Sales: Online shopping booms as grocery operators lament

By 09:16 Fri, 13 Nov 2015 Comments


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• Online products

Operators of large supermarkets and small

businesses have raised alarm over a sharp drop in

their sales, following the booming online shopping

in the country.

The News Agency of Nigeria (NAN) reports that

online shopping is a form of electronic commerce

which allows consumers to directly buy goods or

services from a seller over the Internet.

Alternative names of the system include e-web-

store, e-shop, e-store, online store, online

storefront and virtual store.

Some of the managers of the stores, who spoke

with NAN, complained that e-commerce had

slowed down their businesses as well as reduced

volume of sales.

The system has also caused decline in revenues

accruing to state governments which have not

perfected mechanisms to monitor activities of

operators and collect revenues in their states.

A survey on the operation of online shops in some

major cities of the country, including Abuja, Port

Harcourt and Kaduna, shows that small business

operators are complaining of low patronage.

Mr. Kazeem Olagoke, Manager, Samsung

Telecommunications, in Abeokuta, noted that the

ease in buying products online made such system

more attractive to clients than buying from open

markets.

“Many people prefer to sit within the confines of

their rooms and order for goods online which are

being delivered to them without sweats.

“You know it saves them transport cost, stress and

time they could have spent to purchase the goods

at physical markets.

“So it is increasingly becoming difficult to attract

and maintain clients,” he said.

Mr. Adeyemi Johnson, Manager, Shallom Mega

Stores at Oke-Ilewo, Abeokuta, noted that online

shopping “has created serious competition in the

physical market”.

“Owners of the online businesses have their agents

all around, who even visit our stores and lure away

our clients.’’

Dr Michael Simpson, a Lecturer at the Department

of Economics at the Olabisi Onabanjo University,

Ago-Iwoye, however, described online shopping as

a positive trend in Nigeria.

He noted that the development had contributed

significantly to the entrepreneurial skill of Nigeria,

particularly the youth.

According to Mrs. Adenike Ajala, a civil servant, the

advantages of online shopping is that online stores

are opened 24 hours daily and internet offered

many resources for products and price

comparisons.

“It provides customers with a wider range of

products and services, many which cannot be

found at the physical markets,” she said.

Following the trend in business lull in open

markets and the booming e-business, the Kaduna

State Government said it planned to set up a

structure to monitor the platforms with physical

presence in the state.

The state’s Commissioner for Commerce, Industry

and Tourism, Malam Shehu Balarabe, said the

ministry had begun to identify and locate all online-

shopping outlets in the state.

“We need to know where they are and how they

operate with a view to checkmate their activities,’’

he said.

The commissioner said that the measure had

become necessary to protect consumers from

fraudsters who would take advantage of internet’s

free highway to swindle consumers.

He noted the need to enlighten the public on the

advantages and the dangers of online-markets that

were fast gaining popularity with improved internet

access.

Mr. Jenom Nyam, a Kaduna businessman who

utilised online platforms for over 10 years, said

highlighted the high risk associated with it and the

need for monitoring.

“Sometimes when you make purchase online, after

supplying your credit card details, money would be

deducted from your account, but the goods will

never get to you.’’

However, an economist with the Kaduna State

Ministry of Budget and Planning, Mr. Yusuf Auta,

said in spite of the huge risk associated with e-

shopping, government could still tap from its huge

revenue potentials.

Auta explained that the platforms provided huge

employment opportunities and wide range of taxes

that could be derived from the markets, if allowed

to flourish.

“Manpower is needed to run the market, thereby

creating employment opportunities.

“ The staff are paid salaries and obliged to pay

Personal Income Tax (PIT) which is a huge source

of revenue to the government.’’

“Also, the organisations that run online-market

platforms usually have physical presence where

their goods are stocked for delivery to customers;

government could charge ground rent on the land,’’

he said.

Financial experts in Port Harcourt expressed

divergent views on the potentials and benefits of

the platform to the nation`s economy.

Mr Emmanuel Jumbo, a management expert, said

the system was not in the interest of the nation`s

economy.

“ It makes the buyer to pay more for any service.

“ For instance, I ordered for a handset (phone)

worth N28,000. I paid extra N2,000 as cost of

delivery. It means that for anything you buy online,

you pay extra.

“ Meanwhile, the owner of the shop pays nothing

as tax to government because he does not have a

rented shop and operates from home,“ he said.

However, Ephraims Okon, a stockbroker, said

online shopping had brought a new dimension to

commerce in the country.

He also said that the proprietors paid tax to

government because they also bought such goods

from somewhere and in the process, paid Value

Added Tax.

Corroborating the position, the Director,

Communications and Liaison Department, Federal

Inland Revenue Service (FIRS) Mr. Emmanuel

Obeta, said the operators were collecting agents,

working on behalf of the Federal Government.

Obeta said that every item sold by the online shop

was inclusive of VAT element of five per cent, which

would be remitted to the FIRS.

“The five per cent VAT is attached to every product

you buy so long as this goods is not VAT exempted.

“ At the end of every month, these online shops

which operate as registered businesses, when

piling up their returns, remit the VAT to us (FIRS),”

Obeta said.


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