Effect of E-Commerce Adoption on Operating Profitability of Small and Medium-Scale Fashion Retailers in Lagos, Nigeria

This study examines effect of e-commerce adoption on the profitability of fashion retail SMEs in Lagos, Nigeria, using the Resource-Based View (RBV) framework. Analyzing 2024 financial data from 250 SMEs across three business models (physical-only, hybrid, and e-commerce-only), the study employs regression and ANOVA to quantify performance differences. Results reveal that e-commerce adopters achieve significantly higher operating profit margins than physical stores (+24.1%, p = 0.0003), with hybrid models also outperforming traditional retail (+13.2%, p = 0.0018). Digital marketing expenditure exhibits a strong positive correlation with profitability (β = +1.20, p = 0.0016), while logistics costs emerge as a critical deterrent (β = -0.75, p = 0.0012). The findings align with RBV’s emphasis on resource complementarity, demonstrating that profitability hinges not only on digital adoption but also on strategic integration of logistics optimization and targeted marketing. The study offers insights for Lagos’s SMEs, establishing the need for balanced investments in digital infrastructure and cost-efficient logistics to maximize returns in constrained environments.