Swedish top tech investor, Kinnevik AB said disclosed in its latest trading update for the first nine months of the year that its investment in Konga further deteriorated.

Kinnevik’s 34% in Konga was further impaired down to SEK128 compared to SEK133 disclosed last year. On a USD basis, the company did a further write down to USD15.3 million from USD15.9 million in the previous year.

On a local currency basis, total impairment on its investment for the period was NGN216 million on a year on year basis.

The company co-owns Konga alongside South Africa’s most valuable company, Naspers with about 41% of the eCommerce company on a fully diluted basis. Kinnevik disclosed that its total investment in Konga till date was SEK292 million. This is NGN12.5 billion in local currency.

Within the first nine months of the company said the fair value of this investment fell by about 40% on a year on year basis. However, impairments on Kinnevik’s investments seem to be slowing down as its net impairments for the third quarter of the year only increased by 10%. It is logical to deduce that the first and second quarter had the highest impairments.

As an understanding of how Kinnevik values its investment in the eCommerce company, the group said “The valuation is based on the average sales multiple of a group of comparable companies. Konga generates revenue from two business models, inventory and marketplace”.

The company did not, however, disclose the weight of the two business models to Konga’s revenue profile.

Konga competes with Rocket Internet’s Jumia Nigeria. In its latest trading update for the first six months of the year said its businesses across six countries in Africa suffered a total loss of USD61 million on a year on year basis. In local currency, Jumia has to its negative credit NGN21 billion in losses.

In fairness to two of Nigeria’s largest eCommerce companies, the business of eCommerce has been one of the worst hit after Nigeria’s economy relapsed into its worst recession in over 20 years. An unprecedented depreciation in the Naira against the USD, increase in basic commodity prices, and a subsequent drought in hard currency led to a spike in inflation on mostly imported goods sold by both Jumia and Konga.

Towards the end of last year’s third quarter, both companies changed their business models to majorly merchant system where they practically do not own most of the goods they display on their website. However, from the look of things, it is clear Konga has not done away with the inventory model. It is not known how this approach seems to be working for the company or otherwise.

In the last twelve months, the disposable income of the lower-middle-class population, the core target market of eCommerce companies have further deteriorated beyond precedence. Customers now seek cheaper alternative on essential items or totally cut-down on certain goods. This is a major problem for eCommerce companies as their lifestyle, gadget and electronic side of their business a heretofore market mover has seen the worst performance in the last two years.

The need to adapt to the changes has seen both Jumia and Konga delving into grocery and essential commodities business. While this brings them, new customers, it further exposes them to competitive risks as there are bigger players in the offline side of things such as Shoprite who can offer cheaper prices albeit lower margins, but a higher volume is an upside for the company.

In the last nine months of the year, Shoprite underwayred some of its highest revenue from Nigeria with further expansions under way across key cities of Nigeria.

The need to have a sustainable business model for both Jumia and Konga is therefore crucial as Nigeria transits out of recession. The two companies have been on their way to search for the ‘Holy Grail’ of business- profit. The need to reach this milestone quickly is more pressing than ever given the massive investment that has been staked into these companies.
SOURCE: https://pageone.ng/2017/10/27/kinnevik-konga-six-months/

I dedicate my Ftc to my guys wey introduce me to Nairaland..Afolabi Kazir and Obayemi Hakeem Jinadu

I see Online market taking over

Ok

Too bahd




Btw,
Since my school has refused to mobilize me for service, I am looking for any job (preferably engineering inclined) in either Port Harcourt, kaduna, Calabar or Abuja. Please help a brother overcome idleness by linking me up. Thanks

nowadays so hard to even buy necessities.
how our government has destroyed this country. OBJ bought the fuel to burn the country, GEJ poured the fuel ,Buhari now has brought the matches, and sure the next president will be the one to light the fire to permanently destroy this country.

That's the same issue.

We can't give what we don't have.

Buying things overseas to sell locally isn't profitable one bit. I have a personal experience.

Except konga.com and jumia would collect money for products over 3 months, Nigerians are broke.

Hmmm...Jumia is giving them a serious run for their money. No surprise, their stocks are over priced already hence the lower sales records.

Their business

nice article

ehya

Ibrahim9090:
I dedicate my Ftc to my guys wey introduce me to Nairaland..Afolabi Kazir and Obayemi Hakeem Jinadu

Bblessing37:
Ok

VoltageDivida:
.

Titto93:

psp2pc:
.

Abbeyme:
That's the same issue.

We can't give what we don't have.

Buying things overseas to sell locally isn't profitable one bit. I have a personal experience.

Except konga.com and jumia would collect money for products over 3 months, Nigerians are broke.

Chai!

No be when you don chop you go shop? Economy no good

sisisioge:
Hmmm...Jumia is giving them a serious run for their money. No surprise, their stocks are over priced already hence the lower sales records.

Jumia is in a worst state than Konga. Go and read record.


See https://www.nairaland.com/4084246/jumia-moves-farther-profit-posts

Jumia Moves Farther From Profit, Posts USD 61 Million Loss In Six Months

No bar in naija so no sales

Konga needs to wake up! I began shopping online with them, but now it Jumia all the way! Konga's mobile app isn't very responsive, their products are 1-3k more expensive than Jumia's and their after-sale support is poor. Only advantage is KongaPay

Nigerians can't keep buying with this high exchange rate
, they would have to sale nigeria products if they want to survive.

So na this South Africans still get this Konga again?

someone pls summarize

austin2all:
someone pls summarize

Some swedish investor lost money because konga isn't doing too well.

... even Nigerian Breweries and Jumia also posted a loss... what is going on?

Eeyah

Naija not ready yet when its comes to tech biz, especially On demands Service...

No be small thing oo

Check my signature to order your football jerseys and get it customized FREE OF CHARGE!

I hope this is not the beginning of the end for Konga

NubiLove:
... even Nigerian Breweries and Jumia also posted a loss... what is going on?

What is going on is that the APShit has almost ruined Nigeria's economy!

Even online business is not doing well here.


Anyway, contact my signature for free bitcoins, nothing to lose.

nenergy:
Konga needs to wake up! I began shopping online with them, but now it Jumia all the way! Konga's mobile app isn't very responsive, their products are 1-3k more expensive than Jumia's and their after-sale support is poor. Only advantage is KongaPay

I don't even visit the site no more.

The over-priced Items and very 1950s porn website pattern aside, they are bat-crap crazy enough to expect me to pay different shipping fee for items ordered together when Jumia ships overseas items for as low as 600 naira to my location, irrespective of the numbers.

Bat-crap crazy!!

UBGG:


I don't even visit the site no more.

The over-priced Items and very 1950s porn website pattern aside, they are bat-crap crazy enough to expect me to pay different shipping fee for items ordered together when Jumia ships overseas items for as low as 600 naira to my location, irrespective of the numbers.

Bat-crap crazy!!

I agree! Jumia has shipping fee advantage. You pay less with more items in cart

konga may be telling the truth but jumia are blatant liars...their making serious money and trying to code it

jumia is shrinking and shop right is expanding.....story..jumia is raking in millions

who even verifies these reports sef?