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Sales: Online shopping booms as grocery operators lament

• 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

“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

“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

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

“ 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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