The rise of online food purchases in Kenya: Will it last post Covid-19?
In a previous article, I focused on how Covid-19 has led to an increase in the volume of online food transactions in Kenya. People moved online due to a confluence of the movement restrictions put in place by the government, as well as their fear of contracting the virus if they continued to go out shopping as they did before.
In a bid to further understand the dynamics of this evolving situation, I carried out a simple online survey, titled: ‘Online Buying and Selling of Food Products during the Covid-19 Pandemic in Kenya’. The study consisted of 11 questions on a range of issues encountered by consumers when carrying out online food purchases. Based on 27 responses gathered within three days, I found the following to be among some key insights about the changing consumer behaviour in the country.
48% of the respondents started using online food vending platforms within the past three months, hence corresponding to the onset of the pandemic. A similar number stated that their usage had increased over the same period of time. This indicates that Covid-19 has spurred online shopping for food products. However, these outcomes are in no way the result of an empirical study. It is still unclear whether this shift towards online shopping is permanent or is just a temporary coping mechanism. As such, a more comprehensive study needs to be done in future.
An earlier precedent? Post-Election Violence and the rise of M-Pesa in Kenya
People are generally afraid of change, especially if it involves a technology that they do not fully understand. However, sometimes a large disruptive force may trigger them into embracing these technologies, despite their fears. It may be that Covid-19 is one such disruptive force that might have triggered a shift towards more digital food distribution.To understand how this could be the case, let’s take a look at the rise of a similarly disruptive technical phenomenon, Kenya’s M-Pesa mobile money platform.
Safaricom launched M-Pesa in March 2007, to digitally facilitate person to person (P2P) money transfers. At the time, these were largely done through hand-delivered parcels and courier services. However, uptake was initially low because many people, including the critical mass of unbanked people, did not understand the technology, and therefore mistrusted it. Then in December of that year, the post-election violence erupted following contested national election results, leaving over 1,000 people dead and up to 500,000 displaced.
Starting in February 2008, the Post-Election Violence (PEV) Recovery Program was set in motion by the government, in partnership with NGOs and aid agencies. One of its main components was facilitating countrywide mobile cash transfers to households affected by the carnage using M-Pesa. Concern Worldwide reported that the program “was viewed very positively by the majority of partners and recipients.”
At the same time, individuals increasingly saw the convenience of this new way of transferring cash. As customers increased, so did the number of M-Pesa agents across the country, from less than 2,000 in December 2007 to almost 8000 a year later. Citing a 2008 study, the World Bank stated that, “Ninety-eight percent of M-PESA users are happy with the service.” This has largely been the case since. M-Pesa is today a pillar of the Kenyan economy and Safaricom’s most profitable business unit.
What does the data say about consumers?
In spite of the global death toll, the impact of Covid-19 in Kenya is not comparable to the traumatic PEV episode. At the time of writing this article, the virus has claimed 130 lives in the country, which pales in comparison to the 1000+ people who died in a few short months in 2017/2018. However, its impact on online food purchases is, albeit to a much smaller degree, comparable, to the role that PEV played in accelerating mobile money remittances in 2008.
90% of survey respondents stated that they were either satisfied or very satisfied with food e-commerce due to their convenience and efficiency. Additionally, all respondents said that they will continue trading in food online even once the virus has been contained. This feedback mirrors the enthusiastic response recorded during M-Pesa’s early years, which led to sustained growth even once the country had recovered from the PEV.
Therefore, it could be concluded that Covid-19 has played a key role in breaking the psychological wall that might have been preventing consumers from widely accepting food ecommerce platforms before. Some of these fears include concerns about food safety, size of portions, and the cost of purchases. This creates an opportunity which food vendors can take advantage of even post-Coronavirus.
What do these outcomes mean for food vendors?
A broad range of food sellers, from fresh produce suppliers, to restaurants, stand to benefit from the increased acceptance of ecommerce platforms. However, for one to effectively take advantage of the opportunity, they need to carefully approach the market. These are among the things they need to look out for going forward:
- Understanding your target market
Of the respondents to the informal survey, more than 50% reported that they live in the Nairobi metropolitan region. This indicates that most online customers are likely to be found in major urban areas such as Mombasa, Kisumu and Nakuru. Furthermore, a majority stated that their online purchases mostly comprise fresh fruits and vegetables, or restaurant food. These, and other shopping trends, including demographics and shopping times, are worth noting so as to ensure that customers get what they need.
2. Food safety is essential
Food safety is a major concern among consumers, and is one of the main reasons people prefer shopping at physical markets where they can assess the quality of food products themselves. Furthermore, Covid-19 has increased awareness on food safety among the general public. Online vendors therefore have to offer guarantees that purchases, whether fresh produce or restaurant food, are safe for consumption. Those who manage to effectively do so will likely capture a large share of the emerging market.
3. Online and physical security is paramount
One of the enduring fears that keeps people away from e-commerce platforms is the likelihood of being defrauded. That fear is not without its merits. The sharp rise of online platforms during Covid-19 has been marked by an attendant rise in online scams, with the Directorate of Criminal Investigations launching regular fraud alerts for the public To allay such fears, food vendors have to put in place all relevant measures to protect their users.
4. Broaden your market
To date, most food vending platforms have focused on up-market buyers in urban areas. However, there is still a wide untapped market among middle- to low-income buyers, especially considering that Kenya has an internet penetration of 43%- which translates to almost 23m users. One of the ways that vendors could reach these untapped markets is through strategic alliances with supermarket chains active in these areas, as has been the case between Uber Eats and Tuskys Supermarket.
5. Efficient logistics will be the ultimate differentiator
Unlike M-Pesa which was and still is a monopoly of Kenya’s largest telcom, online food vending offers a level playing field for a broader range of actors. With consumers increasingly embracing it, there will likely be increased competition among existing and emerging players. Efficient logistics will therefore emerge as one of the differentiators among competitors, especially if they are to effectively expand into broader markets while avoiding transport bottlenecks. Possibly, vendors could take a cue from agribusiness giant, Twiga Foods, which has set up a highly effective logistics system backed by Artificial Intelligence for last mile distribution.
Written by Atula Owade
This article is part of Covid-19 Food/Future, an initiative under TMG ThinkTank for Sustainability’s SEWOH Lab project (https://www.tmg-thinktank.com/sewoh-lab). It aims at providing a unique and direct insight into the impacts of the Covid-19 pandemic on national and local food systems. Also follow @CovidFoodFuture, our Video Diaries From Nairobi, and @TMG_think on Twitter. Funding for this initiative is provided by BMZ, the German Federal Ministry for Economic Cooperation and Development.
