It seems that Gigi is about to become the largest advertising platform in Africa with its recent move to acquire a major competitor, OLX.
With the acquisition, the company started working with OLX in five African countries, providing the company with over 8 million unique users a month when the deal is over.
Regardless of the e-commerce giant, the influence of Jumia in Africa, the popularity of her Jumia Deals, is questionable. This puts Gigi in the forefront of the classified sector of the continent.
Last year, OLX closed its offices in Nigeria and other African markets. Unlike Ephritin, which closed completely, OLX retained its online assets in five African nations – Nigeria, Ghana, Kenya, Tanzania and Uganda. These assets are now being taken over by Gigi in a deal worth between $ 1.5 million and $ 3.4 million, according to the Ukrainian technology new site, AIN.UA,
Despite the justification that acquisition is a better deal for OLX, unlike the Efritin case, there are still questions about the future of the classifications industry in Africa.
Recommended for reading: Why general ad sites may not be as successful in Nigeria
Over the years, the industry has witnessed a series of participants as well as exits. Efritin entered the market with a vendor verification system on its platform; a step that no other player in the industry has ever tried in Nigeria. However, the platform vendor protection initiative is obviously unable to save the company, as it closes only two years after the launch.
The closure of Efritin is explained by the low penetration of the Internet, the high cost of the internet and the challenging economic conditions.
Things have not improved much, it seems, as there are still questions about the actual figures for internet penetration in Nigeria, for example.
According to Jiji Country Manager in Nigeria, Julius Shefenfeld, lack of confidence in using the Internet is still a major challenge for the advertising industry.
"Some people still do not fully understand the benefits of the network in their lives and business," says Sheenfeld.
Shenfield argues that Gigi has adapted his product to the Nigerian market, which gives the company leadership in the sector. He also points out that the Gigi B2C and C2C models are geared to providing more value and diversity to their customers.
Shefenfeld believes that Gigi is proof that classifications work in Nigeria after a 30-50% growth over the year.
For the future of ads in Nigeria, Gigi is based on the fact that Nigerians like to bargain with vendors for which announcement platforms provide an opportunity.
Competition in the advertising sector
There are steps to reduce competition in the advertising sector in Africa, especially in Nigeria. Earlier in the industry, Naspers and Schibsted, both OLX and TradeStable, entered an acquisition deal that saw OLX take over TradeStable to reduce competition.
With Gigi's recent move, the question of whether he will ever have anything more than a major player in the ad sector at one point comes to mind.
Business competition allows for innovative action and there is currently no big competitor for Jiji, there are concerns about innovation in the sector.
On the other hand, it can be seen as an opportunity for Jiji to reshape the Classified Goods Market in Africa as a major player with a dominant presence in five African countries.
We can expect the industry to welcome a new player who would like to explore the opportunities in the sector. The acquisition could also make Jumia put more weight behind Jumia Deals, giving Jiji a run for her money.
The country of Nasper
OLPS Finance, Naspers can not comment on the advertising industry's challenges in Africa. However, one representative claims that the sector remains the main focus of Nasper, which is ironic, taking into account the previous decisions of the South African company.
According to Naspers spokesperson, the global Internet group is continually assessing its portfolio of business listings to provide a disciplined approach to how and where it allocates capital and time.
The company decided on the basis of the assessment that it was appropriate to sell its interest to these markets to focus on accelerating growth in other markets.
New Report: Nigerian start-ups $ 17.6m in Q1 2019, 8.5% higher than in Q1 2018. Learn more in the last quarterly issue of Nigerian Starting Financial Statement here.
On June 1, 2019Techpoint will bring together people from across Africa and around the world to engage in talks that will change technology in Africa through AI, Robotics, Blockchain, Cloud Computing, and the future of Techpoint Inspired. Sign up now for an Early Bird Ticket.