When brothers Chris and Tope Folayan founded MallforAfrica in 2013, Nigeria’s consumer market looked a lot healthier and more promising than it does today.
Three years ago, MallforAfrica joined the raft of Nigerian tech start-ups attracting private equity and venture capital backing. It offered online retailers in the US and the UK that were wary of shipping directly to Nigeria a conduit to the country of more than 180m people. The ease of transacting for Nigerians — and for the companies selling them electronics, clothes, jewellery and appliances — brought customers to MallforAfrica as high oil prices drove growth and enabled heavy consumer spending.
Rival online retailers such as Jumia and Konga did not have the same partnerships with western brands that MallforAfrica had managed to forge.
Now, even amid the worst economic crisis Nigeria has faced in decades, the Folayan brothers say they are still drawing — and retaining — new subscribers to their mobile platform. MallforAfrica has proved to be enduringly popular among fashion-conscious Nigerians.
Spending power across income levels has been hit by the downturn. However, the ecommerce company is expanding, as Nigerians turn to the digital service to buy foreign brands in local currency without travelling abroad.
A wide range of shoppers, from taxi drivers to bankers to chief executives, like the convenience of buying their favourite foreign products “on demand” from the comfort of their own homes in Nigeria, says Tope Folayan.
Before the oil price crash, many middle and upper class Nigerians flew to Dubai, London and New York for shopping sprees — and brought home suitcases stuffed with clothes and other products for themselves, their family members and friends.
This option has become much more expensive, particularly for the middle class who mostly earn their income in naira. A shortage of hard currency — set off by the oil slump that began in 2014 and worsened by government policies — has pushed up the prices of foreign airline tickets. A recent estimate by First Bank of Nigeria forecasts that by December, an economy class ticket for a six-hour trip — about the length of a flight from Lagos to London — could cost as much as 800,000 naira ($2,500). Such tickets could be bought for as little as $700 in 2014.
As a result, the ability to shop by app while in traffic, at work, or at home — for anything from Gucci slippers to an Armani blouse sourced from around 180 US and British retail websites — is becoming more appealing to Nigerians.
The average delivery time for an item purchased via the app is two weeks, says Mr Folayan, though custom orders — such as a wedding dress — can be delivered in a matter of days. Items can be delivered to the shopper’s home or picked up at 30 locations around the country.
The rising costs of travel help to explain the falling numbers of Nigerian shoppers in the UK last year, according to Global Blue, the tourism shopping tax refund company, which recorded a 20 per cent decline in such travellers.
MallforAfrica has 100,000 subscribers to its mobile platform, and roughly 70 per cent of them are regular customers who spend the equivalent of $100 per order, according to Tope Folayan, who oversees the business from the Nigeria side. “No one is doing what we are doing,” he says. Mr Folayan did not provide details of the company’s turnover or profitability.
MallforAfrica works with courier and logistics companies including DHL and Nigerian mobile payments services such as Verve and Paga.
It airfreights several tonnes of clothes and other products to Nigeria each month, purchased from the most popular American and British shopping sites, including Amazon, Ebay, Macy’s and Debenhams.
The Folayan brothers have signed up retailers with the promise of “de-risking the ecommerce space for emerging markets” — and they are delivering.
MallforAfrica benefited from early investment by Helios, a London-based, Africa-focused private equity firm, which provided funding to build the business in July 2013.
The online retailer has since closed a second round of funding in July with Helios, says Mr Folayan. This month the brothers expanded into Ghana and Kenya, where there no similar online shopping platforms.
Despite sluggish or negative growth across the continent due to the drop in commodity prices, Mr Folayan says his experience of growing MallforAfrica has made him “extremely bullish” about the market for online retail in Africa. He describes the market for online retail in Africa as “huge, deep and capable of absorbing a lot more negativity”.
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