Exploring the Potential of Digitalization and E-Commerce in Economic Diversification

Case Studies from Nigerian Startups and Digital Entrepreneurs

Abstract

This study explores the potential of digitalization and e-commerce in economic diversification among Nigerian startups and digital entrepreneurs. The primary objectives are to evaluate the role of digitalization in promoting economic diversification, assess the impact of e-commerce on business performance and market reach, and analyze the challenges and opportunities faced by startups in adopting these technologies. A survey method was employed, targeting a population of 140 startups and digital entrepreneurs registered with Small and medium enterprises development agency of Nigeria {SMEDAN} in Kano as of 2024. Using Krejcie and Morgan’s sample formula, a sample size of 103 respondents was determined. Data were collected via online questionnaires and analyzed using descriptive statistics. Findings reveal that digitalization has significantly contributed to business growth and market expansion but faces challenges related to operational efficiency and product diversification. E-commerce has enhanced sales performance and revenue but has not uniformly improved market reach or customer acquisition. Financial constraints are a major challenge, while supportive government policies are seen as beneficial. Technical skills and expertise are not perceived as primary barriers. The study concludes that addressing financial constraints through targeted funding and support, improving e-commerce strategies through enhanced digital marketing and customer engagement, and focusing on continuous technical skill development are essential. Recommendations include increasing access to financial resources for digital adoption, investing in training programs for e-commerce and digital marketing, and establishing training centers for technical skills development. These measures will enable Nigerian startups to better leverage digital technologies, overcome existing barriers, and contribute to broader economic diversification and growth.