The dwindling exchange rate of the Nigerian Naira has presented the country's e-commerce industry with an opportunity to look inward at locally-produced goods to withstand the current economic downturn, says Kaymu Nigeria's Managing Director, Sefik Bagdadioglu.

E-commerce site Kaymu.com was launched in 2012 by AIG (Africa Internet Group) and serves as an online marketplace for trade between buyers and sellers,

"Nigeria is an importing country and so are a majority of our sellers and a lot of e-commerce sellers in the country," Bagdadioglu stated in an email to ITWeb Africa. "This is why the state of the Naira is having an inevitable adverse impact and creating challenges for the industry. However, a part of the challenge is also an opportunity to look closer at what is produced locally and diversify into these products."

Citing local economic conditions, Konga fired about 10% of its 800-strong workforce. This follows Jumia Nigeria's 30% cut in October and DealDey's 60% job cut in November.

The recent and continuous fall of oil prices has hit the West African country's stock market hard and local stocks fell to a three-year low, as did its foreign reserves. As a result, the apex bank imposed certain restrictions, but the official exchange rate still fall by 25% to its previous two-year rate to stand at N199 to the US dollar and more than N300 in the black market.

Since e-commerce firms deal in mostly imported goods, the difference caused by the sharp rise in the exchange rate has forced companies to source products locally.

What is changing the most now is the relationship with local actors, Bagdadioglu said, adding that their "merchants are travelling internally to seek out producers and manufacturers they didn't approach previously. We are seeing an increase in interstate sourcing, which is pushing merchants outside their comfort zones. In the past, our top product categories were a diverse assortment of imported electronics and fashion products, with a few locally produced goods. More and more now, we are seeing locally produced fashion items top our sales and we expect this to continue."

He also believes that economic uncertainties tend to impact new businesses and startups more heavily." "They're also a good opportunity to test the validity of the business model," he said. "I think this is a good time to test out which of the many e-commerce players got its foundations right and will withstand the challenges posed by the current dynamics of the economy."

Government's role

On whether the government is trying to discourage import with some of its policy measures, Bagdadioglu has a different point of view.

He thinks it is a case of encouraging local business owners to diversify and look more locally for their business needs. "If there is enough demand and no local alternatives, imports will still occur. On our part, one of the measures we are taking to address the situation is through skill-set development within our team. For example, our sales team is becoming more and more specialised in business development, seeking out ways to assist our merchants in growing their businesses locally."

Bagdadioglu expects the market to stabilise in the long run, he noted. "However, in the short run, there will be winners and losers. The winners will be those who can source locally and adapt their business. The overall key to success in these times is adaptability."