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InterviewOLX

Trust Is A Big Challenge To e-Commerce- Lola Masha

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Lola Masha is the country manager, OLX Nigeria. A former top executive with Google, she joined OLX Nigeria in February 2014 as the head with the goal of building a world-class customer support service for online classified ads.

Can you explain what online classified ad is?

Online classified ads are important advertising solutions for micro, small, and medium scale businesses. It is a free advertising solution for businesses with a huge user base of people looking for cheap local deals online.

How would you rate its acceptance in Nigeria vis-a-vis OLX operations?

What we have found out was that there are those who have had experience outside Nigeria, buying things on e-Bay and other European websites. These people understand the model and have used and love OLX. It has also worked for those who haven’t had the foreign experience of patronising those foreign sites but have tried us, and they usually come back. So, amongst those that are aware of the model, the feedback we have been getting is that it has been a good experience. We are the leading free classified ad site for consumer-to-consumer trade. We help people discover buying and selling opportunities, earn a little extra cash and get a good bargain.

How old is the business in Nigeria?

We are almost three. OLX Nigeria will be three in September. Nasper is our parent company. It used to be a South African company but is now headquartered in Amsterdam. They own DSTV/ Multichoice. OLX has its presence in 40 countries, with offices in 25 countries including Nigeria.

We learnt that you also operate in Ghana without an office. Why set up office in Nigeria and not Ghana where you have been before Nigeria?

Why not Nigeria? Nigeria is a priority market for us. And for you to address a priority market, you have to physically be there. You can’t run it remotely. And Nigeria has unique challenges as well that require you to physically be there to understand the nuances and to connect with the local stakeholders. In Ghana, it is a smaller and simpler market, and you don’t have most of the complications that we have in Nigeria. Actually, there is an already existing classified ad player there and the users understand the model a bit more than we do. It was a case of prioritizing a certain market and focusing on the other.

Having spent close to three years in this market, how has the competition been?

We have several competitors but our closest was TradeStable.

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So, what is your market share at present?

I think the best way to gauge our market share right now is to look at our competitor. Of course, we acquired Tradestable Nigeria platform, which means we are here to stay. We have an office and there are people employed here, but Tradestable did not. Tradestable is being managed from outside the country. And it really speaks of the importance of having local presence to be successful. In terms of specific share, we have significant market share, Compared to our competitors. I think number two now would be jiji.com.

What is your reach?

We have national reach and we are very strong in Lagos. You can post from any state in Nigeria, but the top five states where we have huge presence are Lagos, Rivers, Oyo, Ogun and Abuja.

What is the difference between OLX and other e-commerce stores like Konga, Kaymu and Jumia?

It is great that you asked and it goes back to the question around the classified business model and what our value proposition should be. There are different e-commerce models. The primary one that most users know is e-tail. And the e-tail model is a Konga or a Jumia where the companies had the warehouse, buy from the suppliers and sell to users. That is the classic e-tail Amazon model. Then there is the Option model. In the Option model, you have big time sellers, small businesses, independent sellers that would post items on the platforms, they would have been pre-screened to a certain extent and interested buyers can now go through the items and bid on how much they want to buy. That is basically similar to what classic e-Bay does. And then there is the classified model. These are three key things that makes the classified ad model different from the other two. First, it is from consumer to consumer which means an individual selling his or her phone, tabs or car to another individual without the platform, OLX being the middleman. We simply provide you the market for you to do it but the connection happens between the buyer and the seller. That is one key difference. The other key difference is the type of things you are able to buy on a classified model as opposed to an e-tail model. Typically, if you want a brand new ‘tear rubber’ item, if you want a brand new Samsung S4 phone, you visit the e-tail stores. But for classified, it is also a marketplace but a mix of the popular ‘bend down boutique,’ used car dealership and Computer Village setting where you can buy a wider range of items in different conditions. If you want a great deal and price, and don’t want to spend extra money to buy a brand new laptop but just need a basic computer laptop for your son or daughter who is in SS3 and studying for an exam, you can then go to OLX to look for someone who is trying to sell a laptop with a great deal. The third key is the business model and how our company makes money. For Konga or Jumia, it is very simple; they can mark up the purchase price meaning they buy a phone from Techno at N18,000, add extra N2,000 and sell at N20,000. Very clear business model. For us at OLX, because we don’t have the transparency in what a seller is putting up for sale, we can’t then put a markup on the item.

But do you have service charge?

We don’t have a service charge for now.

How do you then make or intend to make money from the business?

We have different ways by which we make money. You can either pay to have access to our link or we encourage those who want their items on top three so that they can sell them faster to pay something extra or something similar to Craiglist where users can post their properties for rent and pay to post. We won’t care how much they are renting the property for, but to post on OLX because they know they will find the renters, then we will charge to post. Or if companies such as MTN or First Bank want a banner ad because they know a lot of people go to OLX, they would have to pay for the ad to be posted. Those are the typical ways that classified ad makes money. But basically, the business model is not dependent on the value of the item necessarily, but it is more about the service that we provide. We are more of a service provider as opposed to e-tail shops. Besides, we have a large investor behind us which is Nasper. As I said earlier, they own DSTV/ Multichoice, thus they make money. They are willing to pull the fund in to grow the market. In other markets that we are in like Portugal, the UAE and others, we are making good money. So, some pay for others to grow.

What are the challenges OLX has to contend with?

Because this is a new and foreign concept, the challenges have been the brand perception and keeping pace with the growth. OLX is growing so quickly in terms of numbers of users, and the business itself. We really want to be ahead of the game. Also the issue of safety is a big challenge. You must have heard about the unfortunate ‘OLX Nanny’ saga or some reports that are not pleasant. All these stories sometimes tend to hold back some people from wanting to even try to use the platform. So, the whole work for us is to convince those users. We admit some of those challenges are there but we are working so hard to reduce it. But that should not prevent people from trying the platform.

How have you been addressing the issue of trust and safety as well as ensuring that the OLX platform is secure for users?

Trust is definitely one big challenge. In all the 40 different countries that OLX is operating, Nigeria is the one exception where this question is actually so prominent. When we launched the business in Nigeria, we knew about the perception that here you can’t trust anybody. But then we decided not to get involved in the assumption or to bug out courtesy of the negative stereotype about the market. We said ‘let’s launch and see if Nigerians are actually trustworthy or not.’ But what we learnt painfully and unfortunately is that we do have that problem here. It is a reality. But again, it is very unique to Nigeria. We don’t see this extent of trust and safety issue elsewhere. Frankly, 99 per cent of all cases that do go wrong were because the users paid advance. That is why we keep educating our users not to pay before they see the item. Don’t pay advance, percentage or commission because when you get to see the item, you can evaluate or assess it to know if it meets your need. Consequently, trust is a top priority for us. We are taking the issue very seriously. We are open to innovative ideas and can test new things that will help to build trust and safety. Part of the things we are doing to minimize it is that for every single ad that is posted on OLX, we have a team that work 24/7 to review it and check if it meets our safety criteria. We also have features on the site where you can report and post complaints.

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At what point does your interfacing between customer to customer stop?

Once a buyer calls the seller, they meet up, the trade happens and everyone goes home happy. Our role is to bring the two together. And we also have a customer support team that our consumers can call up to help double check the ad and see if they can meet up with the order. We help on the background check, look through the history, check the ad and advise on where to meet. If things don’t go as expected, consumers can report back to us especially if the buyer requested for advance fee or deposit. We want those reports so that we can block those users.

Do you have plans to grow into e-tail business?

Not currently. We don’t have plans to compete with Konga or Jumia.

What is the growth plan for OLX in Nigeria?

Last year when we moved in here into our office (a three-floor office in Yaba), we were less than 10 people. Now, our size is more than double and we have actually overgrown the space. The business is growing very rapidly and our plan is for this to continue. We have plans to increase our usage significantly and to convince more users to try and sell more through the platform. We actually have more demand than supply. We have more people looking for more items on OLX.