E-Commerce is already integrated into the day-to-day life of developed countries,
developing countries are still facing challenges in implementing E-Commerce. 80 % of
the world population currently lives in developing countries, forming a vast market with
billions of possible customers (UNCTAD, 2017). While these markets used to be
challenging to reach, globalization and the development of information technology are
opening new opportunities for accessing these markets. The usage of the internet in
developing countries is growing from 8% in 2005 to almost 60% in 2021, which shows

1
that besides offering a huge market, people in developing countries are also open to
change and get more and more access to the internet and, therefore, also to E-Commerce
(Johnson, 2022).

Africa as a continent, and more specifically Nigeria, has been chosen as the subject of
this research, mainly because E-Commerce still faces many challenges in this region, but
also offers vast potential to businesses as well as citizens living in those countries (Forbes
Africa, 2022; Okolie & Ojomo, 2020). Especially after the corona pandemic, many
African countries, including Nigeria, struggled to keep up with the positive developments
made over the last years. Integrating E-Commerce offered a lifeline to many companies.
Recently many initiatives and conventions, like The African Continental Free Trade Area
(AfCFTA) in 2019 or the Economic Community of West African States in 1975, were
founded to promote inclusive growth in Africa. Nigeria has been a leading force in those
initiatives and is generally one of the most impactful countries in the whole continent
(UNCTAD, 2021a). Researching E-Commerce in Nigeria and giving recommendations
on successfully overcoming initial challenges are essential contributions to the
sustainable development of the country and, as a result, Africa (Ejemeyovwi et al., 2019).

1.2 Problem Statement

As already mentioned, Africa is an area of interest because of its challenges, potential,
and effects E-Commerce can have on sustainably developing the continent. Nigeria is
specifically relevant because of its population and its impact on the African economy.
With roundabout 215 million inhabitants, Nigeria has almost twice the people of the
second biggest country in Africa (Kamer, 2022b). Here it is also worth noting that the
population is, on average, one of the youngest in the world (Sasu, 2022a). Young people
between 16 and 34 accounted for the largest E-Commerce user share worldwide in 2015
and were projected to grow even more in the following year's (Statista Research
Department, 2016). Furthermore, Nigeria has the highest GDP in Africa, which
underlines the country's importance to the whole continent (Kamer, 2022a). This is also
clearly reflected in Nigeria’s internet penetration, which is constantly increasing, while
predictions also forecast a continuation of this trend in the coming year's (Johnson, 2021).
Having already been a pioneer in E-Commerce, E-Commerce solutions in Nigeria
increased rapidly during the global Covid-19 pandemic (Salem, 2021). For example, the

2
FinTech industry, which provides vital services for the E-Commerce sector, is booming
and gained the attention of many investors (Forbes Africa, 2022). Given these facts,
Nigeria is one of Africa's most essential and influential E-Commerce markets. However,
besides the comparably high internet penetration and mobile usage in Nigeria, only 26 %
of the population bought a product online, which shows that there are still barriers and
challenges when conducting E-Commerce in Nigeria (EcommerceDB, 2021). For
example, a study by Sasu (2022) reveals that the preferred payment method on Jumia, the
biggest E-Commerce platform in Nigeria, is still cash-on-delivery, even though mobile
phone usage and e-payment are well-developed (Sasu, 2022d). Possible explanations for
that include, but are not limited to, cyber security problems, lack of trust in technologies
and providers, and the lack of infrastructure (Ayo et al., 2011). Further challenges revolve
around the lack of customer awareness and satisfaction (Choshin & Ghaffari, 2017),
problems in the logistics and information technologies (Lawrence & Tar, 2010), and a
lack of trained personnel (Ajao et al., 2018). In sum, Nigeria offers tremendous
opportunities in the E-Commerce market. With a large population and a huge market size,
conducting E-Commerce in Nigeria can be promising. Still, previous research mainly
focused on challenges and disregarded solutions to overcome these challenges (Ali et al.,
2021). The underlying study aims to close this gap and give recommendations on
successfully embracing these opportunities. Jumia, the biggest E-Commerce platform in
Nigeria, already showed that E-Commerce solutions are existing and working (Sasu,
2022c), making researching this topic compulsive to contribute to current theory.

As Nigeria is highly dependent on imports and thus international trade, integrating foreign
countries into its distribution chain is inevitable (World Integrated Trade Solution, 2019).
Due to that fact, and since Nigeria offers tremendous opportunities, foreign companies
have gained increasing interest in investing and entering the Nigerian market (U.S.
Department of State, 2021). Especially with the emergence of Cross-Border-E-
Commerce (CBEC), new opportunities to access foreign markets arose (Xue et al., 2016).
However, research in this area primarily focus on logistic processes, drivers of CBEC,
and CBEC in the regions of China, Europe, and the USA (Giuffrida et al., 2021) and do
not consider developing countries. He et al. (2021) are the only authors to mention that
CBEC is harder to implement in developing countries due to infrastructure problems.
Besides that, there is no research regarding CBEC in developing countries yet. Therefore,

3
Qi et al. (2020) suggest that to develop a better understanding of the phenomena of CBEC
and its international influence, researching other markets besides China, the USA, and
Europe is crucial.

1.3 Purpose/ Research Question

This study aims to investigate the challenges of E-Commerce in Nigeria while researching
strategies and solutions on how to overcome these challenges and bear the fruits of
successfully adopting E-Commerce in Nigeria.

To lay the necessary foundation, an overview of E-Commerce in general, including a

definition, the development, prospects, and types of E-Commerce, will be given. Besides
that, previous research shows that E-Commerce offers new opportunities for foreign trade
(Qi et al., 2020). As this is integral for the Nigerian E-Commerce landscape (World
Integrated Trade Solution, 2019), the first part also integrates E-Commerce in foreign
market entry mode theory while highlighting CBEC as an entry mode.

In addition, this study reviews the current state of research regarding E-Commerce in
Nigeria, enrichening the findings with a PEST-Analysis. Our review shows that research
in this area mainly focus on the current situation, possible impacts, and challenges of E-
Commerce in Nigeria. However, there is still a gap in how to overcome these challenges
(Ali et al., 2021). Thus, the underlying Research Question (RQ) is:

What are current challenges in the Nigerian E-Commerce landscape, and which
strategies can companies adopt to overcome them?

By not further defining “companies,” our RQ aims to integrate foreign countries'

influence and, therefore, CBEC on the current state of E-Commerce in Nigeria.
Furthermore, our study intends to expand existing theory on E-Commerce in Nigeria by
adding possible strategies and solutions to current entry barriers and challenges. The RQ
is deliberately open to grasp different points of view, highlighting underlying processes
and dynamics while connecting them to solutions.

4
2 Literature Review
----------------------------------------------------------------------------------------------------------
The literature review revolves around two sections. First, E-Commerce will be
introduced, including its definition, a brief history, advantages, and types of E-
Commerce. This foundation will then be utilized to build a connection to foreign market
entry modes while especially highlighting the influence of E-Commerce. The second part
will focus on E-Commerce in Nigeria and start with the development, the current
adoption, and prospects. Finally, the chapter concludes with possible benefits and
downsides for companies and consumers while also underlining the current challenges
of E-Commerce in Nigeria.
----------------------------------------------------------------------------------------------------------
Our literature review consists of E-Commerce and its influence on foreign market entry
modes and E-Commerce in Nigeria. We started to examine standard databases such as
“Scopus,” “Web of Science,” and “Google Scholar” to identify relevant publications for
our topic by defining keywords. The first keywords we used included “E-Commerce,”
“foreign market entry,” and “Nigeria.” While “E-Commerce” AND “Nigeria” enabled us
to quickly find essential publications for the literature review about E-Commerce in
Nigeria, “E-Commerce” AND “Market Entry” did not yield many results in the
beginning. Thus, we started exploring E-Commerce in Nigeria more deeply by gathering
all the literature from the database. We primarily focused on recent years and decided
which publications to include based on title and abstract. In a second step, we checked
the publishing journals and ABS-Rating and scammed through all papers to identify the
most relevant ones for an intense review. We also checked citations and cross-references
to find further publications, which our initial search missed. Finally, we changed our
keywords by adapting “E-Commerce” to “Online* Trade” to extend our research area.
For the second part of our literature review, we started our research with the keywords
“E-Commerce” AND “foreign Entry.” As already mentioned, we could not identify many
publications in the beginning and therefore enhanced our keyword search by adding
“entry,” “foreign,” “market,” and “strategy.” While we didn’t get many more publications
through that, we found publications that referred to “entry strategy” as “entry mode” and
especially highlighted CBEC as an essential concept for foreign market entry. Therefore,
we expanded our search and looked for “E-Commerce” AND “entry mode,” and “E-
Commerce” AND “Cross-Border.” While that search allowed us to identify further

5
publications, we realized that E-Commerce as a market entry mode is not widely
researched yet, and publications focus almost fully on CBEC. As for the first part, we
scanned through the abstracts to identify the most relevant publications. As there were
few papers on this topic, all publications were included in the in-depth evaluation, and
cross-references were checked to collect pertinent additional publications in this area.

2.1 E-Commerce in General

The following section will lay the foundation of our literature review by introducing the
reader to the definition, the history, and key principles of E-Commerce.

2.1.1 Definition of E-Commerce

E-Commerce is a concept that has been on the minds of countries, companies, scientists,
and researchers for the last two decades and is gaining more and more weight in the same
(Kumar et al., 2021). During this time, various definitions of E-Commerce have been
developed.

According to the OECD (2009), “an E-Commerce transaction is the sale or purchase of
goods or services, conducted over computer networks by methods specifically designed
for the purpose of receiving or placing orders. The goods or services are ordered by those
methods, but the payment and the ultimate delivery of the goods or services do not have
to be conducted online. An E-Commerce transaction can be between enterprises,
households, individuals, governments, and other public or private organizations. [...] ”
(OECD, 2011, p. 184). Khan (2016) is aligned with the OECD’s definition of E-
Commerce. Additionally, he broadens the scope also to the process of information
exchange and price comparison as an additional part of the E-Commerce world. Müller-
Hagedorn (2000) confirms this by defining E-Commerce as a commercial transaction that
does not have to be carried out fully electronically. Thus, payment and delivery can also
take place manually. In addition, the exchange or gifting of products and services that are
carried out online do not fall within the E-Commerce definition. In its “Work Programme
on Electronic Commerce”, the WTO (1998) defines E-Commerce as “the production,
distribution, marketing, sale or delivery of goods and services by electronic means”
(WTO, 1998, p. 1). In summary, we can define E-Commerce as a trade between buyers
and sellers in which at least part of the process takes place electronically.

6
However, E-Commerce should not be confused with electronic business (E-Business)
because E-Commerce is only one part of it. Lientz & Rea (2001) state that “E-Business
activities include not only the electronic commerce transactions with customers and
suppliers but also the internal supporting transactions – some of which may not be
electronic“ (Lientz & Rea, 2001, p. 3).

2.1.2 Development of E-Commerce

E-Commerce as we know it has only existed since 1993 (Riehm et al., 2003).
Nevertheless, it is now taken for granted in most parts of the world and a necessity for
people and businesses. It will be responsible for nearly 21% of total retail sales worldwide
in 2022 (Carola, 2022). To understand the development of E-Commerce, its history is
detailed below.

E-Commerce prehistory
The precursor to E-Commerce was electronic data interchange (EDI), which allowed
companies to communicate with each other via VANs (Value Added Networks)
(Millman, 1998). This allowed technical data to be sent between companies to simplify
and speed up processes, reducing error rates associated with data re-entry (Chopra &
Meindl, 2016). The first message using this technology was sent in 1965, showing that
companies were already interested in paperless processes and efficient office
communication, almost 60 years ago (ÇİĞDem, 2021).

The next big step for developing E-Commerce was Arpanet, a predecessor of the internet
as we know it today. Arpanet was created in 1969, and with it, information could be sent
between computers. In the 24 years that followed, Arpanet continued to evolve, and
companies built their E-Commerce solutions (Riehm, 2005).

Rise of E-Commerce
The Mosaic web browser, developed in 1993, was the subsequent major development of
E-Commerce. This browser could present graphics on the internet for the first time (CSI
Communications, 2014). With this technological advancement and the commercialization
of the internet in 1995, more and more E-Commerce companies developed (Riehm et al.,
2003). Among them are world-famous companies such as Amazon and eBay (Riehm,

7
2005). The rising density of computers in private households has helped these businesses
develop magnificently and not only promoted E-Commerce between companies (B2B)
but also between companies and consumers (B2C). According to Riehm (2005), there are
three main factors for the rapid development of E-Commerce in this time frame. First,
anyone with internet access can sell products there. Second, the user base has increased
rapidly, and lastly, much money has been invested in internet companies, from which E-
Commerce companies have also benefited. This led to online B2C sales being greater
than $1 trillion in 2012 (Ferrera & Kessedjian, 2019). This development can also be seen
very clearly in the rise of internet access; in 1995, just under 45 million households had
internet access. The number of users has increased almost eighty-fold over the last 22
years. In 2017 the number of users reached 3.42 billion. As E-Commerce happens on the
internet, the number of E-Commerce users has also increased rapidly. This can be seen
very well in Europe, where a significant percentage of internet users also use E-
Commerce for shopping. In 2017, 65% of internet users in Europe purchased services and
products online (Lone et al., 2021).

E-Commerce today
E-Commerce is even more prevalent today than projections predicted 3 years ago. The
Covid-19 virus has demonstrated the benefits and importance of E-Commerce in a
pandemic worldwide. From 2019 to 2020, we saw a 5% growth spurt of people buying
goods online in Europe. This is above the average growth rate of 3% in recent years (Lone
et al., 2021). The Director of EuroCommerce, Christian Verschueren, points out that there
are many first time users of E-Commerce, as Covid-19 pressured them to do so (Lone et
al., 2021). The International Trade Administration adds that due to Covid-19, companies
started to sell products online and become part-time E-Commerce companies. This led to
a 19% increase in global E-Commerce revenue, which is particularly important for the
survival of small and medium-sized enterprises (International Trade Administration,
2021a). Governments have also supported the shift to purchasing products and services
online more frequently, limiting contact between people as much as possible (World
Trade Organization, 2020). This above-average growth rate shows that Covid-19 is acting
as a catalyst in the world of E-Commerce (Beckers et al., 2021) to an extent of reaching
up to 2 billion E-Commerce users worldwide by 2020 (Coppola, 2022), representing just
over 25% of the world’s population (O'Neill, 2022).

8
E-Commerce in the future
According to the German bureau of Statistics´, the numbers will increase to 4.87 billion
E-Commerce users by 2025 (Statista, 2022), representing well over 50% of the world’s
population (Plecher, 2021). As a result, it also plays a crucial role in ensuring that the
international economy continues to grow (Hayakawa et al., 2021). These figures confirm
the very positive E-Commerce trend we have seen in recent years and show that we can
expect more E-Commerce activity in the coming years. The National Intelligence Council
also assumes that E-Commerce will continue to flourish and that national borders will
disappear in the market. Online marketplaces/platforms will become increasingly
essential in supporting global trade (National Intelligence Council, 2021).

2.1.3 Types of E-Commerce

The types of E-Commerce are defined by who is selling and who is buying. Schneider
(2016) states that there are 5 different types; “business-to-consumer, business-to-
business, transactions and business processes, consumer-to-consumer, and business-to-
government” (Schneider, 2016, p. 6). Business-to-business (B2B) and business-to-
consumer (B2C) are best known. B2B generates a significantly larger share of sales than
B2C (Schneider, 2016). Sellers and buyers can engage in multiple types of E-Commerce.
For example, intermediate products may be sold by other companies in B2B commerce,
and after assembly, the final products are resold to the end consumer in B2C commerce.
In the following, we will look at these two types while also considering consumer-to-
consumer (C2C) commerce.

B2B
In B2B commerce, companies sell products or services to other companies (Schneider,
2016). When Microsoft sells its software to Volkswagen, this transaction is called B2B
commerce. Mourya & Gupta (2015) and Riehm (2005) state that this E-Commerce type
accounts for more than 90% of the total volume of E-Commerce.

B2C
B2C commerce occurs when “business sell products or services to individual customers”
(Schneider, 2016, p. 8). This commerce takes place, for example, when a private
individual buys a product from companies such as Amazon (Mourya & Gupta, 2015).

9
B2C has the highest number of transactions compared to the other E-Commerce types
(dos Santos et al., 2017).

C2C
C2C represents the smallest share of sales among the three E-Commerce types. C2C
means that people trade products and services online (Schneider, 2016). An example is
“eBay Kleinanzeigen,” a German online marketplace where anyone can sell and buy
products. Since individuals selling products can also be considered businesses, this E-
Commerce type more often falls into the B2C realm (Schneider, 2016).

2.1.4 Benefits and Downsides of E-Commerce

E-Commerce is developing so fast because it is seen as a win-win strategy for all
involved. Sellers, buyers, and the government can benefit from the implementation of E-
Commerce. The advantages of E-Commerce outweigh the disadvantages (Okolie &
Ojomo, 2020). Following, we will examine and highlight the advantages and
disadvantages of E-Commerce for each group. Moreover, we mention the most important
aspects in more detail.

2.1.4.1 Benefits and Downsides of E-Commerce for the Seller

Benefits for Sellers Literature

1 International customer expansion (Schneider, 2016)
2 Long-term overall cost reduction (Kiang & Chi, 2001; Morganti et al.,
2014; Schneider, 2016)
3 No limitation of shop opening hours (Kiang & Chi, 2001; Mourya & Gupta,
2015)
4 Increased profits (Gunasekaran et al., 2002; Schneider,
2016)
5 Expanding customer data and (Khan, 2016; Mourya & Gupta, 2015)
preferences
6 Efficiency enhancement (Gunasekaran et al., 2002; Mourya &
Gupta, 2015)
7 Logistic optimization (Khan, 2016; Morganti et al., 2014)
8 Simplification of advertising (Schneider, 2016)
9 Sustainable Value creation (Ogbo et al., 2019)

10
 10 Low entry barriers (Kiang & Chi, 2001; Okolie & Ojomo,
2020)
Table 1: Benefits for Sellers

Sellers have been given many opportunities to enhance profit and promote their brand
worldwide through E-Commerce. E-Commerce allows the distribution of products
without a physical shop and opening restrictions. Thus, E-Commerce is available to
customers 24/7 with products and services. Furthermore, online shops can be operated
without employing much additional staff, reducing running costs. Due to low entry
barriers, E-Commerce can be efficiently conducted by companies trying to maximize
profits. Furthermore, it can lead to companies working more efficiently and optimizing
their supply chain to create a sustainable company in the long term.

Downsides for Sellers Literature

1 Implementation costs (Gillwald et al., 2018; Okolie &
Ojomo, 2020)
2 Major competition (Okolie & Ojomo, 2020)
3 Return of products (Okolie & Ojomo, 2020; Zhu et al.,
2018)
4 Cyber crime (Khan, 2016)
5 Not all customer reachable (Mourya & Gupta, 2015)
6 Trust (Schneider, 2016)
Table 2: Downsides for Sellers

The downsides of E-Commerce go hand in hand with the advantages. Although there are
low entry barriers, companies still have implementation costs that exist in acquiring
technical equipment. Another challenge is the increase of competition following
depressed prices since every company can sell its products worldwide. In addition, buyers
return their goods more often, which causes costs for the company that would not arise
with a physical store. Lastly, as commerce takes place on the internet, the added risks of
cybercrime can reduce buyers' confidence in the product.

Overall, with professional implementation, many disadvantages can be eliminated, and

thus, the advantages are more substantial than the disadvantages (Okolie & Ojomo, 2020).

11
2.1.4.2 Benefits and Downsides of E-Commerce for the Buyer

Benefits for Buyers Literature

1 Cost reduction (Okolie & Ojomo, 2020)
2 Price comparison (Karavdic & Gregory, 2005; Khan, 2016);
3 Wider selection (Khan, 2016; Khan & Uwemi, 2018;
Schneider, 2016)
4 No limitation of shop opening (Gunasekaran et al., 2002; Kiang & Chi,
hours 2001; Mourya & Gupta, 2015)
5 More and quicker information (Khan, 2016; Khan & Uwemi, 2018)
6 International market access (Gunasekaran et al., 2002)
7 After Sale Service (Kiang & Chi, 2001)
Table 3: Benefits for Buyers

Customers experience significant benefits from E-Commerce. Including the variety of

products and services online that can be compared in seconds for the price, sustainability,
delivery time, etc. As a result, customers can buy products and services cheaper than in a
physical store. In addition, they are not tied to a specific place or time. The offers are
available 24/7 from everywhere.

Downsides for Buyers Literature

1 No examination of product (Okolie & Ojomo, 2020)
2 Lack of Privacy (Oliver et al., 2011)
3 Not Personal (Lawrence & Tar, 2010; Mourya &
Gupta, 2015)
4 Cyber crime (Khan, 2016; Mourya & Gupta, 2015)
5 Targeted advertisement (Okolie & Ojomo, 2020)
Table 4: Downside for Buyers

With online purchases, buyers can no longer physically touch and try out the product,
resulting in products that might not be as imagined. Additionally, personal advice is no
longer available. Due to digitalization, companies now also collect data from customers
and display targeted advertising. This severely limits the privacy of buyers. In summary,

12
E-Commerce simplifies the buyer’s life significantly and allows them to save a lot of
time. However, care must be taken as data is disclosed online.

2.1.4.3 Benefits and Downsides of E-Commerce for the Government

In addition to sellers and buyers, E-Commerce also impacts the economic situation of the
respective country. Adejoh (2018) states that E-Commerce is instrumental in growing the
country’s economy. Anvari & Norouzi’s study (2016) confirms that and highlights the
positive long-term impact of E-Commerce on GDP per capita. They conclude that
countries should invest in developing their ICT infrastructure to strengthen economic
growth.
Besides the positives E-Commerce brings, governments also have to face adverse effects.
For example, the growing use of E-Commerce leads to more cybercrime attacks, for
which the government must prepare (Adejoh, 2018). In addition, increased globalization,
shipping, and distribution of products can lead to more carbon emissions. Ultimately, the
environment suffers from this, but so does the government and its people (Tiwari et al.,
2011).

2.2 Integrating E-Commerce in foreign market entry mode theory

Researching foreign market entry modes has become increasingly popular early in the
21st century and mostly revolved around strategic decisions on how to enter foreign
markets. Several researchers have widely discussed this topic. Determinants and factors
influencing the strategic decision on entering a foreign market have been researched
thoroughly while mainly focusing on traditional foreign market entry modes such as joint
ventures or wholly-owned subsidiaries (Brouthers & Hennart, 2007). Underlying
assumptions regarding foreign market entry modes date back to Hymer’s theory in 1960,
which states that foreign market entry modes refer to exploiting the ownership advantage
in foreign countries by transferring resources from the home country to the host country
(Hymer, 1960). In the following years, many researchers attempted to build on this theory
to develop a general understanding of foreign market entry modes. Sharma & Erramilli
(2004) summarize those publications. They define a foreign entry mode as an agreement
that allows a company to implement its product and its marketing strategy in a host
country by either carrying out only the marketing operations or focusing on the production
operations as well. Furthermore, these operations can be carried out by themselves or in

13
partnerships with others. Adding to that, Laufs & Schwens (2014) highlight that foreign
market entry mode decisions of a company will determine the resource commitment to
the host country, the born risk in the host country, and the level of control being exercised
over the foreign activities of a company. Fifteen different foreign market entry modes
have been identified by Root (1994), which can be divided into equity and non-equity
modes. Depending on the entry mode, the level of control and the level of risk vary.
Johnson & Tellis (2008) specify these entry modes more precisely. They introduce five
types of foreign market entry modes: Export, license and franchise, alliance, joint venture,
and wholly owned subsidiary. In comparison, exporting bears the lowest level of control,
and a wholly owned subsidiary has the highest level of control.

As already pointed out, previous research primarily focuses on traditional foreign entry
modes. However, the development of E-Commerce allows for new possibilities to enter
global markets, which makes it inevitable to connect foreign market entry modes with E-
Commerce (Karavdic & Gregory, 2005). E-Commerce technologies allow specific
processes to be managed from a distance. Still, they also allow for whole new strategies,
in which the digitization of a particular product influences the committed resources, the
born risk, and the level of control (Ekeledo & Sivakumar, 2004).
While examples of traditional entry modes like exporting, a joint venture, or own
subsidiaries in foreign countries can be used for offline distribution as well as distribution
via E-Commerce, the concept of CBEC introduces an entirely new opportunity for using
E-Commerce as a foreign market entry mode (Xue et al., 2016).

14
2.3 Cross-Border-E-Commerce as a foreign market entry mode
CBEC describes the sales of goods between different countries by using the internet
(Cassia & Magno, 2021). As highlighted by Wang et al. (2015), traditional cross-border
trade usually has long supply chains, including exporters, importers, distributors, and
retailers. Figure 1 shows what a classic supply chain of cross-border trade can look like.

Figure 1: Supply Chain of Traditional Cross Border Trade (Wang et al., 2015).

In comparison, CBEC drastically cuts the stations of the supply chain. Intermediaries
like distributors or retailers get substituted by an E-Commerce platform. Depending on
the country of origin of the platform, the supply chain of CBEC changes. On the one
hand, the platform could be in the customer's country, in which case the original business
in country A would sell and ship the goods to the platform in country B, and the platform
in country B would then sell the product to the customer.

Figure 2: Supply Chain of CBEC with the platform being in Country B (Wang et al.,
2015).

15
On the other hand, the platform could also be in the same country as the business, in
which case the business would sell the goods to the platform in country A, and the
platform would then sell and ship the goods to the customer in country B.

Figure 3: Supply Chain of CBEC with the platform being in Country A (Wang et al.,
2015).

As a last option, the platform can also only act as an intermediary resulting in the business
in country A directly shipping the goods to the customer in country B, while the platform
orchestrates only the sale. Figures 2, 3, and 4 highlight the different options (Wang et al.,
2015).

Figure 4: Supply Chain of CBEC with the platform acting as an intermediary (Wang et
al., 2015).

16
Summarized, Wang et al. (2015) identifies several types of CBEC and suggests that it
needs fewer distributors and, therefore, a shorter supply chain than traditional exporting
methods.

Further publications in the area research drivers of CBEC, motivations for selecting
CBEC as a foreign market entry mode, and problems of CBEC. Drivers of CBEC have
been studied by Cassia & Magno (2021) technologically. They find that IT capabilities
positively influence CBEC and even suggest that companies with low IT capabilities can
profit from third-party platforms. He et al. (2021) focuses on logistic drivers. Their study
investigates the interdependence between international logistics and CBEC. Findings
suggest that international logistics and its infrastructures positively influence CBEC in
the long run while also implicating that developing countries, due to their worse
infrastructure networks, have a more challenging time implementing CBEC. A study by
Gomez-Herrera et al. (2014) reveals that online payment systems seem to be an essential
driver of CBEC. While cheaper solutions like PayPal boost CBEC, costly procedures such
as cash on delivery hinder it. The study points out that payment systems are critical to
customers, while shipping costs don’t have a significant influence.
Motivations, researched by Qi et al. (2020), are connected to the role of platforms as
intermediaries and their influence on the supply chain. The author's outline, those
transaction costs are lowered for companies that use CBEC through the involvement of
E-Commerce platforms. As a second motivation, the authors state that trust is an
important driver since E-Commerce platforms have already established a high level of
trust with their customers. Companies conducting CBEC can profit from that.
However, the authors also underline the influence of governmental policies around
CBEC, which can be a problem. The study of Giuffrida et al. (2021) presents similar
findings regarding governmental policies. Their study focuses on risks around CBEC in
China and states that current laws are unclear and changing, including uncertainty for
foreign companies. Besides that, expectations of foreign customers involve a degree of
uncertainty since companies do not know if they can live up to the delivery and service
expectations of foreign customers. As a last point, the emerging popularity of CBEC can
include many new competitors influencing the risk of companies engaging in CBEC.

17
2.4 E-Commerce in Nigeria
The following chapter will introduce the reader to the current situation of E-Commerce
in Nigeria, starting with the development and current state of E-Commerce in Nigeria.
After that, challenges will be highlighted.

2.4.1 Development of E-Commerce in Nigeria

Beginning and Evolution of E-Commerce in Nigeria

While E-Commerce has consistently developed rapidly in industrialized countries from
1995 onwards, it initially played a subordinate role in Nigeria. By 1999, there were only
200,000 internet users in Nigeria (The Ministry Of Communication Technology, 2012),
representing 0.16% of the population (WorldData, 2022). To counteract this, the Nigerian
government has developed various policies. Among others, the National Technology
Policy in 2000, which had the vision “to make Nigeria an IT capable country” (Federal
Republic of Nigeria, 2001, p. iii) in Africa and a key player in the Information Society by
the year 2005, using IT as the engine for sustainable development and global
competitiveness. The goal was to incorporate this IT development into five different
areas: education, wealth creation, poverty eradication, job creation, and global
competitiveness. Government-coordinated programs, such as the State Information
Infrastructure (SII), were then responsible for ensuring that the goals were met (Federal
Republic of Nigeria, 2001). Following the National Technology Policy, the National
Information Technology Development Agency was founded in 2007, taking up the goals
of the previous policy. The agency was also responsible for developing guidelines for the
internet and promoting its nationwide use (NITDA, 2007). The policy shift in the Nigerian
government towards large-scale implementation of internet access and automated
operations has increased the number of internet users to 23.48% by 2010. Due to the rapid
development of the internet during this period, the government decided to adopt the
National Information Communication Technology (ICT) policy (2012), which aimed to
transform Nigeria into one of the top 20 economies worldwide in the long term (The
Ministry Of Communication Technology, 2012). In 2010, despite a significant rise in
internet usage, Nigeria was still considered underdeveloped compared to other countries.
The penetration of internet access was nowhere near as high as in other countries (Ojiako
et al., 2012). The Nigeria Vision 2020 also states that digitalization, including E-

18
Commerce, was still at the beginning of its development (National Planning Commission,
2009). The United Nations Conference on Trade and Development (UNCTAD) confirm
this by showing that in 2013 E-Commerce retail sales accounted for significantly less
than 1% of store-based retail sales. Nigeria was only ranked 101 in the 2014 UNCTAD
B2C E-Commerce Index, which comprises mail accounts, credit card owners, internet
users, and secure servers, while internet users, at 32.9%, still rank above most African
countries. This ranking could be related to the fact that the ICT policy was not fully
implemented until 2014, and so far, laws on cybercrime and consumer protection have
been drafted but have not yet passed (UNCTAD, 2015). Despite these behavioral scores,
Gillwald et al. (2018) highlight that Nigeria is among the continent’s leaders in ICT,
trailing only South Africa in internet penetration. Yet they also say that at 29%, internet
user penetration has weakened or even declined in recent years. This 29%, primarily
comprised of the younger generation, uses the internet mainly for social media and
educational purposes, not E-Commerce. Giving small businesses very little incentive to
expand online, which is reflected in only 5% of internet-enabled small businesses. To
overcome the fear of fraud using E-Commerce and increase user rates, the government
implemented the Cybercrime Law in 2015, which has the purpose of counteracting online
scams (Igwe et al., 2020).

Current situation of E-Commerce in Nigeria

Years of adjustments are now slowly producing results. Due to the steady investment in
the ICT sector in Nigeria, the number of internet users is constantly increasing. One ICT
investment is the implementation of broadband, which is becoming more and more
available in Nigeria. In addition, the government is increasingly implementing e-
government services, leading to people becoming more familiar with the E-Commerce
world and using it more frequently in their private lives. This allows promotion of the E-
Commerce sector and achieving valuable long-term economic benefits. The first results
can already be seen, as the number of online marketplaces such as Jumia or Konga has
increased enormously in recent years (Ibam et al., 2018). This development has made
Nigeria a center of innovation for E-Commerce on the African continent, and they are
currently a pioneer (Igwe et al., 2020).
Nevertheless, constant change persists in Nigeria’s E-Commerce sector. A large
proportion of E-Commerce users are still from the younger generations. Meaning, the

19
market in 2020 primarily revolved around health & beauty (23%), airlines & hotels
(22%), and electrical goods (17%). Showing that everyday items are still mostly sold
offline, while the E-Commerce market focuses on luxury goods (Sasu, 2022b). Regarding
the total population, the share of online shoppers in Nigeria is around 26% in 2020
(EcommerceDB, 2021), and the internet penetration is about 50% (Sasu, 2021). So, a little
over 50% of inhabitants with access to the internet have also shopped online.

Covid-19 hit Nigeria much more severely than other global economies, leading to a
recession. Many companies had to close temporarily due to governmental restrictions.
Only 15% of businesses questioned for the study of the United Nations Development
Programme (2021) have expanded during this time. They state they have only managed
to do this through the advanced implementation of their E-Commerce offerings, which
shows that E-Commerce has kept the economy in Nigeria alive. Kemp (2022) backs this
up by pointing out an increase of 4.6% in internet penetration and 39% in internet speed
in the last year.
Furthermore, the study reveals that among the top 20 websites visited in Nigeria are the
two major online marketplaces, Konga (10th place, 4.8 million unique users) & Jumia
(18th place, 1.95 million unique users). Showing how vital E-Commerce sites have
become for internet users (Kemp, 2022), which is also reflected in the increasing number
of researchers who have been tackling the E-Commerce issue in Nigeria over the last
years. Such as Ejemeyovwi et al. (2019), Okolie & Ojomo (2020), Sasu (2022) and Ayo
et al. (2011).

Future of E-Commerce in Nigeria

Due to the increasing number of internet users and, consequently, E-Commerce users, the
country of Nigeria holds very great opportunities and possibilities in the development of
E-Commerce. There are even more excellent development opportunities here than in
industrialized countries, as the potential of E-Commerce has by no means been fully
exploited. Co-CEO of Konga, Nnamdi Ekeh, supports the extreme projected development
in Africa, saying that "eCommerce in Africa is set to take off to unprecedented heights in
the next decades" (Forbes Africa, 2022, p. 9). According to calculations, they will have
an increase in internet penetration of more than 1.5% per year and thus be close to the
60% mark in 2026 (Johnson, 2021). The government of Nigeria has ambitious goals too,

20
as they want to increase their E-Commerce spending from $12 billion in 2021 to $75
billion by 2025 (International Trade Administration, 2021b). This gives Nigeria an
advantage over other countries in Africa because, according to research, E-Commerce
can evolve faster in countries with higher internet penetration and technology than in
countries with minor technological resources (Zatonatska et al., 2019). This lead is
already clearly visible in the "cashless economic transformation" (Forbes Africa, 2022,
p. 26), where Nigeria pioneers with its digital currency E-Naira in Africa (Forbes Africa,
2022). This regional advantage they have in (Sub-Saharan)-Africa will give Nigeria even
more influence in the continent's economy, including E-Commerce (National Intelligence
Council, 2021). However, this influence also furthers economic relations and pushes
neighboring countries forward in their development. For example, the West Africa
Telecommunication Regulators Assembly (WATRA), which Nigeria chairs, aims to grow
ICT standards exponentially in all participating countries (Nigerian Communication
Commission, 2021).

2.4.2 Challenges of E-Commerce in Nigeria

In order to build a successful E-Commerce business, certain conditions must be met.

Especially in developing countries, these conditions can be hard to achieve. As societies
have evolved differently than industrialized countries, additional challenges arise when
implementing E-Commerce in developing countries.
In the following, attention is drawn to the challenges that generally exist when
implementing E-Commerce. Afterwards, the particular challenges in Nigeria will be
outlined.

Challenges of E-Commerce in general

Challenge Literature
1 Lack of international Infrastructure (Choshin & Ghaffari, 2017; Schneider,
2016)
2 Confidence (Schneider, 2016)
3 Legal barriers (Schneider, 2016)
4 Cultural barriers (Schneider, 2016)

21
 5 Security/ Risk (Lawal & Ogbu, 2015; Lawrence & Tar,
2010; Sharma & Lijuan, 2014)
6 Cost prediction (Schneider, 2016)
Table 5: Challenges of E-Commerce in General

1. The biggest problem in the international developing market is reaching customers,

as they might not have the means to visit the websites due to inadequate digital
infrastructures.
2. Moreover, many people do not yet have the confidence to buy products online.
3. The legal component plays a significant role because, in some countries, legal
barriers prevent companies from trading online in the way they usually do.
4. The cultural barriers are also a challenge for E-Commerce companies, as they
must address different markets with their products and adapt their advertising and
website accordingly.
5. Security risk can be a challenge as well since uploaded data can be stolen and
misused.
6. The last challenge is cost prediction. As many E-Commerce users return the
goods, it is difficult to calculate.

Challenges of E-Commerce in Nigeria

Challenge in Nigeria Literature

1 Missing technological infrastructure (Ajao et al., 2018; Khan & Uwemi, 2018;
2 Internet infrastructure
3 High (implementation) Costs
4 Unsecure Payment system
5 Poorly Developed logistics
6 Security
7 Lack of privacy
8 Customer Satisfaction
Lawrence & Tar, 2010; Rabiu et al., 2019)
(Gillwald et al., 2018; Khan & Uwemi,
2018; Rabiu et al., 2019; Schneider, 2016)
(Ayo et al., 2011; Choshin & Ghaffari,
2017; Gillwald et al., 2018; Lawal &
Ogbu, 2015; Lawrence & Tar, 2010;
Nejadirani et al., 2011)
(Ayo et al., 2011; Khan & Uwemi, 2018;
Lawrence & Tar, 2010; Rabiu et al., 2019)
(Lawrence & Tar, 2010)
(Ayo et al., 2011; Ibam et al., 2018; Igwe
et al., 2020; Khan & Uwemi, 2018)
(Khan & Uwemi, 2018; Lawal & Ogbu,
2015)
(Choshin & Ghaffari, 2017)

22
 9 Lack of web site information (Ayo et al., 2011; Igwe et al., 2020)
10 Awareness & Knowledge (Choshin & Ghaffari, 2017; Lawal &
Ogbu, 2015; Rabiu et al., 2019)
11 Trust/ Confidence (Ajao et al., 2018; Igwe et al., 2020;
Lawrence & Tar, 2010; Rabiu et al., 2019;
Sharma & Erramilli, 2004)
12 Lack of trained personnel (Ajao et al., 2018)
Table 6: Challenges of E-Commerce in Nigeria

The challenges in Nigeria are much more severe making it difficult for companies to gain
a foothold in the E-Commerce market.

1. Rabiu et al. (2019) state that, especially in developing countries like Nigeria, it is
difficult to access the technological infrastructure because there is a lot of poverty
throughout the country. Therefore, not enough people have the financial resources
to buy such an internet-capable device.
2. Second, there is a lack of a stable, nationwide internet connection, which is
mandatory to carry out E-Commerce. Gillwald et al. (2018) state that there was
only an internet penetration level of 29% in 2018.
3. Gillwald et al. (2018) point out that ICT equipment for E-Commerce comes at a
cost, and since everything has to be imported, it is based on world market prices,
which are not always affordable for Nigerians.
4. The shopping process in Nigeria is not that easy either. Although much is being
created and developed in the FinTech sector, there are still problems with online
payment options in Nigeria since they are not yet completely satisfactory and have
significant gaps.
5. Moreover, logistics in rural areas are not yet at an E-Commerce capable level.
This makes it particularly difficult persuading customers to become E-Commerce
users.
6. According to the study by Khan & Uwemi (2018), security is one of the biggest
challenges companies have to overcome.
7. Furthermore, they add that this goes hand in hand with the lack of privacy of the
E-Commerce user, creating uncertainty.

23
8. In addition, E-Commerce in Nigeria has not yet developed to the point where
customers are satisfied with the service.
9. Moreover, having a poorly designed and structured website is a widespread
problem. Thus, E-Commerce is not yet perceived as the main trading option by
the public.
10. Rabiu et al. (2019) state that the lack of awareness of the population, especially in
the rural region, means that E-Commerce cannot spread so quickly.
11. The lack of trust in companies and the slow development of online payment
methods in the past also prevent market growth. Buyers are only slowly building
confidence to accept these services.
12. Ajao et al. (2018) point out that too few employees in Nigeria are capable of
operating an E-Commerce platform.

24
3 PEST Analysis - Nigeria
----------------------------------------------------------------------------------------------------------
The following section includes a PEST-Analysis of Nigeria, especially considering the
Nigerian E-Commerce landscape. The PEST-Analysis aims to gain deeper insights into
micro-and macro-economic coherences understanding their impact on entry barriers and
challenges. Furthermore, the PEST-Analysis is an integral part of building the foundation
for our data collection process.
----------------------------------------------------------------------------------------------------------
A PEST Analysis is a valuable tool to gain further insights into the macro environment
of a particular area, in this case, Nigeria. In 1967, Francis J. Aguilar invented the PEST-
Analysis, to allow for a systematic and strategic evaluation of a business area (Aguilar,
1967). Conducting a PEST-Analysis will help outline prospects, risks, and opportunities
and help better understand the area on which this study focuses. We decided to include a
PEST-Analysis to deepen the understanding of Nigeria's overall economic and E-
Commerce landscape. As a result, our qualitative research will be enhanced since we have
more profound insights into economic coherences. The scope of a PEST-Analysis
includes (The University of Sydney, 2022):
(1) P – Political factors, which focus on governmental regulations regarding the
economy as well as the political situation of the country in general
(2) E – Economic factors that impact society like economic growth or inflation.
(3) S – Social factors analyzing the social environment and include cultural and
demographical information.
(4) T – Technological factors, which relate to the technological level of the country,
including innovations, automation, and R&D, but also expand to technological
awareness.

Political Factors
Nigeria is a federal republic, and its current president is Muhammadu Buhari. Due to its
size, population, and oil reserves, Nigeria plays a central role in Africa. Nigeria’s foreign
political activities have revolved around developing Africa for a long time. In 2019
Nigeria signed the AfCFTA agreement to enhance free trade in Africa by highly reducing
tariffs on goods and allowing free access to services. In addition, Nigeria also maintains
relations outside of Africa since it’s part of the United Nations and other intercontinental

25
arrangements (MarketLine, 2022). Despite Nigeria’s foreign-policy efforts, the
Worldwide Governance Indicator, which is yearly published by the World Bank, reveals
that Nigeria still faces domestic problems regarding political stability, the government's
effectiveness, credibility, and corruption (World Bank, 2022).
Summarized, Nigeria will play a crucial role in developing E-Commerce within the
continent but still faces many domestic problems, which may hinder the infrastructure
development in the short-term (MarketLine, 2022).

Economic Factors
Nigeria’s GDP has scarcely exceeded 430 billion US$ in 2020. After the GDP
consistently averagely grew over 6 percent from 2000 to 2015, it dropped in between
2015 to 2020 due to a global oil crisis and the Covid-19 pandemic. However, after 2020
the GDP started growing again, and forecasts predict a continuous increase for the
following years. Besides that, Nigeria accounts for the largest GDP in the whole African
continent (World Bank, 2020). Nigeria’s exports closely surpass its imports, while almost
90 percent of the exported goods are oil and gas. Nigeria’s exports amount for a total
value of 53 billion US$, and it’s imports for 47 billion US$. Besides India and some
European countries, Ghana, a neighboring country of Nigeria, is one of their most
important export partners. China, which accounts for over a quarter of Nigeria’s imports,
is their key trade partner. Further imports come from India and the USA, while some
European countries like Netherlands and Belgium are also important (World Integrated
Trade Solution, 2019). As FDI constantly increased over the last decade, recently from
2.3 billion US$ in 2019 to 2.4 billion US$ in 2020, Nigeria’s key role in developing the
African continent is also acknowledged and strengthened through foreign investors
(UNCTAD, 2021b). While the development of Nigeria’s GDP and FDI implicates
economic growth, inflation and unemployment are comparably high, which is a problem
for Nigeria and other African countries (MarketLine, 2022).

The E-Commerce landscape of Nigeria offers similar bright figures. While online trade
constantly grew between 25 and 30 percent from 2015 to 2019, it was boosted by almost
40 percent in 2020 due to the international Covid-19 pandemic. Forecasts predict that this
trend is very likely to continue, and the market value of online trade in Nigeria will reach

26
1 billion US$ in 2025. The leading players in the market are E-Commerce platforms, such
as Jumia and Konga (MarketLine, 2021).

Social Factors
With over 215 million inhabitants, Nigeria is the most populated country in Africa. Most
people (over 17 million) live in Lagos. While Lagos was the capital until 1991, the
government decided to move the capital seat to Abuja due to less population density and
its central location. Nigeria has a comparably young population as the average age is 18.1
years. Unfortunately, Nigeria still faces some social and cultural challenges, as a division
between several ethnic groups and Muslims and Christians still causes problems (United
Nations Population Fund, 2022). The Human Development Index (HDI), which the
United Nations yearly calculate, ranked Nigeria in place 161 out of 189 in 2019. The HDI
measures human development and includes but is not limited to life expectancy,
education, and GNI per capita. While neighboring countries such as Niger, Chad, or Togo
are ranked even lower, the placement of Nigeria still indicates that the country faces many
challenges which hinder sustainable growth and the development of E-Commerce (United
Nations Development Programme, 2019).

Technological Factors
The leading authority for R&D, innovation, and technological development is the Federal
Ministry of Science and Technology (FMST). While the Ministry still struggles with its
R&D activities and a linkage to the private sector, the deregulation of the
telecommunication sector provided a boost for the technological infrastructure in Nigeria
(FMST, 2022). Just recently, branch banks of the FMST announced partnerships with
companies from the private sector, such as Huawei Technologies and Tizeti, which aim
to provide more than 90 % of the population with 4G and 5G internet access and educate
citizens towards a better understanding of digital skills (MarketLine, 2022). For the E-
Commerce sector in Nigeria, especially the increasing internet and mobile penetration is
essential. According to a study conducted by Kemp (2022), Nigeria had 109.2 million
internet users in January 2022, making up roughly 51 % of the total population. While
this figure steadily grew in recent years, forecasts predict a further growth over the
following years. Adding to that, the study also reveals that round about 82 % of the
population has mobile access.

27
4 Methodology and Method
----------------------------------------------------------------------------------------------------------
The methodology and method chapter introduces the underlying research approach to
lay the foundation for the research design, which includes the data collection process and
the interview design. Furthermore, the process of analyzing the data and used methods
will be described. Finally, ways to ensure the quality of the study and ethical implications
for the interviews are presented.
----------------------------------------------------------------------------------------------------------
4.1 Research Philosophy
The research philosophy is an essential concept for studying business phenomena since it
implicates how we perceive the nature of reality (ontology) and how we perceive
knowledge (epistemology). In addition, the underlying perception of reality and
knowledge directly influences the execution of our study since it guides us through
investigating our topic and indicates which methods of gathering data should be used
(Fleetwood, 2005).

As touched upon before, the underlying ontology of a study describes how reality, the
embedded truth, and facts are perceived. Different angles to reality range from realism to
nominalism. While a realistic ontology would implicate only one truth based on facts, a
nominalist ontology would implicate no truth since reality is created by individual
perceptions and therefore can’t exist without these perceptions. Besides that, Easterby-
Smith (2018) introduces internal realism and relativism as intermediary ontologies.
Relativism, the ontology used in this study, captures the angle on different perceptions
of a nominalist ontology. However, relativism assumes that there are many different
realities and truths depending on the point of view. This means that depending on
individual experiences and assumptions, reality and truth are an alterable artifact
(Easterby-Smith, 2018). We chose relativism as ontology because it allows us to
investigate different points of view on challenges regarding E-Commerce in Nigeria and
different strategies to overcome these challenges. For example, a realistic ontology
approach would look for hard facts by investigating how CBEC as a market entry mode
in Nigeria quantitively influences the firm performance by looking at critical figures like
ROI or shifting contribution margins. (Easterby-Smith, 2018). However, our study aims
to look at a bigger picture. We are not looking at only one specific challenge or strategy

28
but want to provide a broad overview of the Nigerian E-Commerce landscape from
different angles. To grasp the variety of challenges and different solution approaches, our
study needs to include experts and companies with diverse backgrounds and experiences.
Therefore, a relativist ontology is inevitable to have multiple perspectives and to be able
to create broad knowledge of the topic.

By following a relativist ontology approach, our study aligns with social constructionism
as an epistemology (Easterby-Smith, 2018). Social constructionism assumes that reality
is based on individual assumptions and experiences. Berger & Luckmann (1967) explain
this by showing how different individuals perceive freedom. While one individuum
would describe himself as free based on his understanding of what being free means and
what he has experienced, another individuum could give a different meaning to this word
and, thus, not agree with the freedom of the other one. Therefore, social constructionism
implies that researchers need to pay close attention to the assumptions and statements of
interviewees and the process of how the interviewees came to these assumptions.
Scrutinizing how the background of the interviewee and their experience influences their
reality and knowledge is inevitable to be able to make sense of our data, find coherences
and draw conclusions. Furthermore, integrating knowledge derived from previous
literature and secondary data into the gathered data will help contextualize information
(Easterby-Smith, 2018). We plan to meet these requirements by conducting open
interviews to gain deeper insights into the interviewees' backgrounds. Consequently, this
will help find coherences between different interviewees and between challenges and
strategies. Furthermore, we conducted a PEST-Analysis of Nigeria based on secondary
data, which will enable us to integrate micro and macro-economic impacts on the
Nigerian E-Commerce landscape.

The following sections will explain the coherence between our research philosophy and
our research methods, highlighting how we conducted our study and arguing for chosen
methods by integrating them into our ontology and epistemology approach.

4.2 Research Approach

The strategy and methods supporting the research differ depending on the underlying
research philosophy. Literature on management research differentiates between methods

29
fitting for a positivist study and methods providing for a study following social
constructionism. However, approaches mixing elements of positivism and
constructionism are also possible and generally referred to as mixed methods (Easterby-
Smith, 2018). Since the underlying study aligns with social constructionism, a qualitative
study approach offers the best option to gather, process, and analyze data (Creswell &
Creswell, 2018). As our RQ presupposes, our study aims to generate theory and build on
existing theory since we want to investigate E-Commerce challenges in Nigeria and
possible solution approaches. Therefore, we adopted a grounded theory (GT) approach
based on (Charmaz, 2006). The following part will dive deeper into grounded theory, its
history, and its forms while explaining why we chose the approach based on Charmaz.

Grounded Theory has its roots back in 1967 (Glaser & Strauss, 1967). Glaser & Strauss
(1967) introduce grounded theory as a method to develop theory by comparing similar
events or processes in different settings. In our case, this would mean investigating the
landscape of E-Commerce in Nigeria while including different actors in the market and
focusing on a wide range of perceptions and experiences to be able to grasp the bigger
picture and develop a broad understanding of the situation to generate theory. Glaser &
Strauss (1967) mention two main criteria for the quality of a study: First, it needs to be
analytical enough to be able to derive generalizable facts, and second, it still needs to
include a wide range of individual experiences and perceptions to make sense of
deviations in the data. Our study aims to do so by including different actors and experts
in the Nigerian E-Commerce landscape while paying close attention to individual
meanings to compare differences in the data and find overall coherences.

After Glasers’ and Strauss’ initial accordance regarding grounded theory, the authors split
up in the following years and represented different positions on conducting a grounded
theory study, which ultimately led to the emergence of a constructionist grounded theory
approach by Charmaz (Easterby-Smith, 2018). In opposition to Glaser & Strauss,
Charmaz underlines that a constructionist GT approach does not offer an “exact picture”
(Charmaz, 2006, p. 10) of the world. Instead, GT assumes that researchers are a part of
the studied phenomena and therefore include their perspectives as well as their
interviewee’s perspectives. In conclusion, derived theory from data will always have
individual meanings and experiences. Still, it is vital that researchers can compare these

30
unique points of view to generate an “interpretive portrayal of the studied world”
(Charmaz, 2006, p. 10). In addition, Charmaz underlines that GT offers guidelines rather
than explicit rules. Throughout her book, she introduces different methods which can be
used to gather and analyze data while highlighting that these methods provide supportive
options for a grounded theory approach but can be enriched by other methods. We adopt
the constructionist GT approach of Charmaz since her philosophical guidelines align with
ours. Our study aims to include a broad range of participants and experts in the Nigerian
E-Commerce market and will consequently cover different experiences and opinions. We
think that the challenges of adopting E-Commerce in Nigeria are a widespread
phenomenon and cannot be explained without considering different views. Furthermore,
strategies to overcome these challenges are diverse as well. To generate theory, we will
need to cover a broad range of strategies and explain how these strategies counter
challenges. Lastly, it is to mention that the Nigerian E-Commerce market is very dynamic.
Therefore, it is almost impossible to portray an ”exact picture” (Charmaz, 2006) about
strategies, challenges, and benefits since they are changing at a fast pace. However, our
constructionist GT approach will be able to grasp the current dynamics and serve as an
indication for further research in the area of E-Commerce in Nigeria.

4.3 Research Design

According to Charmaz, the foundation of a good study is rich data, which is “detailed,
focused, and full” (Charmaz, 2006, p. 14). Gathered data need to obtain personal opinions
and experiences of a wide range of interviewees to find coherences and arrange the whole
data set in structures, explaining the underlying phenomena. Researchers have different
options for gathering data, including own observations, interviews, and secondary data.
Mixing different approaches can enable researchers to broaden their understanding of the
topic and better understand different angles and perceptions (Charmaz, 2006).
We decided to use semi-structured interviews as the primary data source for our study
because the best-fitting interviews for GT are open-ended, briefly structured, and
unrestricted. Therefore, these interviews help grasp individual influences and perceptions
and are the most explorative (Charmaz, 2006). Semi-structured interviews fulfill this
purpose because the interviewers only determine a topic guide in advance and let the
interview develop as it goes. This technique allows the interviewee to answer broad and
open. At the same time, it also enables the interviewer to dig deeper into specific topics

31
or questions that seem interesting and essential for the study (Easterby-Smith, 2018). As
a second source of data, we will use governmental and organizational reports and statistics
to conduct a PEST-Analysis of the E-Commerce market in Nigeria. As discussed, mixing
data sources will enrichen the understanding of the topic and help us conduct superior
interviews. In conclusion, we use the PEST-Analysis combined with our literature review
to build a topic guide and to get a deeper understanding of the market. Since we as
researchers have never personally experienced E-Commerce in Nigeria, we must read
existing literature and draw on reports and statistics to fully understand the current
situation in Nigeria and our interviewees' backgrounds and perceptions.

4.3.1 Data Collection

Our initial task for our primary data was to identify interview partners who conduct E-
Commerce in Nigeria. We established contact with a consulting company focusing on the
Nigerian market and had an initial interview to identify key players in the E-Commerce
market. Furthermore, we did research via google and contacted employees and managers
of the identified companies on “LinkedIn.”

In the second step, we set up initial meetings with all experts and companies with whom
we were able to establish contact. Our main goal was to get to know each other, introduce
our topic and check if the experts/ companies were suitable for our study. In addition, we
were also looking for further contacts.

As a third step, we set the scope of our study to gain broad insights from different players
in the market. Our sampling strategy and criteria are presented in 3.3.2. Furthermore, we
designed our topic guide for the final interviews. In 3.3.3, the process of creating our topic
guide is outlined.

In the final step, we were then able to collect empirical data by conducting semi-structured
interviews. As discussed above, these open interviews enabled us to capture our
interviewees' individual experiences and opinions and allowed us to contextualize
information.

32
For our secondary data, which was needed to conduct a PEST-Analysis, we were
specifically looking for governmental reports and official statistics. Reports from
MarketLine, Datareportal, and Statista, but also insights from the homepage of the
government, the World Bank, UNCTAD, and the United Nations are included. In
addition, the consulting company was able to support us with additional sources.

4.3.2 Sampling Strategy

Since our research question aims at a specific topic, interviewees had to meet certain
criteria. Our main criteria revolved around the expertise of interviewees in the Nigerian
E-Commerce market. Therefore, interviewees either had to be an expert in the area by
working for consulting companies or providing services for players in the Nigerian E-
Commerce market, such as payment or logistic functionalities, or interviewees had to be
an employee or executives of a key player in the market with sufficient experience.
According to Easterby-Smith (2018), this sampling strategy is called purposive
sampling since only interviewees who meet the criteria are included. In addition, we
deployed snowball sampling, which means that we asked our initial interview partners
for further contacts. This was particularly helpful because we initially established contact
with one of the biggest players in the E-Commerce sector in Nigeria, and they referred us
to further contacts. While we reached ten of our interviewees through the consulting
company and our research, we got another three through snowball sampling. As both of
our sampling strategies are non-probability sampling designs, meaning that the
likelihood of each respective of the population in the sample being included cannot be
known, we needed to focus on two factors to assure the validity of our study. First, we
had to ensure that our research was as generalizable and representative as possible.
Therefore, we included a broad range of interviewees with different experiences. Second,
we needed to reduce bias as much as possible. Thus, we only had short initial meetings,
and besides that, we did not know the interview partners before (Easterby-Smith, 2018).

4.3.3 Interview Design

As our underlying research philosophy assumes, researchers should have a certain degree
of knowledge in order to conduct relevant interviews. Hence, we used derived knowledge
from the literature review and the PEST-Analysis to build our guidelines for the
interviews (Charmaz, 2006). We did not pre-formulate specific questions but instead

33
designed a topic guide with seven categories to conduct semi-structured interviews for
previously outlined reasons (Easterby-Smith, 2018). The categories are shown in the
following section:
(1) Background information (personal background and background of the company)
(2) E-Commerce in Nigeria
(3) Challenges
(4) Entry strategies
(5) Solutions
(6) Prospects
(7) Concluding remarks
The first two categories were explicitly designed to gather information about the
interviewees' backgrounds while also contextualizing their backgrounds with their
perception of E-Commerce in Nigeria. Since we had interview partners from different
players and service providers in the Nigerian E-Commerce market, it was important for
us to understand what exactly they are doing and how they perceive E-Commerce to
compare different points of view. Categories three, four, and five formed the central part
of the interview. First, our goal was to compare the knowledge we already had about
challenges from our previous research with the information from experts. Besides that,
we also aimed to deepen our understanding of why these challenges exist to grasp solution
approaches better. Categories four and five were the research parts, where new knowledge
was derived. We explored how different players in the market approached entry barriers
but also how they developed afterwards and managed other challenges. As different
interviewees had expertise in different fields, we focused on their specific areas. We used
the laddering technique to dive deeper into interesting fields to gain insights for our
research (Easterby-Smith, 2018). Category six was designed to investigate the future of
E-Commerce in Nigeria. Since E-Commerce is still in a developing phase, the landscape
is dynamic and likely to change. Therefore, new challenges and new opportunities will
be involved in the future. Since all our interviewees had years of experience in the E-
Commerce landscape, the gathered information was interesting and important for future
research in the area. Lastly, we wrapped up the interview by giving interviewees the
opportunity to add information they thought we missed. Besides that, we asked them for
possible exciting questions for our subsequent interviews to improve our research

34
strategy. In addition, we reviewed our interviews by going through the recordings to
enhance our skills and learn from our mistakes.

We had 13 interviews, which lasted between 30 and 90 minutes. In the following figure,
an overview of all interviews can be seen:

Case/ Interviewee Position Company Date of Length

Expert (INT) Type Interview in min
Case 1 Int 1 CEO E-Commerce 08.04.22 40
Company
Case 1 Int 2 Employee E-Commerce 11.04.22 52
Company
Case 2 Int 3 Head of E-Commerce 12.04.22 66
Sales Company
Case 3 Int 4 CEO FinTech 12.04.22 44
Company
Case 4 Int 5 CEO E-Commerce 12.04.22 37
Company
Case 5 Int 6 CEO E-Commerce 13.04.22 63
Company
Case 6 Int 7 CEO E-Commerce 14.04.22 58
Company
Case 7 Int 8 Expert Expert 14.04.22 31
Case 8 Int 9 CEO E-Commerce 15.04.22 33
Company
Case 9 Int 10 Former Logistic 21.04.22 43
CEO Company
Case 10 Int 11 CEO E-Commerce 21.04.22 88
Company
Case 11 Int 12 Expert Expert 31.04.22 32
Case 12 Int 13 Employee Logistic 03.05.22 54
Company
Table 7: Overview of Interviews

In total, the interviews resulted in 641 minutes of raw data. By including interviewees
from different sectors and standpoints, we ensured that the data was multilateral. This
also ensured that each interview yielded new results to some degree and that our data
collection process was not saturated after the first couple of interviews. In conclusion, our
data collection process successfully managed to grasp different angles of the E-
Commerce sector in Nigeria. In section 4.4, our data analysis process is outlined to
explain how the results were generated.

35
4.3.4 Qualitative and ethical implications
Due to the distance between our country of origin and Nigeria and the recent Covid-19
pandemic, interviews were conducted remotely via Zoom. All interviews were held in
English, recorded, transcribed, and reviewed. All our interview partners agreed to the
recording. Reviewing our interviews enabled us to spot expressions that might have been
overseen during the interview itself. In addition it enabled us to critically review the
interview quality. Identified weaknesses were improved for the following interviews.
While remote interviews offer more flexibility and demand less commitment, they might
also lack depth and non-verbal communication (Easterby-Smith, 2018). Hence, we
decided to turn our cameras on and record the sound and the video of each interview to
grasp non-verbal communication if our interview partners permitted us to do so.

Besides adopting the recommendations to ensure the quality of a qualitative study

introduced by Guba (1981), which are outlined in 4.5, we especially paid attention to the
six concerns of conducting interviews presented by Easterby-Smith (2018):
(1) Obtaining Trust – can be difficult when the interview partners haven’t met
before. However, trust is an essential intermediary for an open discussion.
Therefore, we ensured that the initial meetings were well prepared and that our
interview partners had a good feeling for the actual interview. Furthermore, we
highlighted the anonymity of our study to provide a safe space.
(2) Social Interaction – goes hand in hand with obtaining trust and influences the
scope and the level of detail of obtained answers. Consequently, we focused on
making an excellent first impression and kept a comfortable atmosphere during
the interviews.
(3) Appropriate attitude and language – are critical when interacting with other
cultures. Therefore, we contacted people living in Nigeria and learned about their
culture before conducting interviews. This helped us to conduct professional
interviews, avoid judgment and be respectful.
(4) Getting Access – is about establishing contact with possible interviewees. The
first contact must be polite and appropriate. Therefore, we paid special attention
to adequately introducing ourselves and our topic. Besides that, we underlined
that any kind of help is helpful and appreciated.

36
 (5) The Location of the interview – always needs to be adapted to the interview
partners’ wishes. Since we only conducted interviews remotely, we took care of
that by letting our interview partner decide the time and date.
(6) Recording interviews – is inevitable for reviewing interviews and transcriptions.
However, it might lead to concerns for the interview partners. To oppose
concerns, we prepared a confidentiality agreement (Appendix 1) and highlighted
the data security in the beginning.

In addition to sustaining a high quality of our interviews, we also complied with the
eleven key principles outlined by Bell & Bryman (2007) to protect the interests of our
interview partners:
(1) Harm to Participants – The physical and psychological well-being of
participants needs to be ensured at any time. We assured that by creating a
respectful and comfortable interview environment and underlining that
interviewees don’t need to answer questions if they don’t want to. Furthermore,
we emphasized that our partners could speak freely, and all data would be
anonymized.
(2) Dignity – The dignity of participants is untouchable. Therefore, we avoided
discomfort by using language which is easy to understand and stopped digging
deeper into topics that we recognized felt uncomfortable for our interview
partners.
(3) Informed consent – As seen in Appendix 1, we created a GDPR consent form to
inform participants of their rights and about the procedure, the topic, and the scope
of the study.
(4) Privacy – To protect the privacy of participants, we never included personal
information such as name or age. Moreover, we stored interviews and recordings
in a safe space to avoid data leaks.
(5) Confidentiality – If confidential data relating to individuals or organizations was
shared, we anonymized it or did not include it in our study to maintain the integrity
of our participants.
(6) Anonymization – Connecting to the previous points, we did not and will not share
personal information or confidential data with third parties and anonymized every
information we got.

37
 (7) Deception – To avoid deception, we were transparent about the whole process
and shared important information with participants beforehand. Besides that, we
answered all questions from participants and were clear about our intentions.
(8) Affiliation – Our participants were informed that we conducted our study for our
final master thesis. Any sponsoring or funding did not happen.
(9) Honesty and Transparency – As stated before, we shared intentions with all
participants before the interviews. Since transparency is an important topic and
our master thesis will be published within our university, we also offered to write
a business report in the end, which summarizes our work and might help our
participants to gain further insights about E-Commerce in Nigeria.
(10) Reciprocity – Besides the business report, which we offered to hand out to
participants, we also offered to help with any upcoming questions.
(11) Misinterpretation – Since the interviews were always conducted in English,
which rarely was the mother tongue of either the participants or us, we made sure
to ask straightforward questions and clarify our understandings if necessary. In
addition, we always conducted and revised interviews with both researchers to
have two opinions and avoid misunderstandings.

4.4 Data Analysis

Based on our research approach and how we designed the data collection process, we
chose Grounded Analysis by Charmaz (2006) to analyze our data. While there are
several ways to analyze qualitative data, grounded analysis allows for an open approach,
which helps frame a broad range of data. Furthermore, grounded analysis and this study
aim to derive theory from the data (Easterby-Smith, 2018). Our data analysis process
consisted of the following steps:
(1) First, we familiarized ourselves with the data. We transcribed every interview
using the software “Descript” and then listened through the interview again to
adjust the results. We highlighted key phrases and reviewed the scope and aim of
our study to interiorize what we are looking for (Easterby-Smith, 2018).
(2) As suggested by Charmaz, grounded analysis should at least include two rounds
of coding. The initial coding process was done separately to lay a foundation of
codes, which we then explored deeper in a second step. We explicitly decided to
code separately in the beginning, to reduce our bias and find coherent categories,

38
 which are important for our research question. We used line-by-line coding in our
initial coding stage since our data consisted of personal experiences and
constituted problems, processes, and solutions. Using line-by-line coding helped
us be open to the data and find categories and coherences emerging from the data.
After both of us finished coding separately, we compared our codes and embedded
them in an initial frame. As a result, we defined 72 initial codes, which were then
used for the second coding stage (Charmaz, 2006).
(3) In the second stage, we applied focused coding, meaning that we compared
derived codes with our data to see which codes were most representative and
significant. This process facilitated analyzing the large amount of data and
allowed us to condense different chunks of data. In conclusion, we defined 29
final codes. Ultimately, we embedded these codes in three superordinate
categories (Charmaz, 2006). In Appendix 2, an overview of example quotes,
related codes, and categories will be given.
(4) Throughout the coding process, memo-writing helped us gather our thoughts
about the codes and to embed these codes into a framework. After each coding
stage, we used our memos to extrapolate categories from the codes and
conceptualize them, building the foundation for our final framework. We used this
framework to point our coherences between different processes, problems, and
solutions.

In addition, we constantly challenged our findings. We reworked our frameworks and

codes, which allowed us to embed the findings presented in the initial framework into a
final framework to answer our RQ. Conducting two stages of coding, using the help of
memos, and constantly challenging our findings enabled us to discard unempirical
coherences and focus on the key categories to build new substantial theory about E-
Commerce in Nigeria.

4.5 Research Quality

Rich data is inevitable for a qualitative study. Compared to quantitative research, where
statistically proven data is critical, qualitative studies aim to grasp authentic experiences
and plausible explanations (Easterby-Smith, 2018). Hence, in addition to the previously
mentioned steps, which avoid bias, encourage open communication, and foster data that

39
contains a broad spectrum of personal experiences and opinions, we applied Guba’s
guidelines to guarantee the quality and trustworthiness of our study. Guba (1981) suggests
four criteria that need to be fulfilled to achieve trustworthiness: Credibility,
Transferability, Dependability, and Confirmability.

To ensure the Credibility of a study, Guba (1981) suggests the process of triangulation
and extended engagement, and structural coherence. Triangulation refers to a variety of
data sources, different investigators, and perspectives while also cross-checking data. We
adopted triangulation by using primary and secondary data, including participants with
different backgrounds, and conducting research with two researchers. Furthermore, we
used the laddering technique to gain deeper insights into certain topics and avoid
misunderstandings (Easterby-Smith, 2018). To extend our engagement and knowledge
about Nigeria, we contacted Nigerian citizens who were not included in the study. This
helped us train our perceptions and reduce bias by learning about the culture and
traditions. Lastly, our analysis approach assumes that we analyze data against each other
and embed findings in a bigger picture while establishing coherences.

Transferability is especially important for qualitative studies since qualitative studies do

not aim to develop a “hard truth” but rather contextualize experiences and statements to
develop applicable and generalizable theory (Guba, 1981). We assured that the gathered
data is connected to our RQ by applying purposive sampling. Additionally, our sampling
strategy aimed to extend the range of information and include different backgrounds.
Furthermore, semi-structured interviews helped to collect rich data.

Dependability, thus the stability of data, can be achieved by overlapping methods or

stepwise replication (Guba, 1981). To meet this criterion, we split the data analysis evenly
while still setting daily meetings to discuss findings and next steps like reworking our
topic guide based on empirical findings. We also conducted a PEST-Analysis as a second
method to form our interviews and conceptualize information.

Confirmability goes hand in hand with the credibility of a study and refers to arguing for
your research and proving its consistency (Guba, 1981). While triangulation is one way
of demonstrating the consistency, another is the logical explanation of underlying

40
philosophical stances and resulting methods. As extensively discussed in previous
chapters, we put much effort into arguing for our underlying research philosophy, our
used methods, and how we assure the quality of the study. Therefore, the logical
explanation is already done.

41
5 Empirical Findings
----------------------------------------------------------------------------------------------------------
Based on our data analysis described in the previous part, we built an initial framework
to categorize and present our findings. The following part aims to introduce the findings
to the reader while also underlining coherences to previous research.
----------------------------------------------------------------------------------------------------------
As discussed in Chapter 4.4, our data analysis resulted in 29 final codes, which we further
divided into three main categories. We used these categories to build an initial framework
to present our findings regarding the underlying RQ:

What are current challenges in the Nigerian E-Commerce landscape, and which
strategies can companies adopt to overcome them?

Figure 5: Initial Framework to present Findings

As seen in figure 5, the first category evolves around the Status Quo of E-Commerce in
Nigeria (5.1). While our literature review already touched upon the market development
and prospects, our data analysis allowed for further insights from experts regarding the
influence of Covid-19 and the market potential. In addition, our findings integrate
distribution channels and the impact of CBEC in the current Nigerian E-Commerce
landscape. Even though these findings are not directly included in our RQ, they are the
foundation to explain which current challenges exist and why they exist. The second
category, Challenges of E-Commerce in Nigeria (5.2), will draw on the challenges
outlined in the literature review and expand them. Lastly, the category Solutions (5.3)

42
will present the empirical findings of our research regarding the strategy’s companies can
use to overcome the barriers and challenges. Furthermore, we will contextualize our
findings with knowledge derived from previous literature and the PEST-Analysis to point
out coherences and differences. Finally, our analysis section will integrate our
presuppositions to build a final framework, contextualizing our findings to answer the
underlying RQ.

5.1 Status Quo

The following findings aim to enrichen previous knowledge regarding the current
situation of E-Commerce in Nigeria, highlight the importance of certain distribution
channels, and integrate the influence of CBEC on Nigeria.

Figure 6: Initial Framework - Status Quo

5.1.1 E-Commerce Development and Prospects

Market reports by Kemp (2022) or MarketLine (2021) used for the PEST-Analysis
already revealed that even though Nigeria’s economy took a severe hit from the global
Covid-19 pandemic, the E-Commerce sector benefited from it. The study by the United
Nations Development Program (2021) even states that E-Commerce was the last lifeline
for many companies in Nigeria after the pandemic started. In line with this, our
interviewees underline the impact Covid-19 had on their business activities.

43
 “Covid had a huge impact on the E-Commerce sector” – INT2

“As soon as the pandemic started, E-Commerce got a huge boost” – INT10

However, besides the short-term impacts directly related to the lockdown, Covid-19 also
had a sustainable influence on the development of E-Commerce. As many people still
lack technological education and knowledge regarding the use of E-Commerce (Choshin
& Ghaffari, 2017; Lawal & Ogbu, 2015; Rabiu et al., 2019), Covid-19 served as a major
driver in introducing E-Commerce to a wide range of the Nigerian population.

“People are still having issues with education about technology and thanks to Covid
education already got better, but there is still much work to do.” – INT9

“Covid made E-Commerce more appealing and more realistic to common Nigerians
[...]” – INT7

“Covid educated the population in the way, that it showed how convenient online
shopping can be” – INT1

Concluding, the restrictions during the pandemic played a major part in catalyzing the E-
Commerce environment in Nigeria. Even though Covid-19 caused a recess in Nigeria’s
economic situation, E-Commerce solutions helped overcome this recess.

“[...] E-Commerce offers the solution to offset the losses caused by the pandemic and
boost domestic and foreign trade again” – INT3

Connecting to that part, our introduction already showed that developing countries,
particularly Nigeria, have a massive potential if E-Commerce can thrive. Due to their
already well-established internet- and mobile penetration, Nigeria offers tremendous E-
Commerce opportunities and will play a crucial part in developing the whole continent
(Forbes Africa, 2022; National Intelligence Council, 2021). Our interviews with experts
and C-Level executives confirm this.

44
“Let's not forgets what the Chinese say, there are no fishes in clear waters. If you want
to catch fish, look for the dirty ones. And Nigeria is such a dirty water.” – INT7

“Especially with all the new and innovative start-ups, I see a great future for the
Nigerian E-Commerce market.” – INT8

Reasons for that potential especially evolve around the size of Nigeria’s population, its
comparably young age, and the rise of the middle class. Furthermore, even with the rising
competition, there is still enough space for additional players.

“With the growing middle class, the coming generations will have increased purchasing
power, which will ultimately increase E-Commerce” – INT1

“[...] companies should not need to worry about competition, because the market is far
from saturated” – INT10

Another factor influencing the adoption of E-Commerce in Nigeria is that customers, due
to much traffic in bigger cities, need hours to shop and are looking for alternative
solutions. Summarizing, Nigeria offers promising opportunities, and even with the
development in recent years, E-Commerce in Nigeria is still in the wings:

“If you want to go anywhere in Lagos, you are stuck in traffic for several hours” – INT2

“[...]only a comparably small share uses E-Commerce. Imagine what happens if this
number grows to 95%” – INT7

5.1.2 Distribution Channels

As seen in market reports by MarketLine (2021) and Kemp (2022), the leading E-
Commerce players in the Nigerian market are online marketplaces, where vendors can
offer and sell their products. Our interviews reveal that these marketplaces are popular
because they allow vendors to save time and money while connecting buyers and sellers
to facilitate the whole trading process.

45
 “Vendors see convenience in using the service of online marketplaces [...], because
marketplaces enable vendors to grow their business [...]” – INT1

“With E-Commerce vendors can reduce time and cost consuming tasks, which barely
add value and focus on their core business” – INT2

“We give vendors the opportunity to easily connect with buyers and sell their products”
– INT5

Thus, E-Commerce platforms mainly act as an intermediary for the market because they
only offer the service, control the logistics and help with the payment process, which adds
value for all parties. In addition, marketplaces tremendously lower the entry barriers for
vendors, which includes that transactions on e-commerce platforms are mostly B2C.

“We mostly don’t own the items. We offer the service and control the logistics and
payment processes” – INT6

“We mainly sell our products via E-Commerce platforms [...]. This allows for an easy
market entrée [...]” – INT3

“B2B is rare on platforms. It only takes place if our partners find good offers on a
platform” – INT3

While offline trade still plays a significant role in Nigeria in certain market segments,
other segments thrive from E-Commerce because many physical stores are often out of
stock. In addition, there is a lack of information, especially regarding electronic and
fashion products.

“Most of the people in Nigeria still prefer buying groceries in a physical store” – INT4

“It is difficult to find out if shops have a certain product. Often you go there, and they
don’t have the phone or the suit you are looking for.” – INT1

46
Yet, even in segments where offline trade has a significant market share, companies have
started using E-Commerce as a further distribution channel. Furthermore, physical stores
might have the opportunity to integrate into the distribution chain of E-Commerce,
combining offline and online trade.

“Companies start conducting E-Commerce, because it offers further distribution

opportunities” – INT3

“I think small supermarkets will not vanish, but they will be more likely to [...] facilitate
the distribution chain in Nigeria” – INT7

Besides B2C transactions on E-Commerce platforms, C2C plays a massive part in

Nigeria’s E-Commerce landscape. Small merchants often use social media services such
as WhatsApp or Instagram to sell their goods, capturing a big part of E-Commerce in
Nigeria. This is also why there are so many different vendors in the market.

“[...] C2C transactions on social media make up for a big part of the market volume” –
INT6

“A lot of people sell goods on social media right now. Especially on Instagram” – INT4

By selling goods on social media, vendors aim to increase their customer range, but there
are also no fees included, which lowers entry barriers even more. Moreover, vendors have
complete control over their products on social media while deciding how to sell and how
to ship them. However, companies wanting to sell their products in Nigeria mostly don’t
consider social media vendors because it is unofficial and connected with credibility risks.

“People use social media E-Commerce and marketplaces at the same time, to reach
more customers” – INT4

“Many people launched social media businesses [...], because there are no barriers and
fees” – INT8

47
“Vendors like control. That is why they start to prefer selling goods via social media” –
INT13

“We also thought about using social media merchants to sell our goods [...], but that is
quite unofficial, it’s hard to connect with them and our credibility might suffer” – INT3

5.1.3 Cross-Border E-Commerce

As outlined before, Nigeria is highly dependent on cross-border trade since they import a
wide range of goods. While more than 25 % of those goods come from China, Europe, or
India, some neighboring African countries also play a vital role (World Integrated Trade
Solution, 2019). In accordance with that, our interviews reveal that China plays an
important role in cross-border trade due to its manufacturing power. However, European
countries and the USA are also important trade partners because Nigerians tend to identify
with products from these regions.

“There is a huge appetite for foreign products. Today, I would say 70 % on our
platform are foreign products” – INT11

“China is very important to us, because they have factories with more workforce and
cheaper prices there“ – INT9

“Building good connections with the supply chain in China is crucial” – INT7

“Culturally Nigeria is influenced by Europe and USA. So, most of the fashion will still
come from those regions. While other products [...] come from [China]” – INT13

“Nigeria is influenced by European countries and the US a lot [...]” – INT3

In sum, E-Commerce platforms in Nigeria are aware of the advantages CBEC can have
and try to partner with foreign companies.

“CBEC will be the future, because it facilitates access to new markets without having to
pass that much third parties like distributors etc.” – INT12

48
 “We aim to connect foreign companies into our platform to move goods smoothly and
profit from the advantages of CBEC” – INT9

However, as already underlined by He et al. (2021), developing countries face challenges

conducting CBEC due to worse infrastructures. Our research encounter similar findings.
Especially domestic logistics are a challenge for the whole distribution chain in CBEC.
Besides, custom clearance in Nigeria is inconvenient. Nevertheless, with the development
of the AfCFTA, at least intracontinental customs clearance should work better in the
future.

“Logistics and custom clearance are a big challenge for CBEC” – INT12

The easiest part is to ship products to Nigeria. Then, custom clearance and domestic
logistics is the hard part” – INT13

“Customs clearance is also a problem for cross border trade. But I think as soon as we
move on with the AfCFTA, it will be easier and cheaper to move goods in Africa” –
INT9

As recommended in previous literature, CBEC can thrive by adopting IT capabilities from

partners (Cassia & Magno, 2021). While the authors suggest that vendors can benefit
from the capabilities of E-Commerce platforms, our research reveals that partnerships are
also beneficial for platforms in Nigeria because collaborations allow them to adopt
capabilities from their partners. Furthermore, Giuffrida et al. (2021) point out that CBEC
involves uncertainty regarding customers' expectations in foreign countries. Concerning
these expectations, our research shows that customers in Nigeria particularly want a quick
delivery. While Wang et al. (2015) introduce different options for conducting CBEC, this
indicates that warehouses in Nigeria are most suitable, as it allows for the quickest
delivery. However, leaving this decision up to the vendors increases trust and
transparency in the process and partnership.

“We are partnering with logistic companies in different countries in order to enhance
our knowledge and our capabilities.” – INT12

49
 “Quick delivery is important in Nigeria [...]. So we mostly store our products in
Nigeria“ – INT3

“Nigerian customers expect, that products reach them within a couple of days. So
mostly, our partners will store their products in warehouses in Nigeria” – INT11

“We give people the freedom of deciding which kind of CBEC they want to do. Like if
they want to have their own warehouse here, or if they just want to ship it. It’s their
decision, we will support them as good as possible with their choice“ – INT12

50
5.2 Challenges
Many challenges emerged from the 13 interviews. These will be discussed and compared
with the literature review in the following section. While the literature review exposed 12
challenges, we categorized the challenges of our research into ten sub-categories.

Figure 7: Initial Framework – Challenges

5.2.1 Cash-On-Delivery
The transaction process, which occurs when selling or buying goods, has already been
identified as a problem in the literature review. Authors such as Khan & Uwemi (2018)
state that despite the increasing development of payment solutions, online banking is still
not trustworthy enough for shoppers wanting to pay this way (Ayo et al., 2011; Khan &
Uwemi, 2018; Lawrence & Tar, 2010; Rabiu et al., 2019). The interviews confirm this
statement.

“Even though we have a lot of FinTech’s, and the industry is booming, there are still
problems compared to other countries” – INT9

“A major problem was the issue of payment systems [...]” – INT11

51
The lack of reliable online payment systems and flawed deliveries led to cash on delivery
being demanded by the customers. While cash on delivery offers an excellent way to
introduce consumers to E-Commerce, it also represents a significant risk for companies.
Return rates increased significantly due to customers just trying out the service or not
accepting the goods. These high return rates cause high expenses, preventing the
companies from operating sustainably.

„We actually do cash on delivery in all over the country“ – INT1

“People still prefer to pay cash on delivery” – INT2

“[...]mistakes with deliveries, which promoted cash on delivery even more” – INT6

“Cash on delivery is a good way to start using E-Commerce, but a huge risk for the
company” – INT2

“Cash on delivery was the monster that really wrecked all the E-Commerce companies
in Africa, because people were just testing out the services and often didn’t accept the
goods” – INT11

“You have almost 50% of it returned back to you. It doesn't make an economic sense
because you've wasted a lot of money on delivery” – INT7

5.2.2 Inflation
A further challenge connected to transactions, which was not mentioned in previous
literature, revolves around the fluctuation of currencies and inflation. Due to the fact that
the Nigerian national currency, the Naira, is volatile, major currency problems arise in
international trade, as this is conducted in US$ (MarketLine, 2022). As a result, the
fluctuation, in combination with inflation, ultimately impacted goods and services and
negatively affected their prices. While the problem of inflation is likely to accompany
Nigeria and its economy in the following years, it also influences the purchasing power
of consumers, and thus E-Commerce.

52
“Currency change is a major challenge as well, because the Naira is not stable” – INT8

“The inflation of the Naira compared to the dollar had a big impact on the Nigerian
economy” – INT2

“The fluctuation of the currency affects us a lot. So, about a year ago, compared to now
we're paying almost double for the same service, just because of the change in the
exchanges” – INT5

“Prices are increasing more than the wage, so everything is getting more expensive,
decreasing the spending’s on E-Commerce” – INT2

“One future problem comes due to the inflation especially in Africa and Nigeria.
Products are getting more expensive, and people shifted their purchasing behavior
towards the basic needs” – INT1

5.2.3 Logistic Infrastructure

As already stated by Lawrence & Tar (2010), Nigeria has difficulties in successfully
implementing a logistic solution for E-Commerce companies due to the lack of proper
infrastructure. Our findings show that poorly developed roads and the lack of an
appropriate address system complicate deliveries.

“The infrastructure still needs to be developed in order for E-Commerce to work better”
– INT13

“The roads are not very good. So sometimes you damage your goods” – INT2

“The road network infrastructure is very bad” – INT11

“Delivering goods is not easy in Nigeria. The address system doesn’t work properly, so
often there are wrong deliveries” – INT3

53
 “There is an infrastructure deficit in Nigeria like bad roads and no address system” –
INT8

5.2.4 Distribution Chain

This lack of infrastructure makes logistic processes very complex and expensive for E-
Commerce companies. Several authors already mentioned high implementation costs in
previous literature; however, they were mostly connected to setting up an online store
(Ayo et al., 2011; Choshin & Ghaffari, 2017; Gillwald et al., 2018; Lawal & Ogbu, 2015;
Lawrence & Tar, 2010; Nejadirani et al., 2011). Our research reveals that running costs,
such as logistic costs, are a further challenge. And although logistics can be partially
outsourced, there are still considerable problems with logistic security, reliability of
delivery people, and the high expectations of customers. In sum, successfully distributing
goods is a challenge consisting of different parts, causing companies high costs and time
efforts.

“It costs a lot to set up a proper logistic infrastructure” – INT5

“It´s very expensive for companies to own a logistic distribution chain” – INT8

“So, it is a challenge that costs a lot of time to plan logistics” – INT9

“Another challenge is security. So, there are some areas that are quite unsafe. So that
also is affecting our business because when customers order from that area, we have to
say sorry, we don't have the capacity to deliver to you on that area” – INT7

“Logistics can´t be 100% secure of course, people disappear with the items they were
supposed to deliver” – INT8

“The customers expectation about delivery is insanely high. In the bigger cities they
often expect you to deliver packages within the same day” – INT13

54
5.2.5 Technological Deficits
The research from the literature review revealed that the technological infrastructure, as
well as the internet infrastructure, are not fully developed in Nigeria (Ajao et al., 2018;
Khan & Uwemi, 2018; Lawrence & Tar, 2010; Rabiu et al., 2019; Schneider, 2016). Thus,
companies have problems with their data management because they struggle to adopt IT-
Capabilities. As a result, analyzing customer data and adapting the services to the
consumer's wishes is difficult. Furthermore, collaborating with third-party companies can
pose problems because APIs are missing, affecting the transparency of processes. In sum,
missing IT-Capabilities influenced internal data from customers or stocks and
complicated collaborations with FinTech or logistic third parties.

"In Africa and Nigeria, we were not ready for E-Commerce and neither was our
technology. It was very hard to adapt our IT-Capabilities to E-Commerce solutions” –
INT11

“A big problem here is that many sellers don’t have proper technology to keep track of
their stocks” – INT6

“The problem here was that this platform have very poor data management, which
didn’t really allow us to analyze KPI's and see what worked well and what didn’t” –
INT3

“However, we had challenges with the technology in logistics. Most of our partners did
not have API's we could use, so we had no transparency and visibility into what was
happening and where packages were“ – INT13

5.2.6 Lack of Market Research

Technological deficits also result in a lack of proper market research. While missing
knowledge and awareness of customers were already mentioned by authors such as
Choshin & Ghaffari (2017), Rabiu et al. (2019), and Lawal & Ogbu (2015), the
knowledge gap also impacted companies in the Nigerian E-Commerce landscape.
Insufficient resources tremendously complicated the market entry because neither
companies nor independent researchers conducted insightful studies concerning the

55
market. Thus, there was no data to build on. As a result, companies attempted to enter the
market without first conducting studies and failed when having the wrong product.

"Companies did fail, because they had the wrong timing or product" – INT8

"I feel like a lot of the companies didn't do good because we didn't have deep data" –
INT11

"I don't think we would have the resources to be able to do a lot in terms of data
analytics and R&D and the likes" – INT11

“So, if you look from what I could get assessed, there's a huge lack of data in
Nigeria. You cannot have reliable sources” – INT10

“One big problem was that there was no knowledge base that we could tap from” –
INT1

“It's listening to the customers because sometimes we think that we know it all because
we know E-Commerce very well, but we need to understand our customers also” – INT2

5.2.7 Governmental Instability

As shown in previous reports, the government in Nigeria is unstable and faces challenges
in corruption (World Bank, 2022). Our research reveals that one of the biggest fears from
companies is that the government can shut them down. Another issue is that the
government is quick to adopt policies that may not benefit businesses and customers,
while policies regarding E-Commerce in Nigeria are not consistent and transparent, which
causes problems. This leads to companies feeling neglected by politics.

“The government is unstable” – INT2

“E-Commerce has gotten to a point of no return right now, unless there's just a
government rule that says no more E-Commerce” – INT11

56
“it's tough to work with the government in Nigeria because they can decide to shut you
down. Any minute” – INT2

“In the future one big challenge will be the government, policies can change fast and it
is not always stable” – INT8

“The Government is making quick decisions, which are not always good for the
companies or the people” – INT2

“Secondly the regulations surrounding the system are not really clear. You
will wake up and you might see a total change in the room” – INT10

“We need the government to ensure that some policies are there to make us profitable”
– INT11

“We need to pay to the government for our licenses and so far, I have not seen much in
return. The government doesn’t really do much for E-Commerce companies” – INT10

“Nigeria has a governmental postal service, but their capacity is very low. They can
barely send all the letters, so E-Commerce won't work with them” – INT13

5.2.8 Trust
One of the most frequently mentioned topics in the reviewed literature are problems with
trust in E-Commerce (Ajao et al., 2018; Igwe et al., 2020; Lawrence & Tar, 2010; Rabiu
et al., 2019; Sharma & Erramilli, 2004). Our data analysis reveals that it is difficult to
gain customers' trust, as there are significant security gaps when transacting online.
Previous literature supports this position by identifying the security aspect as a problem
(Ayo et al., 2011; Ibam et al., 2018; Igwe et al., 2020; Khan & Uwemi, 2018). While
security loopholes cause much fraud on the internet, this is still most likely to occur in
C2C transactions.

“And then we have the issue of trust” – INT11

57
“One of the issues that Africa has is safety whilst transacting online. There is still a lot
of fraud and people are skeptical if you are not a mainstream company” – INT5

“The issue of fraud is most common with C2C transactions” – INT4

When security measures are finally in place and trust has been gained, it is a further
challenge to keep the trust and satisfy the customer because customers’ expectations are
pretty high. This was also noted by Choshin & Ghaffari (2017). While the literature
mentions the lack of privacy and the lack of website information as a challenge regarding
trust, our interviewees did not mention these problems (Khan & Uwemi, 2018; Lawal &
Ogbu, 2015).

“As soon as we built up trust, we need to make sure to maintain it. Because the worst
thing that you can do is to pass the wrong impression scaring customers away” – INT7

“The customer wants to buy things for a relatively affordable price, with free delivery
and with the comfort of staying at their home, which makes building trust and satisfying
them hard.” – INT10
5.2.9 Employment
Ajao et al. (2018) already highlight the lack of trained personnel as a challenge for E-
Commerce companies. The interviews support this. In addition, our research also
underlines that it is difficult to retain staff, which makes planning a complex process on
the long term.

“Even employees sometimes do not understand the marketing and selling concept of the
companies” – INT2

“The unemployment rate is high and the fluctuation on low-skilled jobs is high. They
swap jobs really fast, which makes it difficult to plan sufficiently” – INT7

5.2.10 Price Wars

While competition has not been mentioned as a challenge in previous literature explicitly
for Nigeria, Okolie & Ojoma (2020) highlight that E-Commerce ultimately leads to

58
increased competition. In conclusion, customers have a more comprehensive range of
choices and can compare prices (Khan, 2016; Khan & Uwemi, 2018; Schneider, 2016).
our findings indicate that due to the enormous price sensitivity of Nigerians, this can be
a major challenge for companies complicating the sustainability. Customers in Nigeria
have a huge range of choices because there are many vendors on E-Commerce platforms
and on the black-market. This causes companies to lower prices in order to outdo
competitors, resulting in a price war.

“Competition is also potentially a challenge because it pushes you to spend more, if you
try to offer at the cheapest price in the market” – INT2

“If you need to pay 50% more for your riders, then it becomes an issue also of
sustainability” – INT9

“The black market is big in Nigeria and hinders the growth of proper marketplaces” –
INT1

“As of now, you still have hundreds of thousands of vendors, so customers have a big
range of choice” – INT10

“Nigeria is extremely price sensitive. So, people will only buy online if they get better
prices” – INT3

“Nigerian consumers are very sensitive about price” – INT2

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5.3 Solutions
While our interviews revealed challenges, we also focused on solution approaches for
these challenges. Twelve solutions are examined in more detail in the following, but
almost no comparison can be made with the literature review, as this topic has not been
properly addressed in literature so far.

Figure 8: Initial Framework – Solutions

5.3.1 FinTech
The first solution is connected to the rising amount of FDI (UNCTAD, 2021b), which
particularly benefits FinTech companies in Nigeria. Our research shows that FinTech’s’
positively impact the E-Commerce sector in several ways. First, they facilitate internal
transactions, which save time and costs. Second, they solve the problems of cash-on-
delivery by enabling customers to pay before the goods were delivered, which drastically
lowers return rates. Third, transactions with different currencies, which previously caused
trouble, improve.

“Over the past two to three years now, most of the investments coming into Nigeria
went into the FinTech space [...]. Their innovations have helped us to become a
growing trend by easing payment” – INT7

60
“Financial solutions saved us a lot of money and time by tackling transactions with our
riders determinating how they get paid and how we get our share” – INT10

“If customers pay for products beforehand, they are almost 100% likely to also accept
the delivery” – INT4

“Delivery is now more like 98 % success rate” – INT11

“FinTech solutions actually helped with [foreign exchange]” – INT12

Besides, FinTech solutions enabled E-Commerce platforms to add further services, such
as recharging money on the phone or paying bills, to their platforms. Lastly, some
FinTech companies specialize in loans, allowing customers to pay for products at rates
after the purchase. Accordingly, this strategy increased sales of E-Commerce platforms
because customers are more likely to afford products this way. Summarized, the growth
of FinTech companies offers many solutions to problems of E-Commerce companies and
impacted the overall adoption of E-Commerce in Nigeria.

“[Blanked due to anonymization] pay, you can now also pay your utility bills or
recharge your phone“ – INT1

“Rather than cash-on-delivery we do loans. So, you can buy on our platform and take a
loan from our FinTech partner to pay the products later” – INT6

“A lot of people are borrowing money and pay things overtime. We used this strategy to
get more adoption in the market” – INT6

“The introduction of more payment’s methods actually added value and growth to E-
Commerce” – INT4

5.3.2 Integrating Offline-Stores

Customers in Nigeria expect a quick delivery. However, distribution costs and time is still
comparably high for companies (INT3) & (INT11). Besides solutions regarding the

61
infrastructure development, which is mainly connected to the government and discussed
in a later chapter, E-Commerce companies enhanced their distribution chain by
integrating pick-up stores. These pick-up stores especially eased the last mile of the
distribution chain, which is challenging due to the lack of a proper address system. Some
Platforms even set up their own stores in major cities to improve their distribution chain.

“We have some pickup stations where people can go and pick up their order” – INT2

“We partner with a couple of stores. So, if you order from our website, you have an
option to pick-up in store” – INT11

“We opened a couple of stores in major cities in Nigeria to facilitate distribution” –

INT7

5.3.3 Efficient Delivery

Nevertheless, some customers expect their orders to be delivered to their door. Therefore,
delivery companies and their agents are rewarded for quicker delivery and for delivering
packages to the door. Besides improving the speed of deliveries, companies aim to offset
the speed of delivery with free deliveries. Particularly in big cities, E-Commerce
platforms integrate their own logistic processes to offer a quicker delivery free of charge.
These logistic processes also include quality checks to ensure that goods arrive in good
condition.

“To overcome the address problem, we rely on delivery agents and give them incentives
to deliver the packages faster” – INT5

“We are actually offering free delivery, for example in Lagos” – INT2

“We have our own local riders in bigger cities to make deliveries quicker” – INT11

“Every product that is sold on is passing through our warehouses to check the quality”
– INT1

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5.3.4 Local Manufacturing
Solutions to tackle logistic problems revolve around the speed and cost of delivery,
ensuring that the product reaches the customer in an impeccable condition. A different
approach is shown by INT10, who suggests that local products can lower the costs of
distribution and the costs for the customer, which adds value for both parties and enhance
the distribution chain.

“There is a lack of manufacturing. We import a lot of goods, which automatically

increases the costs of distribution. If we want to lower the costs, we need to fill the
manufacturing gap in Nigeria and start selling more local products” – INT 10

5.3.5 Education
While the Covid-19 pandemic already played an initial role in spreading awareness
towards digital solutions and E-Commerce, there is still a lack of education regarding E-
Commerce. Thus, educating consumers is crucial for the E-Commerce sector. Companies
in Nigeria take that matter into their own hands to spread awareness and capabilities
regarding E-Commerce solutions. While some companies fell back on digital solutions,
others hired agents to educate the Nigerian population on E-Commerce. Besides
educating consumers, platforms also integrate guides and entrepreneurial schools for
vendors to conduct E-Commerce successfully.

“People need to get educated, about how E-Commerce works, and which solutions are
offered” – INT8

“The future challenge will be to get people to embrace the tech space” – INT9

“Every E-Commerce company has the aim and need to educate the consumer” – INT2

“We use agents to educate the population and introduce them to E-Commerce and the
online landscape. They will help customers placing orders on the platform” – INT1
“We not only provide the platform, but we also run a blog, a podcast, and an
entrepreneurial school to educate people about how to run online businesses” – INT9

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5.3.6 Brand Building
Marketing solutions can help build a brand and, most importantly, help build the trust of
customers and investors. Therefore, brand building is extremely important in Nigeria, as
it will help establish a good connection to the customer, which ultimately leads to trust.

“The level of trust of the population differs between the brands” – INT2

“For people to trust you, you need to be a visible brand out there or collaborate with a
known brand” – INT11

“There is also the importance of building customer connections. The big companies
already created a brand to which people are loyal to” – INT5

“Trust is not really a big factor for us, since we are a known brand” – INT1

To successfully create a brand, companies in Nigeria aim to promote their brand using
different channels. These channels, for example, include google ads, billboards, social
media, or the company’s vehicle fleet. Adopting these promotions leads to the awareness
of consumers. In conclusion, they spread information regarding the brand via mouth-to-
mouth marketing.

“That’s why we are online with promotions and with banners, to make sure we get at
least recognized and even if they don’t buy now online, they might do it offline in the
future” – INT3

“We give our drivers a uniform and bikes so that they are recognized in the streets and
also represent the brand” – INT10

“Doing a lot of marketing, via Billboards” – INT1

“We start applying some of this big radio ads and currently, we're looking to move into
Google ads” – INT5

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 “We use influencers in different countries” – INT2

“People speak more about us with their friends and family increasing the number of
customers” – INT2

5.3.7 Niche Markets

As there are already major players in the Nigerian E-Commerce landscape, building a
brand is easier in niche markets, especially for smaller companies. Thus, new E-
Commerce companies in Nigeria should ponder their available resources and choose their
market accordingly.

“It is important to find a niche in the market, especially for new companies that want to
build a brand.” – INT5

“[...]New E-Commerce companies that are looking for success in Nigeria, should be
targeting a niche market” – INT11

5.3.8 Customer Service

Besides building a recognizable brand, companies need to engage in customer service to
retain customers. This starts by building a website or an application that is easy and
intuitive to use. In addition, filling the gap in market research by doing polls or surveys
helps better understand customers and respond to their wishes.

“Besides, we are investing more in customer service” – INT7

“We are taking away all the customers pain problems. We are giving the customer a
seamless experience on the app” – INT10

“We speak with people; we organize focus groups. We do polls. We really spend a lot of
time with our customer service team to speak with the customer and we listen to them
and we attempt to understand what they want” – INT2

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“And we're always trying to get feedback from customers to ensure that we are working
on that user experience from the website to the app. It's still a work in progress for, we
constantly get feedback” – INT11

“So, the E-Commerce marketplace needs to build more connection with the users, have
a way to improve their communication strategy with the buyers so that they can have a
personal touch via chat bot for example” – INT6

“We are trying to improve our website and communicate more with our customers to be
able to adopt their wishes” – INT1

5.3.9 Return Policy

Including a return policy is another way to build trust. Cash-on-delivery built trust
because customers did not have to pay for goods if they arrived in bad condition. A return
policy connotes the same thing; however, goods are paid before, which lowers the chance
of actual returns. A return policy allows consumers to check their items and send them
back if the goods do not satisfy them, ultimately increasing trust in the company.

“So how we also made them gain trust was we increased our return policy; pay us the
money we can offer you 28 days of return on our products” – INT11

“And free return policy also enhances trust in us. [...] So, we made sure that customers
are not disappointed in us” – INT7

“The customer wanted to make sure that when they're buying products, they don't get
stuck with the product in case the product doesn't work. So, we offered seven days free
returns to all customers” – INT1

5.3.10 Collaborations
As already touched upon, our findings reveal that external collaborations with companies
from different sectors could help solve problems. Especially partnering with FinTech or
logistic companies seem to benefit E-Commerce platforms because their capabilities
facilitate the whole process.

66
 “Partnerships are formed with companies from different sectors in order to offer the
customer the best possible package” – INT1

“We work together with a FinTech startup and integrated it in our platform” – INT7

“We are trying to partner with several different logistic third parties across Africa” –
INT2

“We have partners in logistics. I believe a lot in collaboration” – INT5

“If you want us to deliver to you, we can deliver to you, because now we have delivery
partners” – INT11

“So, we build a service, which would connect different logistics companies to facilitate
the process and give customers transparency about the status of their package” – INT13

In addition, cooperating with the government is a solution for implementing policies such
as the Cybercrime Law (Igwe et al., 2020) and a better infrastructure to facilitate E-
Commerce. While the government did not implement any subsidiaries to help the E-
Commerce environment in Nigeria yet (INT10, INT8 & INT2), especially the
improvement of the infrastructure in Nigeria could benefit the E-Commerce landscape.
Different interview partners mentioned that the government would play a central role in
developing E-Commerce in Nigeria. Besides governmental policies regarding E-
Commerce and the enhancement of the infrastructure, our research showed that policies,
which impact the free trade area in Africa, have already helped the E-Commerce
landscape.

“We are working with the government on the taxation issue” – INT2

“Right because for us to build powerful logistics we need to collaborate with the
government. That means they have to give us good roads, good transportation network
and all of that” – INT9

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 “[...] the government will play an important part. How they use their money, if they
enhance the infrastructure and what kind of regulations or policies they release“ –
INT13

“We are counting on the economic development in Nigeria. If the economy improves, if
the government policies get better and infrastructure enhances, it will definitely
influence the online business” – INT8

“The AfCTFA has a great influence on E-Commerce, because free trade within Africa is
enhanced” – INT6

5.3.11 Innovations
In general, the E-Commerce ecosystem in Nigeria benefitted a lot from the investments
and attention in recent years. As many new startups emerged, innovations and an increase
boosted the E-Commerce environment in Nigeria.

“The ecosystem is generally quite innovative. a whole lot is going on” – INT7

“Another key driver also is increasing number of players, [...] because all that noise is
innovating the sector and a key driver for ecommerce in Nigeria” – INT9

“Competition is good for the companies and Nigeria, since more people are into contact
with E-Commerce” – INT2

“What is really going to catalyze growth is actually going to be funding” – INT11

“So FinTech received attention first, but logistics will be the next one to receive
attention and investments” – INT13

“Stock markets were flying especially in Africa, everybody who had money invested it in
Africa” – INT2

68
5.3.12 Shared Value
As a final solution, E-Commerce companies in Nigeria aim to provide a better and more
sustainable service to involved stakeholders by enhancing the conditions for their
employees. Besides offering training and equipment, companies also started to pay their
employees more and supply them with sufficient insurance coverage. Moreover, they
made sure to hire more local personnel.

“We enhanced the quality of our drivers and deliveries because we made sure that our
riders are getting adequate training. In addition, we gave them equipment, lease them
bikes etc.” – INT10

“We made sure that our riders are treated as employees. And they were getting one of
the highest paid across Nigeria” – INT13

“We were giving our drivers insurance, etc., just to make sure that they feel safe on the
road” – INT10

“In the past years the company strategy changed from hiring experts from other
countries, mostly Europeans, to hire more local people” – INT2

“By enhancing the conditions of our employees, we were looking to create value for
every stakeholder involved.” – INT7

69
6 Analysis
----------------------------------------------------------------------------------------------------------
The Analysis section aims to contextualize our findings with previous literature, pointing
out coherences between the categories introduced in our findings. As a result, a final
framework to answer the underlying RQ is presented to highlight the main challenges of
E-Commerce in Nigeria and fitting solution approaches.
----------------------------------------------------------------------------------------------------------
Based on the initial framework used to present our findings, we derived a final
framework, as seen in the following figure. We use this framework to analyze our
findings, point out coherences, and answer the underlying RQ:

What are current challenges in the Nigerian E-Commerce landscape, and which
strategies can companies adopt to overcome them?

Figure 9: Final Framework to answer RQ

70
In line with previous research, our findings reveal that the dominant distribution channel
for E-Commerce in Nigeria are E-Commerce platforms (Ibam et al., 2018; Igwe et al.,
2020; Kemp, 2022; MarketLine, 2021). While social media commerce plays a huge role
in C2C transactions and smaller, local vendors, bigger companies’ partner with E-
Commerce marketplaces when selling goods online. Reasons for that have already been
indicated by previous literature. For example, Ayo et al. (2011) underline the high
implementation costs of E-Commerce. Additionally, entry barriers for setting up an
online shop are high because fraud and security are still a big issue, making building up
trust as an unknown brand a time- and cost-consuming matter (Khan, 2016; Schneider,
2016). The final framework embeds our findings in three main challenges and fitting
solution approaches, mostly connected to E-Commerce platforms as they are the primary
distribution channel.

The three superordinate categories are 1) Awareness, 2) Logistics, and 3) Sustainability.

6.1 E-Commerce Awareness

To have a sustainable E-Commerce structure, the population, the government, and
companies are dependent on E-Commerce awareness. Everyone plays a part in building
a sustainable and successful structure. While E-Commerce awareness is fundamental to
reaching customers, other stakeholders need to be addressed properly as well. Our
findings and previous research indicate that even employees of E-Commerce
companies in Nigeria sometimes lack proper knowledge, making it even harder to
successfully market E-Commerce to customers (Ajao et al., 2018). E-Commerce
awareness is divided into four distinct phases, unawareness, building trust, confirming
trust, and maintaining trust (Najafi, 2012), with Nigeria having challenges in each of
them.
Public unawareness is a major challenge for companies, as customers are not familiar
with E-Commerce and are therefore not accessible for the companies' (Rabiu et al., 2019).
Although Nigeria is one of the most advanced countries in Africa, E-Commerce
companies still have problems selling their services to the population. In addition, many
people also do not see the advantage of E-Commerce. They would rather stick to their
usual shopping behavior than open themselves up to the new possibilities E-Commerce
offers. For instance, customers often prefer physical shopping facilities because they can

71
personalize their shopping experience (Lawrence & Tar, 2010), see what they are buying,
and get advice on the spot (Okolie & Ojomo, 2020). To overcome this challenge and get
people out of the unawareness phase, companies must change marketing methods to show
people that E-Commerce brings advantages such as cost reduction (Okolie & Ojomo,
2020) and no limitations of opening hours (Mourya & Gupta, 2015). This can be achieved
by educating the population on E-Commerce. A distinction is made between physical
and virtual education.
Virtual refers to any advertising done online, like social media, google ads or podcasts.
This method reaches people already familiar with the internet, owning an E-Commerce
capable device, making it much easier to get started. You also reach people who have
nothing to do with the internet with physical advertising. Billboards are visible to
everyone and can show people what opportunities E-Commerce can offer. In addition,
you can also establish direct contact with people with staff on-site and give them an
understanding of E-Commerce live on a device. Advertising can be very precisely
targeted under those circumstances. In addition, companies have the option of
integrating offline stores, which simplifies logistics and serves as brand ambassadors
for the company. People can establish direct contact with the e-commerce world. This
way, initial trust can be built up with the residents. Education and marketing presence
are, therefore, gateways to the E-Commerce world.
It is one thing to raise people's awareness. It is another thing to build trust so that they
will continue to use E-Commerce. E-Commerce in Nigeria still has difficulties with
customers' trust due to the ever-present challenges in security (Khan & Uwemi, 2018)
and payment systems (Rabiu et al., 2019), which ultimately led to the demand for cash-
on-delivery. Building trust is particularly necessary for the payment sector, as the
majority of Nigerians are not comfortable with payment before delivery. People are still
worried that goods and services ordered will not be delivered on time or at all while
having low trust in refunds.
E-Commerce awareness is constantly changing, forcing companies to adapt to new
situations in order to maintain a positive awareness among customers. Specifically, for
customers that had a negative experience with E-Commerce in the past, trust needs to be
rebuilt by accommodating these people. Customer confidence can be built by
collaborating with reputable partners who have already made their name in Nigeria.
These then offer additional credibility, allowing for a deeper connection with the

72
customers and building trust. In addition to partnerships, it is also extremely
important to build and market one's brand in order to gain the trust of existing
customers and obtain new ones. As already underlined, this can be implemented through
marketing strategies.
Another way to build trust is to introduce a return policy, which allows customers to
have products sent back to the company, usually free of charge. A suitable return policy
makes customers more willing to buy products and increases customer satisfaction,
which is generally seen as a challenge. Once the customer's trust has been gained, it is
important to confirm and retain it. Otherwise, it may well be that they switch to another
company.
A further challenge is the lack of privacy and lack of information on websites. Companies
need to make the payment and settlement processes as transparent as possible so that
the customer is very familiar with the process and knows exactly where the money has
ended up and how long the delivery will take. However, if questions still arise from the
customer, it is essential to offer an easy-to-reach customer service, so the purchase
feels more personal, and customers have the opportunity to give feedback and directly
interact with the company.

Research has established the value of E-Commerce awareness but has also shown many
challenges to it. Several solutions have been identified to overcome these, but they all
have one thing in common: market research. It is essential to do targeted market
research, considering every country's geographical, cultural, and economic markets.
Market research is important because it builds the foundation for how much growth
potential a company can have and how customer awareness can develop. Additionally, it
must be mentioned that E-Commerce awareness also depends on the government and the
relevant policies. For example, the Covid-19 period substituted a lot of the education part,
as people had to stay at home and were driven towards E-Commerce.

6.2 Logistics
Logistics is the foundation of every E-Commerce process. Without functioning
distribution, companies are not able to supply customers with the goods they ordered. A
sophisticated supply chain with interacting collaborations is crucial. However, the initial
situation in Nigeria lacks the requisite preconditions. The literature review, as well as our

73
research, show that the infrastructure does not get enough attention through
governmental funding, resulting in a poorly developed road network and address-system
(Choshin & Ghaffari, 2017; Khan & Uwemi, 2018; Lawrence & Tar, 2010). While
internet and mobile penetration is high compared to neighboring countries, Nigeria still
has problems with power supply and IT capabilities. Those influence logistic
processes enormously. As a result, delivering goods to customers in Nigeria is costly
and time-consuming. In addition, cash-on-delivery drastically increased return rates,
which raised logistic costs even more. Moreover, E-Commerce marketplaces face
challenges regarding the quality of goods sold by third parties and the reliability of their
delivery drivers. All these factors negatively impact the distribution chain of E-
Commerce companies in Nigeria. Unfortunately, the customers’ expectations
regarding deliveries do not match the underlying conditions, making it hard to
satisfy them. A wide range of choices and widespread availability of corner shops leads
to consumers wanting their products to arrive quickly and without difficulties to even
consider online shopping. Therefore, E-Commerce platforms must tackle these problems
to represent an alternative to traditional offline trade.
The development of CBEC and the implementation of foreign companies and products
on E-Commerce platforms is the first step to achieving long-term e-commerce success in
Nigeria. As seen in the literature review, increasing the number of featured products will
allow E-Commerce companies to address a wider range of potential customers (Khan,
2016; Schneider, 2016). Nevertheless, CBEC also increases the complexity of the whole
process because Nigerian companies often lack IT capabilities and APIs, which
hinders transparency. As a result, efficiently implementing Cross-Border E-Commerce
causes trouble not only because of the logistics but also due to a lack of IT-Capabilities.
While previous literature indicates similar findings (Cassia & Magno, 2021; He et al.,
2021), Gomez-Herrera et al. (2014) point out that cash-on-delivery is another factor
hindering the adoption of CBEC. Adding to that, Qi et al. (2020) highlight the importance
of trust between customers and the E-Commerce platform. To summarize, overcoming
logistic challenges not only builds the foundation for domestic trade but is also crucial to
boosting Nigeria’s economic situation in general, as Nigeria is dependent on imports and
thus on cross-border trade. Overcoming these challenges will result in long-term benefits
for E-Commerce marketplaces and companies and have already been discussed in

74
previous studies. Benefits range from efficiency enhancement over sustainable value
creation to increased profits (Gunasekaran et al., 2002).

Our research reveals different approaches to tackle the challenges named above. As
outlined in studies by Adejoh (2018) and Anvari & Norouzi (2016), collaborating with
the government to enhance the infrastructure (logistic and ICT) is the most obvious one.
Even if the government plans to increase spending in this area (International Trade
Administration, 2021b), it will still be a long and difficult process. There is a multitude
of challenges and building the needed infrastructure will take several years. Policies
implemented in the past were often ambitious and designed to help the ICT Infrastructure
of Nigeria and, thus, E-Commerce companies, but their execution often failed its initial
purpose (Federal Republic of Nigeria, 2001; NITDA, 2007; The Ministry Of
Communication Technology, 2012). Therefore, collaborations with private companies,
especially start-ups in the tech sector, will help bridge this time. While FinTech
companies have already received a lot of attention and innovated financial processes, our
research indicates that the next interesting area for investment and innovation will be
logistics technology. Innovation in this area needs to tackle the IT capabilities to
enhance transparency for the whole process, facilitating international and domestic
trade. As a result, the delivery conditions, such as quality and speed of deliveries, can be
sustainably improved to the level of customer demand. Nevertheless, collaborations with
the government and innovative start-ups are dependent on external influences. Meaning,
companies won’t be able to rely on them in the short term. Ways to tackle these problems
on a short term are still necessary, though, to keep up with customer expectations.
Integrating offline stores to optimize the distribution chain is a first possible option.
Particularly for products such as fashion or electronic goods. Offering local pick up to
shorten the delivery time can positively impact the distribution chain. While these stores,
similar to Europe, can be partner stores, some E-Commerce marketplaces even set up
their own stores in central locations. In addition to optimizing delivery times through
pick-up possibilities, offering free deliveries is a further possibility to give incentives
and offset the speed of delivery. Besides the speed and cost of delivery, the condition
of arriving goods is important. Thus, integrating quality checks, especially when
distributing goods from smaller vendors, is advisable for E-Commerce platforms. While
quality is influenced by the vendor, our research also shows that delivery drivers might

75
not be reliable and damage or steal packages. Offering incentives for drivers and investing
in sufficient equipment to avoid problems regarding roads and the address system can
therefore help to ensure that the goods reach the customers in good condition while
creating shared value for the stakeholders involved. Lastly, to reduce overall
distribution costs, companies can invest in local manufacturers. Especially in markets
where local manufacturing capabilities exist, drawing on local products does not only
reduce costs and speed of distribution but also sustainably impacts the environment.
However, suppose E-Commerce platforms decide to partner with foreign companies
conducting CBEC. In that case, our research shows that warehouses in Nigeria are
highly advisable, enhancing the speed of delivery and living up to the customers’
expectations.

6.3 Sustainability
Besides challenges regarding the consumers’ awareness of E-Commerce and logistic
processes, sustainably operating is the third superordinate challenge in the Nigerian E-
Commerce landscape. While previous literature highlights that shopping online has the
advantage of comparing prices (Karavdic & Gregory, 2005; Khan, 2016), it also
implicates that vendors need to adjust their prices accordingly. Especially with the high
amount of competition in the form of local vendors, who sell their products on social
media, Nigerian consumers are very price sensitive. In conclusion, many vendors and
platforms have to offer products at price points that are not economically sustainable in
the long run, causing price wars. In addition, conducting E-Commerce is associated with
high implementation costs (Gillwald et al., 2018; Lawal & Ogbu, 2015; Nejadirani et
al., 2011). While vendors offering their products on platforms are not directly affected by
these costs, the E-Commerce platforms in Nigeria are. As they play a major part in B2C
transactions in Nigeria, these platforms must stay in business. Even though some
platforms rely on governmental help, there are no subsidiaries or the like. They even
have to pay for licenses to be allowed to conduct business. On top of that, Nigeria lacks
trained and educated personnel, implying that E-Commerce companies need to hire
foreign personnel, mostly from China, Europe, or the USA. Those often fill executive
positions but are also likely to change their work more often. In combination with the
general fluctuation of personnel, this means that effective planning of resources and
manpower is constrained and costly. Lastly, payment systems add problems to

76
sustainably operating in Nigeria. Although mobile penetration and internet banking are
comparably well developed, customers are still reluctant to use these possibilities due
to the fear of fraud. Therefore, E-Commerce platforms had to implement cash on
delivery as a payment option to successfully adopt E-Commerce. The increased return of
products has already been underlined as a problem for E-Commerce in previous research
(Zhu et al., 2018) & (Okolie & Ojomo, 2020), and cash-on-delivery drastically raised
the number of returns. Our research reveals that companies faced return rates up to 50
percent, which lowered the profit margin and caused serious problems for the economical
sustainability of E-Commerce companies in Nigeria. In addition, Cassia & Magno (2021)
point out that return rates this high are a hindrance for CBEC as well. Besides the
problems regarding return rates, cross-border trade is also influenced by the exchange of
different currencies, and the Naira has not been stable over the last years. In sum,
problems regarding the sustainability of E-Commerce companies influence domestic and
foreign trade.

To overcome these challenges and foster domestic and foreign trade by sustainably
operating, our research indicates that investing in local personnel can be promising in the
long run. While these investments tie capital initially, they will result in long-lasting
relationships between employees and the company, creating shared value for included
stakeholders. Besides internal investments, collaborating with FinTech companies will
benefit E-Commerce. Especially since the FinTech sector in Nigeria has received a lot
of attention and foreign investments over the past years, start-ups have been able to
offer creative solutions, tackling payment processes. These solutions include safe money
transfers to counteract fraud, new payment options for E-Commerce platforms that reduce
costs and time, and international payments to ease forex transactions. Adopting these
solutions to tackle the uncertainty of consumers is crucial. In addition, FinTech’s allow
E-Commerce marketplaces to integrate new offers into their platform, such as paying
household invoices or recharging money on the phone. Including possibilities like that
can attract customers and attach them to the marketplace by simplifying everyday tasks.
Thus, E-Commerce marketplaces should research the functionality they need on their
platform and either build the technology themselves or collaborate with a FinTech
company. Another interesting approach to attract customers is offering the option to pay
for products in multiple installments. Particularly more expensive products, like

77
electronic goods, are often hard to pay for at once. Thus, companies should have the
capabilities to offer loans and track payments to receive their money. Collaborating with
FinTech’s specializing in this area can help.
In case new E-Commerce marketplaces or companies lack the necessary funding,
focusing on a niche market to avoid competitors can be another strategy. While our
research shows that the market, in general, is far from saturated, there are still certain
areas, which include a lot of competition and price wars. Thus, new marketplaces should
try focusing on a niche to successfully enter the market without sacrificing a big part of
their margin. Establishing a brand and building up trust is also easier in a smaller market
and can later be used to further diversify their product range. Furthermore, relying on
local manufacturing can help lower costs in certain markets, which also influences the
margin. Besides, local manufacturing also sustainably impacts the Nigerian market,
fostering the local economy.

78
7 Discussion & Conclusion
----------------------------------------------------------------------------------------------------------
The following section starts with presenting conclusive remarks, giving a summary of our
findings and the analysis to answer the underlying RQ, and presenting theoretical
contributions of the thesis. Lastly, limitations of the study and advice about further
research are suggested.
----------------------------------------------------------------------------------------------------------
7.1 Conclusive Remarks
This study aimed to build on existing literature regarding the challenges of E-Commerce
in Nigeria while investigating strategies and solution approaches to overcome these
challenges. In addition, the study aimed to integrate previous research concerning cross-
border E-Commerce in the Nigerian E-Commerce landscape and connect underlying
challenges. Based on our research philosophy, we conducted a qualitative study approach
to grasp a broad range of opinions and impressions, which resulted in three main
challenges. 1) E-Commerce Awareness, 2) Logistics, 3) Sustainability. These challenges
were derived from our data analysis approach and contextualized with previous literature.
In conclusion, our findings highlighted different strategies and solutions to tackle these
challenges, resulting in the successful adoption of E-Commerce in Nigeria.

Our results implicate that educating Nigerian consumers about E-Commerce is the first
necessary step. While the Covid-19 pandemic already played an initial role in doing so,
E-Commerce companies in Nigeria need to further tackle this problem and spread
awareness of E-Commerce solutions. In addition, this also helps to build a foundation of
trust. Furthermore, findings reveal that consumers in Nigeria are price sensitive and have
high expectations regarding the speed of delivery. Thus, companies need to tackle this by
collaborating with third parties, enhancing their capabilities. The final framework (Figure
9) gives further implications regarding underlying challenges, connecting them with
possible solution approaches, ultimately answering our RQ.

7.2 Theoretical Contribution

With the rising number of foreign investments in FinTech companies in Nigeria and E-
Commerce in developing countries in general, research in this area received increasing

79
attention in the last years. Authors such as Ayo et al. (2011), Khan & Uwemi (2018), and
Okolie & Ojomo (2020) particularly investigated entry barriers, challenges, and possible
benefits concerning the adoption of E-Commerce in Nigeria but did not include solution
approaches. Additionally, studies regarding the economic development of Nigeria
accelerated as well (MarketLine, 2021), (Kemp, 2022) & (UNCTAD, 2021a), underlining
the importance of imports and, thus, international trade for Nigeria. Therefore, foreign
market entry modes were also included in this study. However, research in this area
mostly disregarded developing countries, and only a few authors mentioned challenges
connected to cross-border E-Commerce in developing countries (He et al., 2021). As a
result, the underlying qualitative study approach aimed to build theory regarding the
challenges of E-Commerce in Nigeria and how to overcome them while also connecting
these challenges and solutions to cross-border E-Commerce:

First, our study contributes to research regarding the current adoption of E-Commerce in
Nigeria, expanding knowledge on challenges and entry barriers. While issues such as the
missing infrastructure (Ajao et al., 2018; Khan & Uwemi, 2018; Lawrence & Tar, 2010;
Rabiu et al., 2019), security, trust, and fraud concerns (Ajao et al., 2018; Igwe et al., 2020;
Lawrence & Tar, 2010; Rabiu et al., 2019; Sharma & Erramilli, 2004) and customer
satisfaction (Choshin & Ghaffari, 2017) have already been mentioned extensively, our
findings extend these challenges. For example, our findings reveal that the lack of data is
a further problem, which results in poor market research, negatively influencing the
capabilities and knowledge of E-Commerce companies in Nigeria. In addition,
sustainably operating due to the price sensitivity of the consumers and measures such as
cash-on-delivery are also a challenge. Furthermore, our findings highlight the importance
of E-Commerce marketplaces in Nigeria and added social media commerce as a common
distribution channel for C2C transactions. Besides that, our study builds on previous
reports regarding the potential of Nigeria and the influence of the Covid-19 pandemic.

Second, our findings build on previous research regarding cross-border E-Commerce.

While Wang et al. (2015) introduces several possibilities for conducting CBEC based on
the warehouse's location and the E-Commerce platform’s role, our study suggests that
foreign companies use warehouses in Nigeria to assure quick delivery. Moreover, our
study connects challenges of conducting CBEC, such as the negative influence of cash-

80
on-delivery (Gomez-Herrera et al., 2014), the importance of trust between customers and
E-Commerce platforms (Qi et al., 2020), and IT capabilities (Cassia & Magno, 2021) to
current challenges of conducting E-Commerce in Nigeria.

Lastly, our study constructs new theory regarding possible solutions to overcome barriers
and challenges of E-Commerce in Nigeria, giving implications for managers of E-
Commerce platforms, foreign companies interested in the market, and the government.
As stated before, building awareness and trust regarding E-Commerce opportunities is
the first crucial step in fostering the adoption of E-Commerce. While Covid-19 already
played an initial role in educating the population of Nigeria, our findings highlight the
importance of companies taking this measure into their own hands. In addition, using
marketing strategies to build a known brand and trust is necessary. Besides, our findings
reveal that collaborations are a further important strategy to build capabilities overcoming
logistic and sustainability challenges. Especially with the rising amount of FinTech
solutions, E-Commerce got new opportunities to tackle payment problems and facilitate
the whole process for them and the consumers. In addition, collaborations help enhance
the supply chain, meeting customers’ expectations regarding the delivery. Lastly,
solutions without third-party companies, such as including a return policy and enhancing
the quality of goods and delivery, particularly in a niche market, can result in long-term
customer relationships.

7.3 Limitations
Unfortunately, our research process has been accompanied by certain limitations, which
should be considered and are thus presented in the following.

First, we would like to mention the underlying conditions of our study. As we are both
living in a European country and researching an African country, there are cultural and
linguistic barriers. Furthermore, due to the current Covid-19 pandemic, the possibilities
to travel to Nigeria were limited. We did not have the possibility to experience Nigeria or
Nigerian consumers or managers in person, which also complicated finding interview
partners. All interviews were held remotely, and all previous information regarding
Nigeria came from literature or secondary sources. While the interviewees spoke
impeccable English, there were still problems due to technical issues and accents.

81
However, we tried to oppose this limitation as well as possible by extensively researching
our topic beforehand, talking with people living in Nigeria, and conducting introductory
meetings with our interviewees. In addition, we reviewed the recordings of our interviews
several times and contacted interviewees if something was unclear.

Second, the underlying conditions of this thesis restricted the scope and time of our study.
Thus, our data collection process was limited in time and only resulted in 13 interviews
with about 650 minutes. As the researched topic is fairly broad, we applied a qualitative
study design, which allows considering several points of view. However, besides case
one, we only interviewed one person per company. Interviewing a second employee or
manager could have resulted in even deeper insights and challenged some of our findings.
But we decided to focus on different companies representing different parts of the E-
Commerce sector in Nigeria to get a broader understanding of underlying challenges.
While this allowed us to get a broader understanding, on the one hand, it also implicates
that those findings might be subjective. Nevertheless, we were able to identify coherences
between our interviews, indicating the representativity of our study.

Lastly, our data collection approach might have been influenced by our skills as
interviewers. Besides one prior study, both of us did not have much experience
conducting interviews. However, we tried to tackle this problem by participating in a
workshop and constantly reviewing our interviews to enhance our skills.

7.4 Future Research

The findings of our study contributed to previous literature and theory in the areas of E-
Commerce in Nigeria and CBEC while filling a gap in overcoming challenges. In
addition, the results give indications for new opportunities in future research.

First, as logistics play a huge role in E-Commerce and cross-border trade, further
examining this area and researching the interdependence between both would allow for
deeper insights. For example, our findings reveal that especially IT capabilities play an
important role in transparency in logistic processes. Therefore, investigating how
companies can drive capabilities and enhance processes is an interesting area for future
research.

82
Second, our study purely engaged with the challenges of E-Commerce in Nigeria from
the point of view of managers and companies. Therefore, elaborating the consumer's
perspective can help understand challenges even better and connect the consumer's
opinion to solution approaches presented in this study. A quantitative study design, like
a survey, could help get a representative overview of the Nigerian population, which
would also contribute to the lack of market research in Nigeria.

Third, besides taking the consumer's perspective into consideration, further researching
the influence of the government presents an important opportunity for future research.
Especially with developments in recent years and initiatives such as the AfCFTA to
enhance free trade within Africa, but also due to the government's influence on
developing E-Commerce, investigating drivers for governmental support can result in
important contributions to enhancing E-Commerce in Nigeria.

Lastly, our study highlights the importance of social media commerce in Nigeria.
However, the scope of our study did not allow us to review literature regarding social
media commerce and dive deeper into this area. Nevertheless, this topic is highly relevant
because social media commerce is directly connected to WhatsApp, Facebook, and
Instagram. As all these services belong to the American tech giant Meta, they have great
opportunities to become even more influential in the future if Meta decides to invest in
this area. Researching possibilities for the future and the impacts this would have on the
Nigerian-and the global E-Commerce landscape could be worthwhile.

83
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Appendices

Appendix 1: Information Sheet & GDPR Consent Form

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95
96
Appendix 2: Final Coding

Example Quote Code Category

COVID made E-Commerce more realistic and more COVID Status Quo
appealing to common Nigerians, because most people
used to have the mindset that buying things in store
would be way easier than shopping online.
[...] of the 200 and something million people living in Potential Status Quo
Nigeria still only a comparably small share uses E-
Commerce. Imagine what happens if that number
grows to 95 %.
We are partnering with logistic companies in different CBEC Status Quo
countries in order to enhance our knowledge and our
capabilities.

Culturally Nigeria is influenced by Europe and USA. International Status Quo

So, most of the fashion will still come from those Influence
regions. While other products, such as electronics,
which are often manufactured in China, obviously
come from there.
Vendors see convenience in using the service of Marketplaces Status Quo
online marketplaces [...], because marketplaces
enable vendors to grow their business, reduce prices
and save time.

I think small supermarkets will not vanish, but they Social Media Status Quo
will be more likely to evolve with the system. [...] Commerce
Especially when looking at the address system in
Nigeria, they have many options to facilitate the
distribution chain in Nigeria.
Many people launched social media businesses in the Offline Trade Status Quo
past years, because there are no barriers and fees.

Cash on delivery is a good way to start using E- Cash-On- Challenges

Commerce, but a huge risk for the company Delivery

Currency change is a major challenge as well because Inflation Challenges

the Naira is not stable.
Delivering goods is not easy in Nigeria. The address Logistic Challenges
system doesn’t work properly, so often there are Infrastructure
wrong deliveries.
It´s very expensive for companies to own a logistic Distribution Challenges
distribution chain Chain

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In Africa and Nigeria, we were not ready for E- Technological Challenges
Commerce, and neither was our technology. It was Deficits
very hard to adapt our IT-Capabilities to E-Commerce
solutions
So, if you look from what I could get assessed, there's Market Challenges
a huge lack of data in Nigeria. You cannot have Research
reliable sources
We need to pay to the government for our licenses and Governmental Challenges
so far, I have not seen much in return. The Instability
government doesn’t really do much for E-Commerce
companies

One of the issues that Africa has is safety whilst Trust Challenges
transacting online. There is still a lot of fraud and
people are skeptical if you are not a mainstream
company

The unemployment rate is high and the fluctuation on Employment Challenges

low-skilled jobs is high. They swap jobs really fast,
which makes it difficult to plan sufficiently

Competition is also potentially a challenge because it Price War Challenges

pushes you to spend more, if you try to offer at the
cheapest price in the market
Over the past two to three years now, most of the Fintech Solutions
investments coming into Nigeria went into the
FinTech space [...]. Their innovations have helped us
to become a growing trend by easing payment

We partner with a couple of stores. So, if you order Integrating Solutions

from our website, you have an option to pick-up in Offline-Stores
store

We are actually offering free delivery, for example in Delivery Solutions

Lagos Conditions

There is a lack of manufacturing. We import a lot of Local Solutions

goods, which automatically increases the costs of Manufacturing
distribution. If we want to lower the costs, we need to
fill the manufacturing gap in Nigeria and start selling
more local products
We use agents to educate the population and introduce Education Solutions
them to E-Commerce and the online landscape. They
will help customers placing orders on the platform

98
for people to trust you, you need to be a visible brand Brand Solutions
out there or collaborate with a known brand. Building

It is important to find a niche in the market, especially Niche Markets Solutions

for new companies that want to build a brand.

We speak with people; we organize focus groups. We Customer Solutions

do polls. We really spend a lot of time with our Service
customer service team to speak with the customer and
we listen to them and we attempt to understand what
they want.

So how we also made them gain trust was we Return Policy Solutions
increased our return policy; pay us the money we can
offer you 28 days of return on our products.

We have partners in logistics. I believe a lot in Collaborations Solutions

collaboration.

Another key driver also is increasing number of Innovation Solutions

players, [...] because all that noise is innovating the
sector and a key driver for ecommerce in Nigeria
We enhanced the quality of our drivers and deliveries, Shared Value Solutions
because we made sure that our riders are
getting adequate training. In addition, we gave them
equipment, lease them bikes etc.”

99