Nigeria: Geopoll Survey and Insights on Adoption of eCommerce, Income and Consumer Behaviour

As Africa’s largest economy, with high mobile penetration, Nigeria is one of the most prosperous consumer markets in Africa. Analysis of the consumer trends in the market is an ongoing area of interest for brands, financial institutions, and media agencies. In order to establish this trend, GeoPoll recently conducted a study to gather up-to-date insights about Nigerian consumers, eCommerce spending and buying preferences.

Nigeria’s Consumer Market

Nigeria’s population was most recently estimated at 198 million people, which is close to 3 times the size of South Africa’s population and is the largest population in Africa. Lagos alone houses an estimated 21 million people and is Africa’s largest city by population. Nigeria’s population skews young with a median age of 20 years old. 65 million people in Nigeria are 14 years old or younger, which points to an even larger consumer market to come in the next decade. The middle class in Nigeria makes up 23% of the population and has an estimated potential market value of over $28 billion USD, which will only grow as the middle class expands over the coming years.

In 2017, Nigeria’s GDP was 375.77 in billions of US dollars. The overall GDP Growth Rate for Nigeria is 2.90, the Annual GDP Growth Rate is 1.50, and the GDP Per Capita is 2412.41, according to Trading Economics. With this said, it is important to note the prevalence of informal trade in Nigeria. According to research conducted by Business Chief, “87 per cent of the trading in Nigeria happens in informal markets.” Informal trade is not tracked or included in overall Gross Domestic Product calculations, which means Nigeria’s economy is more prosperous than GDP alone can represent.

Today, businesses should be taking note of the Nigerian market due to the cash flow throughout the nation and the projected growth trajectory of the market. The largest population in Africa is in Nigeria and the majority of these people are young. As the economy continues to flourish and the population gets older, their buying power will continue to increase, and companies looking to expand could benefit from learning more about this powerful set of consumers.

Study Methodology And Sample

GeoPoll conducted research in Nigeria for this report using a mobile-based data collection platform in order to perform a market analysis for the country. The data was collected from 500 unique respondents from GeoPoll’s survey panel in Nigeria. There were half female and half male respondents, and all participants were required to be 18 years old or older. The age split of the panel was 21% ages 18-24 years

old, 65% ages 25-34 years old, and 13% aged 35 years old or older. Respondents came from all SEC groups, with the majority of respondents falling in SEC group B and C1. Respondents come from 29 of Nigeria’s 36 states, with 33% of respondents living in Lagos, 17% in Kano, and 10% in the Federal Capital Territory. The survey was conducted in English over SMS.

Consumer Insights

Income Levels

The following chart shows the overall breakdown of income brackets that were reported by the study’s respondents.

QUESTION:
“What is the monthly income for your household in NGN? 1) Below 269,000 2) 269,001-650,000 3) 650,001-1,031,000 4) 1,031,001-1,412,000 5) 1,412,001-1,795,000 6) Over 1,795,000”

RESULTS:

The largest portion of respondents (39%) reported that their monthly income was below 269,000 NGN, or approximately 740 USD. The second largest income bracket was reported as 269,001 to 650,000 NGN (~740 USD to 1783 USD) with 31% of respondents falling into this category.

Looking at female respondents, 33% bring in between 269,001 to 650,000 NGN in household income. The largest portion of male respondents (46%) bring in below 269,000 NGN. Women overall were higher earners than males, having fewer people in the lowest income brackets than males and more people in the higher income brackets than males. This demonstrates the strong buying power of female consumers in the Nigerian market.

In terms of age, 18-24 year old’s made the least money overall. 87% of the 18-24-year-old’s surveyed were in the lowest two income brackets, meaning only 13% brought in more than 650,000 NGN a month. Also, 56% of surveyed 18-24 year old’s reported that their monthly income is under 269,000 NGN.

25-34 year old’s had higher income overall than both 18-24-year-old’s and 35+-year-old respondents. 35% of 25-34-year-old respondents reported bringing in more than 650,000 NGN a month and 36% reported bringing in under 269,000 NGN.

35+-year-old respondents looked more similar to the 18-24-year-old age bracket, with 72% of respondents in the lowest two income groups, however, the largest portion of 35+ respondents, 42%, were in the income group between 269,001 to 650,000 NGN monthly.

These results show that as the booming young population (under age 24) of Nigeria will likely increase in purchase power in the next decade. It is also important to keep in mind that 65 million people in Nigeria are 14 years old or younger, so the growth in overall Nigerian purchase power in the next 20 years could be exponential.

Decision Influences

Knowing that Nigerians are purchasing goods and services widely lead us to inquire about how the consumers were making their purchasing decisions. Below is one of the first questions we asked in this category,

QUESTION: “What do you consider most when buying a product?”
RESULTS:

The responses indicate that the largest influence on purchasing decisions, whether in-store or online, is product function followed by price and features. This finding is specifically interesting for sellers of goods. Brand performance within a market is contingent on many factors, yet understanding how consumers purchase based on a good’s function, price, and features is a key to adjusting a product to appeal to the audience.

Further research on how Nigerians make purchasing decisions may be necessary in order to gain a comprehensive understanding of their buying behaviour, but the question and answers below may help shed additional light on Nigerian purchase influences.

QUESTION: “Select all that apply. What influences your preferences in products and services?”
RESULTS:

According to these results, Nigerians are highly influenced by word of mouth through friends, family or social media. The high response rate for social media’s influence on preference can point to social media advertising as a promising market penetration strategy.

Online Shopping

Nigeria has been an early adopter of e-commerce in Africa: In 2012 Nigerian e-commerce company Jumia launched and since it has “become Africa’s largest e-commerce platform.” The study also showed how Nigerians interact with online retailers.

It was found out that 88% of respondents had purchased items online before, and also examined the frequency of their online shopping, and why they prefer shopping online. See below for results,

QUESTION: “Select all that apply. Which items have you bought [online]?”
RESULTS:

Respondents reported that they largely purchase electronics online in comparison to the other categories. This may be due to electronics not needing to be touched or tried on to build faith that the item will work for the purchaser.

In terms of frequency, the primary response rates were as follows: monthly at 41%, weekly at 23%, and daily at 1%. The responses to this question can indicate that many consumers do not use online retailers to fill all of their shopping needs and that FMCG products like soap and toothpaste are not typically what sits in their online shopping carts.

The last set of key insights gathered in the e-commerce category focuses on why consumers choose to purchase online. Respondents were asked to, “select all that apply, why do you prefer shopping online?” and the answers were as follows: convenience at 29%, efficiency at 25%, discounts at 20%, variety at 15%, competitive prices at 10%, and others at 1%. Convenience, efficiency, and discounts have similar response rates. This may not be so unexpected if you evaluate the reasons you shop online yourself, but can reinforce key elements to focus on when building an online shopping experience for Nigerian consumers

Key Insights And Summary

Nigeria has a vast market of consumers that is only set to grow in the next few decades. Overall, Nigeria is a market with widespread opportunity for sellers. The population of the country is young and growing. The consumers are willing and financially able, to make purchases. It is important to study and monitor Nigerian purchase behaviour and decision-making patterns throughout the foreseeable future.

GeoPoll is an expert in conducting custom research in Nigeria and throughout Africa.