Trust is a critical ingredient within the e-commerce sector, with Nigeria and Ghana no exception. Users want to know that when they click or tap on “Pay”, the party they are doing business with will deliver the product they are vouching for as a supplier. Human connection is integral to building this trust with consumers, especially when they need information quickly.
“Typically, 9 times out of 10, consumers go onto an e-commerce platform with the expectation that they should be able to do what they want to do,” says Irina Oduro, Co-Founder and Vice President of Product of KudiGo, an omnichannel digital commerce infrastructure provider for micro and small businesses retailers in Africa. “But, people feel more comfortable chatting with someone and closing a transaction over WhatsApp, Facebook Marketplace or Instagram’s DMs. It’s a market characteristic we’ve identified in a sizable part of our own user base and elsewhere in the ecosystem, including our peers.”
Oduro says that the KudiGo team had suspected this insight for some time based on their own experiences in the market and their conversations in the ecosystem. Their suspicions were confirmed when KudiGo conducted an internal analysis of the data generated by users on the KudiGo platform. “I even buy things online sometimes this way. If I’m looking for something that we [KudiGo] don’t sell, I’d go onto Instagram, browse different options of what I’m looking for, and when I find what I want, I DM the seller,” she says.
“The seller names their price, provides payment details, and I pay it expecting the seller to send me the product. Sometimes the seller will expect payment on delivery, but this is less common. The problem with this whole interaction, as our own data proved, is that it relies solely on trust. There is no guarantee the buyer gets what they want or the seller gets paid because someone has to take that first step. One part must trust the other first for a transaction to take place.”
Apart from being prevalent within the Nigerian and Ghanaian e-commerce markets, KudiGo found that this dynamic is playing out elsewhere across the continent and in Asia.
KudiGo as a business has, to a degree, been defined by trust. Its organic growth, especially from 2021 onwards, has been driven by the company’s own customers, who, after using it, refer KudiGo to their peers. KudiGo’s customer base, as of March 2023, sits at over 60,000+ merchants.
This trust deficit within social e-commerce created an itch that Oduro and KudiGo wanted to scratch. After testing several options and conversing with their payment partners in Nigeria and Ghana, KudiGo created VerifiBuy. The idea behind VerifiBuy is that social media users are guaranteed a refund on their purchases if they do not receive what they buy, protecting them from scammers and fraudulent sellers. “VerifiBuy is built on the principle of neo-two-factor (2FA) authentication, harnessing the 2FA process creatively to create value for consumers and merchants. How it works is when a buyer on social media wants to purchase an item over Instagram, for example, they’d click on the merchant’s VerifiBuy link,” Oduro explains.
The link then takes the buyer to a payment portal where they make payment, with the funds deducted from their account like usual. Where VerifiBuy is different is that on payment, the buyer is sent a confirmation code, with the payment held in escrow by the payment provider. When the item is delivered, the confirmation code is shared with the delivery professional, who then triggers the release of funds to the merchant. If the buyer does not get what they paid for, they are automatically refunded after a set period.
So far, KudiGo has partnered with recognised payment providers in Ghana and Nigeria as part of VerifiBuy’s payment network. These include Paystack, Paga, AccessBank, GT Bank Ghana, Juni Payments Ghana and MTN Mobile Money. Discussions are also underway with a couple of international payment providers. Having completed its pilot phase, VerifiBuy is open for closed beta testing. In the pilot phase, over 3,000 micro-merchants signed up to use it, with the results suggesting that VerifiBuy can bridge the trust gap between sellers and buyers, providing micro-merchants a way to boost their trustworthiness in a competitive marketplace.
“E-commerce is vital for small businesses to reach consumers. Through VerifiBuy, we want to play our part in helping the continent’s e-commerce sector grow over the long term,” says Oduro.
You can learn more about VerifiBuy here.