E-commerce in Kenya: Don’t miss this big opportunity
Really soon, I think e-commerce will be a huge Industry in Kenya as online shopping experience improves and challenges decrease. This is generally across most of Africa. These are exciting times for the growing young tech-savvy population, the middle class and the SMEs. It could easily be the best thing to happen since M-Pesa.
Some Statistics
Internet penetration is at 74% in Kenya. The number of estimated internet/data users grew by 7.8 percent in the last 3 months to stand at 31.9 million users. What fraction of this could be online shoppers?
24% of Kenya is middle class and according to KNBS(Kenya National Bureau of Statistics), middle class includes anybody spending between Sh23,670 and Sh199,999 per month.
Wherever they have been shopping from, online retailers like Jumia, kaymu, rupu.co.ke and others have shown us a large number of this ‘class’ of people can be converted. I couldn’t interpret this data, it just looks exciting!
Now the only reason I think e-commerce hasn’t worked for us in Africa is because of 3 main(and maybe security?) challenges:
- Poor physical address system
- Poor delivery systems
- Payment systems: few people have bank/paypal/credit cards for onlne payments
Now these problems are being solved albeit slowly. Big multinationals have their eyes on the outcome of local solutions. Maybe opportunistically waiting for some young blood to prove the market for them before making a celebrated entry and crashing local players like cockroaches. Like what Uber did to Easy-taxi?
Physical address
The lack of proper address systems has deterred even the entry of global stores into the country. But things are looking up. A team of technology entrepreneurs at okhi.com aims to provide a physical address to the 4 Billion people in the world who don’t have one. OkHi has just closed another round of funding securing a total $750K. OkHi has already mapped more than 100,000 locations in Nairobi. Partnered with Jumia for the black friday deliveries. A success.
Shouldn’t Posta Kenya have preceded in solving this problem? Here is an interesting post about why Posta Kenya should be acquired by Okhi.com & Sendy.
Delivery
The company sendy.com got funded in 2014. Sendy is helping businesses deliver premium door-to-door customer service. There is also dialadelivery.co.ke. Posta Kenya also does delivery for Jumia.
Payment
Yes there is mobile money. It has disrupted banking and revolutionized commerce but e-commerce is only beginning to feel the current limitations of mobile money.
So now we have Mobile operators like Airtel stepping up with their new Airtel money visa card and, more recently, Pesa card that is linked directly with Airtel Money mobile account. Safaricom just released its long awaited API that developers can integrate into any website. kopokopo.com, Bitpesa, Bitsoko, Chura
I believe when these things become streamlined, online shopping will boom. Not that it’s not already happening. Many businesses are already selling online via social media, having established a reputation and gaining customer’s trust. They receive M-pesa payments for products, and use available local transportation for delivery.
I visited one such shop in Hurlingham, Nairobi, selling shoes, wallets and watches. When I asked him if he could deliver to Mombasa he smiled and pulled out a bundle of delivery receipts. He already sells to many customers in Kisumu, Eldoret,Nakuru and Mombasa from a small 20 sq. Ft stall inside Hurlingham Plaza. He delivers using bus parcel services.
To put this into perspective, for such kind of a business this wasn’t remotely possible before the advent of mobile money. If you had a shop in Nairobi You had customers in Nairobi.
This trend in increasing. Businesses will need to sell online. Buyers will find them.
Conclusion
We all have to jump on to this fast moving train. The economy growers as the middle class spend away. Small and big shops could cut costs. Newer shops don’t can go straight into e-shop and avoid the initial costs of a physical store. The barriShoppers have choice, and discounts. And that there will be increasing demand that web developers and programmers will be in high demand. New set of business and customer skills will be needed to run these e-shops.
It’s headlines like this that excite me:
The Africa Report.
Any thoughts?