Pros and Cons of Selling on online Market places, like Jumia and Konga

So if you are not selling your products online yet, or you are trying to make a decision on how to start putting your products online, this article will be great for you help you know the basic information of both marketplaces.

We all know that Jumia and Konga didn’t start out as marketplaces but changed their business models no so long ago. So basically, an online marketplace is a place where different sellers converge to sell their products. The market place provides the platform and the marketing while the sellers provide the products.

It is usually a mutually beneficial relationship, as the marketplace gets unlimited number of products listed without having to invest in inventory, while the seller gets more exposure to a wider array of new customers.

Having said this, there are various Pros and Cons to selling on the various platforms and below are some of them, and you can make your decision on where to sell and the upsides and downsides;

PROs

  • Increased Sales and High traffic: Jumia and Konga have a high number of daily visitors as they spend a lot on online marketing. Most sellers can testify to significantly higher number sales after registering to sell on these market places.
  • Acquire New Customers: Most times as in the case of Jumia, nobody goes looking for your shop on a market place. They might be looking for your products and then stumble upon you. You can win new customers by excellent service and fulfillment. For Konga, its easier as you have the details of the customers to follow up on return customers. For both you can share your store link to family and friends to help with new purchases, especially for those who do not live in the same state as you.
  • Most people prefer to shop on Marketplaces: Just like people like to go to malls, because of the variety and assortment of products that they can get, same reason why most people like shopping on online marketplaces, especially well known ones. There is also a wide fulfillment reach, as marketplaces invest in their fulfillment process. So if you as a small corner shop cannot deliver an item to Sokoto, a market place will be great for you. Jumia has set up a fulfillment company called AIG-Express that fulfills their orders across the country. While konga also has a fulfillment company known as kos.ng. Kos is an ecommerce fulfillment company set up by konga. It has a great network and fulfillment process is great to an extent. They also take walk-in ( if you have an order at your personal store not on the market place, that needs to be delivered elsewhere, especially when the customer cannot pick up) deliveries at great prices. While Jumia/ AiG express offer offer pick up services at any of their Pick up centres, Konga/ Kos do not offer such services as shipping is charged on all orders, except the seller wants to bear the cost. In which case the seller bears the cost of the shipping.

 

 

CONs

  • Fees: Konga and Jumia take a commission on every product sold and delivered through their platform. Varies from 3%- 35% of the price depending on the category. Fashion Items normally have a higher commission percentage. Also in addition to the commission, Konga charges a monthly Listing charge which ranges from 1000- 2500 depending on the number of products you want to list. For unlimited number of products, you get to pay 2500 naira monthly, according to them they introduced this charge to ward off unserious sellers. So it will do you a lot of good to calculate your margins properly so as to accommodate these charges, especially if you sell products that are high commoditized low margin products, then it will be of no use.
  • Limited Control: Some marketplaces focus more on the products than on the seller, so you might have limited control. For example, while Konga allows you access to you customer’s information so you can communicate with them and encourage repeat sales, Jumia restricts the customer details from the sellers to give “excellent customer experience” (some of the sellers go to the customers directly after the first sale and offer lower prices). At times, the Marketplace identifies a high selling and popular product, stocks it at an obviously lower price as they have the ability to buy in very large quantity, and invests on marketing it.
  • Inventory Sync: For most businesses, the marketplace is a second point of sale, while for others, they sell on more than one market place. So there is a lot of manual reconciliations since the stock comes from one source. More work has to be done managing stock levels and replenishment plans.
  • Returns: While some marketplaces have a higher rate of returns, returns are a constant in online shopping, communicating with the buyer, shipping early and fast fulfillment, helps reduce the rate of returns.

It is important to weigh your Pros and Cons before you decide to sell on a marketplace, be it Jumia or Konga. For most businesses though the Pros outweigh the Cons. You can consider Jumia First or Fulfillment by Konga (FBK) where they keep your listed inventory at their warehouses and sort out your order management and fulfillment processes for a fee. They also give priority sale for these products as they can be shipped faster, to give the customer an overall great experience.

If you have an online store, you can sell on market places as well to increase your revenue streams. And you can sell on as many platforms as you can handle, as long as you have a system in place to manage your inventory levels.

 

 

 

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