Another Nigerian internet giant has reportedly collapsed. According to reports swirling on the internet, DealDey, one of Nigeria’s biggest eCommerce platform, is getting shut down!
Recently at @smepeaks, we realised how quite DealDey has been recently and had some speculations. Some of our thoughts were confirmed when we visited the website. It's as silent and 'empty' as a graveyard. Until a source hints at the possible scenario. https://t.co/pUUlVSknKh
— Gracey (@ms_grakins) January 8, 2019
The story is yet to be confirmed. However, according to TechPoint, DealDey actually closed shop way back in early December 2018. According to them, this was the last time DealDey users saw any deals on the platform or any of its social media platforms.
Staff have reportedly been let go and the company’s office has also been closed since.
Since December, users have increasingly complained that the website’s workers no longer respond to enquiries and phone calls. These have helped to fan the speculation that the platform has truly collapsed.
Yet, there’s been no confirmation from either former workers or operators of the platform.
@DealDey what kind of useless customer service do you guys run ffs? You don't reply mails, you don't answer calls, you don't reply DMs. You guys should leave this useless behavior in 2018 please and check your DMs.
— The Alawada of Awada (@TheSagachristos) December 31, 2018
Dealdey shutting down wasn't new info. Knew since Sept but mahn u close mouth till official, Another bites the dust but we move
— Amun Ra (@sinzubaba) January 8, 2019
Founded by serial entrepreneur, Sim Shagaya in 2011, DealDey was the forerunner for Konga and many other ecommerce websites. But the platform was different as it focused on helping users find discounts on products, services and event tickets.
Thanks to early advantage, DealDey looked poise to play a big role in the Nigerian ecommerce space. Of course, Nigerians love “awoof” (getting things on the cheap), and they value platforms that provide this sort of service.
This helped DealDey snatch a $5 million equity funding from Sweden’s Kinnevik investment company.
⚰️ Startup Graveyard updatehttps://t.co/DQVnHCnhLY
— Calabash 🥁 (@CalabashApp) January 9, 2019
Sector: eCommerce
2011: Established by Konga founder Sim Shagaya
2015: $5m investment by https://t.co/kZUurKLwWx
2016: Acquired by Ringier Africa Deals Group for $5mhttps://t.co/LJ47pBp07q
But things escalated really quickly from there. DealDey shaved over 60% of its workforce following the deal. And in less than a year, the eCommerce platform was sold to Ringier Africa Deals Group. According to one source, DealDey was sold for $5 million rather than the $75 million it originally valued itself.
Fate of Online Business In Nigeria
The collapse of DealDey is just the latest in a long list of struggling (and failed) internet companies in Nigeria. From Efritin, to Konga, to Careers24, speculation is getting widespread that Nigeria is not the right market to launch an internet business.
First it was Efritin, then others, Konga Sold then Dealdey. E-commerce in Nigeria still has an extremely long way to go but investor confidence in the sector has been badly shaken so far. Everyone prefers Fintech
— Amun Ra (@sinzubaba) January 8, 2019
To be fair, the collapse of DealDey is not unexpected. Its business model was in direct competition to the more traditional eCommerce models of Konga and Jumia. With the latter two offering products at regular prices and crashing prices during peak seasons or promos, DealDey was extremely vulnerable. In fact, to many users, DealDey had completely been forgotten.
Yet, aside from DealDey, the struggles of Efritin, OLX, Konga and even Jumia, suggests that Nigeria is a difficult market regardless of its population potentials.
With the purchasing power of citizens quite low, a high cost of operation in the country, alongside lack of solid internet laws and identity management, internet businesses face several struggles.
Meanwhile, developing the infrastructure for success has been difficult as the requisite funding and support do not exist.
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