Coca-Cola Nigeria’s Direct-To-Consumer (DTC) strategy will benefit from increased e-commerce adoption, according to Fitch Solutions analysis.
In its June 2021 quarterly update, Coca-Cola Nigeria reported that e-commerce sales had increased threefold. According to the company, this was due to the shift in consumer purchasing patterns amid the covid-19 pandemic which accelerated online sales growth.
Strategically, the past year has been very eventful for Coca-Cola Nigeria as it partnered with e-commerce platforms such as Jumia and Konga to sell its products to customers. Despite the positive turnout of things through these media, it only represented a significantly low base.
Furthermore, the company reported that e-commerce sales remained in the single digits when compared to sales through existing retail outlets. Having established a niche offering in the country, the shift in Nigerian consumer’s purchase patterns amid the COVID-19 pandemic will enable Coca-Cola increase its e-Commerce sales through the Direct-To-Consumer channel over the coming months, Fitch Solutions predicts.
A recognizable feature of the Nigerian population is the vast proportion of young adults in the country. With this demographic feature of its population, Fitch Solutions indicates that this will be key to the growth of the e-commerce sales of Coca-Cola going forward.
Like many markets globally, the COVID-19 pandemic accelerated the adoption of e-commerce as social distancing measures has ultimately influenced consumers’ movements.
Nigeria’s Young Adult Population and e-commerce
According to Fitch Solutions, this presents a whole range of opportunities for the food and drinks companies to sell their products directly to consumers easily through partnerships with e-commerce platforms.
“We believe that this trend will appeal to the younger consumer groups in Nigeria, particularly young adults who are typically tech-savvy and more likely to try new things.
“Nigeria has a large young adult population (20-39 years old) that is tech-savvy and is open to new trends and this will aid e-Commerce growth. However, companies seeking to tap into the DTC trend will need to adjust their product and distribution strategies to target Nigeria’s price-sensitive consumers.”
Fitch Solutions
According to Fitch Solutions, in 2021, this age group made up 27.9 per cent (or 59.1 million people) of the country’s population. Fitch Solutions forecast this demographic group to increase to 28.2 per cent (or 65.9 million people) of the country’s population in 2025 remaining a large consumer group over the medium term (2021-2025).
Besides, the majority of consumers in Nigeria access the internet through their mobile devices and based on this, Fitch Solutions believe that it is important for e-commerce players to develop websites and apps that are mobile-friendly.
For instance, both Jumia and Konga have mobile apps, that are available on the Google Play Store and the Apple App Store that make it easier for consumers to browse and purchase products through their mobile devices.
According to Fitch Solutions, Nigeria has a mobile penetration of 91.4 per 100 people in 2021 which is projected to reach 94.2 per 100 people in 2025. Furthermore, the country’s 3G and 4G mobile penetration is 47.8 and 11.4 per 100 people respectively in 2021 and this will increase to 56.6 and 22.2 in 2025.
Fitch Solutions expects that for the years ahead, food and drink companies will begin establishing similar partnerships with e-commerce platforms to diversify their route to market strategy through Direct-To-Consumer.
READ ALSO: Oil and gas markets to experience increased volatility and concentration- IEA
