Is Bamboo, Chaka, Rise-Invest, and Trove Stuck in a Commodity Trap?
The race to own the Nigerian retail stock trader.
With the global stock market experiencing extreme volatility, brokers are panic-selling stock, due to extreme uncertainty. Global exchanges saw depression era lows in February and March due to the lack of economic activity caused by a global pandemic (#COVID-19). Collectively, the global equity markets lost $24 trillion in value within the first quarter of 2020, $2 trillion more than the GDP of the United States.
Within the aforementioned period, COVID-19 shrunk nearly a 3rd of the entire global market capitalization of the global equities markets. The Nigerian Stock Exchange (NSE) saw a loss of ₦2.4 trillion within three weeks of the first Nigerian COVID-19 case in February – an 18% drop.
On top of a global pandemic, we saw the oil markets decimated due to decreased demand and geopolitical brinkmanship which culminated in a price war between Russia and Saudi Arabia. We saw a 65% quarterly fall in the price of oil. Of course, every oil producing country was affected. Nigeria ended up devaluing the naira as a result. Overnight, the naira lost 15% of its value.
Ala adi mma bu uru ndi nze
“When there is crisis some people are favored by the situation.” - Igbo Proverb
In the wake of the pandemic and economic uncertainty, I had a good conversation with peter kisadha. We spoke about his fears about the rising global market disruption, and discussed the reality of participating in one of the largest transfers of wealth in our time. (Global equities market)
Before now, buying US stock for many Nigerians was a tasking exercise.
Investors bought and traded stock through brokers. You can set up an account by depositing cash or stocks in a brokerage account. Firms like Charles Schwab and Citigroup’s Smith Barney unit offer brokerage accounts that can be managed online or with a broker in person.
With Chaka, Rise, Bamboo (all backed by Iyin Aboyeji’s Future Africa Fund), and Trove (backed by ARM a Lagos based Nigerian private equity firm) there’s now a proliferation of options to empower Nigerian consumers to buy stocks from around the world, but equally important, provide the casual investor and opportunity to diversify away from naira holdings.
Different app, same people, same customers
The commodity trap
Remember when Snapchat launched with stories functionality and a couple of years later, Facebook and Instagram launched a near identical feature on their products? Many thought it was the end of Snapchat. Fast forward a couple of years and Snapchat is still around doing so much more. Facebook/ Instagram may have tried to compete on a feature but products are much more than one feature. That’s why Snapchat is still around today.
When companies deliver a similar value proposition in the market, most users think these companies offer products that are essentially interchangeable. Unfortunately, some companies start to compete on attributes that are not defensible and easily replicable. I call this the “commodity trap”.
Everything about a company adds up to its uniqueness. Commoditization, specifically in tech products, is the failure of a company to recognize differences, and they end up falling into the trap of “We are the same.”
There are a couple of ways to leave the trap.
Bundling services
Differentiated brand/ marketing
Delivering a superior product (Quality Assurance)
For today, we’ll focus on these two below
By offering a sustainable customer value proposition (CVP)
By delivering exceptional customer experience.
How different is Trove, Rise-Vest, Bamboo, Chaka?
Key Differentiator 1: Customer Value Proposition
Customer value proposition is a company’s way of generating value in their product or service. Few years ago marketers used the term “unique selling proposition” but this is now considered restrictive as there may be many values within an offer that customers value and not all are necessarily unique. Customer needs are diverse, ranging from small to large customers, working in different industry verticals, with different capital to start investing.
Many of these retail trading companies have strategies to cover a cross section of the market and customers with similar needs. This was possible by customizing starting amounts around segments of their targeted markets and their competitors. Some are just stocks only focused, while some allow users to invest in real-estate and some offering API features that allow institutional clients to integrate with their platform.
Key Differentiator 2: Customer Experience
It is very easy to photocopy a product and make it look similar to others but typical hard to copy the service that comes with the product. The truth is that service is delivered by people in a personalized way makes it unique. People remember good service long after they have forgotten the AHA moments on different platforms they have interacted with before.
Providing good customer service and experience has been critical in avoiding the commodity trap for retail trading platforms in Nigeria. In fact, the idea of “customer experience” goes beyond “good service”. It has been based on the concept of a culture and the mind-set of these companies.
With an ambition to provide a holistic experience to each customer, each of these companies have made serious attempts to read and react to customer needs at each point of their journey in their respective platforms.
Great customer experience is hard earned. It has been earned in small servings, over time by some micro investment platforms in Nigeria. But this is worth the effort because as it has provided them with strong differentiation from their competitors even though the core product is considered similar.
Citural Tips
Product feature
StartHawk 2.0 - Make your co founder search as easy and effective as possible.
Companies currently hiring.
Regional Customer Loyalty Executive | GREENLIGHT PLANET
Stock Management Associate, West Region|GREENLIGHT PLANET
Senior Frontend Developer| Doist
Events
#Startup-South
If you want to know what growing a winning business on the continent would look like in the unfolding Digital era - this is a session you shouldn't miss. Join Collins Onuegbu, Uzoma Dozie, Juanita Clark, Kelvin Balogun & Austin Okere on June 26 | 1300 (W.A.T) at #BroadbandConversation by @StartupSouthNG to discus Digital Transformation - Competitiveness & Growth in Africa's Future Business Landscape.
Register here event.startupsouth.org/ssdt
Tweet of the week
Pair the invisible with the unknown and misunderstood and watch greatness happen. We are exceptional, not exceptions. But the price of entry must come down, like it has for others. /fin (c)Do you see things differently? Well then, definitely leave a message I would love to hear from you.
Follow us on Twitter @citural @Instagram and @Linkedin.
Stay safe.