It appears Jiji is on the path to becoming the largest classifieds platform in Africa with its recent move to acquire major competitor, OLX.
With the acquisition, the company is taking up OLX’s businesses in five African countries, giving the company over 8 million monthly unique users when the deal is completed.
In spite of eCommerce giant, Jumia’s clout in Africa, the popularity of its classifieds arm, Jumia Deals is questionable. This somewhat puts Jiji at the fore of the classified sector on the continent.
Last year, OLX shut down its physical offices in Nigeria and other African markets. Unlike Efritin that shut down completely, OLX retained its online assets in five African countries — Nigeria, Ghana, Kenya, Tanzania and Uganda. Those assets are now being taken over by Jiji in a deal worth between $1.5 million and $3.4 million, according to Ukrainian tech new site, AIN.UA.
Despite the justification that the acquisition is a better deal for OLX, unlike in Efritin’s case, there are still questions about the future of the classifieds sector in Africa.
Over the years, the industry has witnessed a series of entrants as well as exits. Efritin entered the market with a verification system for sellers on its platform; a move no other industry player has ever tried in Nigeria. However, the initiative to protect sellers on the platform evidently couldn’t save the company as it shut down barely two years after launch.
Efritin’s shut down was blamed on low internet penetration, high cost of Internet and the challenging economic conditions.
Things haven’t improved much, it seems, as there are still questions about the actual figures for Internet penetration in Nigeria for instance.
According to Jiji Country Manager in Nigeria, Yuliy Shenfeld, the lack of trust while using the web is still a big challenge for the classifieds sector.
“Some people are yet to fully understand the benefits of the web in their lives and businesses,” says Shenfeld.
Shenfield claims that Jiji tailored its product to the Nigerian market which gives the company an upper hand in the sector. He also points out that Jiji’s B2C and C2C models are towards ensuring more value and variety to its customers.
Shenfeld believes Jiji is proof that classifieds work in Nigeria, having experienced 30-50% yearly growth over the past.
For the future of classifieds in Nigeria, Jiji is banking on the fact that Nigerians love to bargain with sellers which classifieds platforms are providing an opportunity for.
Competition in the classifieds industry
There have been moves to reduce the competition in the classifieds sector in Africa, especially Nigeria. Earlier in the sector, Naspers and Schibsted — financiers of OLX and TradeStable respectively — entered an acquisition deal that saw OLX take over TradeStable in order to reduce competition.
With the recent move by Jiji, the question about whether there’s ever going to be more than a major player in the classifieds sector at a time comes to mind.
Competition in business gives room for innovative moves and with no major competitor for Jiji at the moment, there are concerns about the innovativeness in the sector.
On the other hand, it can be considered as an opportunity for Jiji to reshape the classifieds market in Africa being the major player with a dominating presence in five African countries.
We can expect that the sector will welcome a new player that would want to explore the opportunities in the sector. The acquisition could also make Jumia put more weight behind Jumia Deals, giving Jiji a run for its money.
Naspers’ side of the story
OLX finance, Naspers couldn’t comment on the challenges of the classifieds industry in Africa. However, a representative claimed that the sector remains Nasper’s core focus, which is ironic considering the past decisions of the South African-based company.
According to the Naspers spokesperson, the global internet group continually evaluates its portfolio of classifieds businesses towards ensuring a disciplined approach in how and where it allocates capital and time.
The company decided — based on the evaluation — that it’s an appropriate time to sell its interest in those markets to focus on accelerating growth in other markets.
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.