The acquisition of Konga by Zinox Group seems to be yielding positive results, as the e-commerce company announced that it has made a turnover growth of 800% since the acquisition which took place last year.
Although the details of Konga’s financial result were not made public, Co-Chief Executive Officer of the company, Prince Nnamdi Ekeh, said the company had recorded an impressive turnover since Zinox acquisition of Konga in February 2018. He said the company’s growth was in line with investors’ expectations.
The e-commerce business is yet to be profitable for online-marketplace companies in Nigeria, however, Konga in the past had reiterated that it would be the first e-commerce company to hit profit by 2021, despite the presence of strong competitors like Jumia.
E-Commerce companies in Nigeria (and Africa at large) have generally struggled overtime to make profits. Not only does the online retail sector have a high-entry barrier, but the cost of sale is also usually high, thereby making profitability nearly impossible. This challenge has led to companies such as Efritin shutting down their operation.
“E-commerce is not just an extremely expensive project anywhere in the world with initial huge losses. It is a very complicated business,” Ekeh said about the e-commerce business.
Ekeh also disclosed that the company recorded cost reduction within eighteen months after the acquisition, adding that Konga is self-sufficient, “We have reduced cost by over 45% and also achieved growth of over 800% in the past 18 months. We are working very hard to meet investors’ expectations. It is true we are incurring huge losses now based on the e-commerce business model. However, we have 36 months of cash reserve to build Konga as a success.
“We are ambitiously scaling Konga, and that is why we launched a successful Konga Travels and Tours that is currently making huge waves in the travel booking industry. In addition, we have other approved projects and new lines of businesses that are set to be unveiled soon.
“We have spent the last year restructuring the business and positioning it on a very solid footing. This is evident from the huge strides we have recorded over the period and the several other viable business units and subsidiaries that have taken flight within the Konga Group. Indeed, we are preparing to lead in this space.”