A peaceful weekend was rattled by news that the Zinox Group had acquired Konga, one of Nigeria’s biggest eCommerce giants in a sudden swoop. The Zinox Group is a technology company that built Nigeria’s first internationally certified computer systems and has large substantial stakes in ICT in Nigeria.
Chronicling the development of technology and ICT in Nigeria will never be complete without mentioning the Zinox Group and its founder and chairman, Mr. Leo-Stan Ekeh.
Apart from being a giant in innovation and technology, Leo-Stan Ekeh is also an astute businessman with decades of successes under his belt.
But all these do not in anyway explain why he bought Konga.
A time when the eCommerce aspect of consumer internet in Nigeria is not making plenty business sense does not look like a good time for a business savvy man like Leo to make this deal.
And the fact that a reliable source within the company’s rank has stated expressly that Konga won’t be merged with Yudala even further confuses the matter.
Here are possible explanations for the Zinox Group acquiring Konga.
Even though Zinox has — unofficially — stated it won’t merge Konga with Yudala, there’s much more that can happen in terms of a relationship. .
Konga is likely one of the few eCommerce platforms in Africa with its own bespoke software solutions. In February 2014, Konga started work on its own custom marketplace platform, SellerHQ and by September of that year it was ready and working better than 3rd party solutions.
There is also a Notification as a Service (NaaS) tool that was built to keep in touch with customers and merchants.
Compared to 3rd party template eCommerce solutions, these software tools were built with Nigeria and Africa in mind and are by extension more efficient.
Even if a merger does not eventually happen, Konga’s technology can effectively strengthen Yudala.
Incorporate a software company
Software is the new fad and software companies are ruling the world. For all its technological greatness, the Zinox Group is still largely a hardware and business-focused company. With the aforementioned bespoke proprietary software solutions, Konga can be a software company under Zinox that caters to the needs of eCommerce platforms across Africa.
The Zinox Group has had a run at eCommerce in the past with BuyRightAfrica.com so they should know where the figurative software shoe pinches.
Magento is still the global go-to for eCommerce solutions across Africa even Konga still uses it. But with proper structure, Konga can effectively fill this gap and make a killing doing it.
Diversify and sell
If the supposed $10 million acquisition price is anything to go by, Zinox got Konga at less than a bargain considering that Konga’s original investors probably lost money.
But as an astute businessman, selling off Konga in parts can be a possible motivation.
Konga currently has three subsidiary arms — KOS Delivery, KongaPay and Konga.com — and they all have the potential to be individual product portfolios.
The current global eCommerce boom has ensured that logistics is a well in-demand service if properly structured. With Kobo and its large volume of transactions as an example, logistics is a big deal in Nigeria if done right so KOS Delivery won’t have a problem scaling and selling.
Payments is still one of the biggest bane of eCommerce in Nigeria and KongaPay can be positioned to tackle this issue as a company on its own.
Finally, for all the software reasons, Konga is still one of the best structured eCommerce platforms in Nigeria. This gives it an automatic edge to fly.
With his experience in business, Leo Stan Ekeh won’t have any problems diversifying Konga into all these already existing arms, building stable entities and selling them off.
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Nigerian startups raised $17.6m in Q1 2019, 8.5% higher than they did in Q1 2018. Find out more in the latest quarterly edition of the Nigerian Startup Funding Report here.