Konga, a Nigerian e-commerce platform that burst onto the scene in 2012 and quickly became one of the most popular online marketplaces in Africa.
Konga is a word of Nigerian origin that means “to put in a place” or “to store”.
It was chosen as the name for the e-commerce platform because it conveys the idea of storing and selling products in a convenient and accessible way, which aligns with the company’s goal of providing a convenient and reliable shopping experience for its customers.
Konga was selling everything from electronics to fashion to household goods, and people couldn’t get enough of it. With all that growth and buzz, it seemed like Konga was destined for greatness. But as we know all too well, things aren’t always what they seem.
Despite their rapid expansion and massive funding, Konga couldn’t seem to turn a profit.
In 2016, they had to lay off a big chunk of their workforce and shift their focus from growth to profitability.
And while that may have been a necessary move, it also highlights the dangers of chasing after growth for growth’s sake.
Because let’s face it, growth isn’t everything. If you’re not making any money, what’s the point?
While chasing the break-even point is a critical part of achieving profitability, it’s essential to focus on achieving product profitability before pursuing growth.
If a product is not profitable, then growing it will only lead to larger losses for the business.
In some cases, businesses may choose to adopt a loss-leader strategy where they deliberately sell products at a loss to attract customers and drive sales of other profitable products.
However, this strategy should be used with caution and only for specific products that have the potential to drive additional sales and customer loyalty.
Ultimately, the goal of any business is to generate sustainable profits over the long term.
Pursuing growth at the expense of profitability is a recipe for disaster, as it can lead to cash burn, investor dissatisfaction, and even business failure.
Therefore, entrepreneurs must prioritise achieving product profitability before pursuing growth, and be mindful of the risks associated with the pursuit of growth.
Fast forward to 2018, and Konga was acquired by their rival company Zinox.
Now, Zinox has taken the reins and is trying to turn things around. They’ve rebranded the platform and are focusing on building a strong and loyal customer base, instead of just chasing after growth.
So what can we learn from Konga’s blunder?
For starters, prioritise profitability over growth. Achieve product profit and and scale from there.
Sure, growth is important, but it’s not everything. You need to make money to stay in business.
Second, be careful with all that funding. It’s great to have a lot of cash to play with, but it can also lead to reckless spending and poor decision-making.
Finally, remember that success isn’t just about growth, it’s also about building a strong and loyal customer base. Because in the end, those customers are the ones who will keep you in business.
Entrepreneurship is a marathon, not a sprint.
My Biggest Blunders Speaker: Mr Mokete Refentse Ratlabala, Tech Entrepreneur
Mokete Ratlabala is the founder and sole member of team Learn Base, an electrical engineering company that develops electrical energy systems which protects a business’ or household’s electrical infrastructure, and also allows end users to monitor and manage electricity consumption in real time.
Mokete’s business is to develop a technology that would be able to take electrical data from equipment, use it to manage the electricity, and lower power consumption. Learn Base was born.
Catch Mokete at My Biggest Blunders | Pretoria taking place on Wednesday, 26 April 2023 in Pretoria from 10:00 until 15:30.
This is a free admission event but registration is required due to limited space. We expect this event to be fully booked like our last one.
To register, please go to this link: My Biggest Blunders Registration.