Why Kenyan retailers need to embrace e-commerce or become redundant

There is a new breed of customers in town; they are young, busy, techno savvy, have the latest smartphone or tablet and belong to the ballooning middle class. They are customers with disposable income to spend BUT will spend it on their own terms, from their comfort, at their convenience.

According to Communications Authority of Kenya quarterly sector statistics report Q3 2014/2015, the number of internet users stands at 29 million. Internet subscriptions stand at 18.8 million while mobile subscriptions dominate at 18.6 million bringing to 99 percent the number of Kenyans browsing the web via smartphones and to 72.7 percent the number of people with access to internet in Kenya.

Looking at these numbers, it’s easy to decipher that the catalyst to this breed of customers that prefers to shop online is the internet. This breed wants to buy a product but won’t go downtown to compare prices between physical stores. If anything, they don’t have the time and if they won’t find your products and services online, they will buy from you competitor.

The potential of e-commerce in Kenya

Due to this increasing shift in consumer shopping behaviour, embracing e-commerce is no longer a luxury but a competitive advantage that retailers must embrace or become redundant.

To understand the potential of e-commerce, in June 2014, Communications authority of Kenya estimated e-commerce to be KES 4.3 Billion, in the same year Jumia, Kenya’s largest e-commerce retailer increased sales by 900 percent and became Kenya’s most visited site in July 2015 according to alexa.com.

More e-commerce ventures such as Kaymu – online marketplace, EasyTaxi- taxi booking app, Jovago- hotel listing portal, Hellofood – online portal where you can order food and Lamudi – property listing portal among others have also seen the potential and positioned themselves to cash in from the virtual space.

How to embrace e-commerce in Kenya

There are two ways to embrace e-commerce in Kenya. The most popular one is to build your own website and list your product catalogue and information. While this may be a good option, it is really expensive to drive traffic to your site to generate sales further, you will not be able to take advantage of other customers apart from those who specifically visit your site.

The second option is to sell your products by listing on the online marketplace of an e-commerce company. You can sell through drop shipping- where you keep the product and have it collected when an order is placed or through consignment- where they allow the e-commerce company to keep the products in its warehouse for free and deliver to customers directly when an order is placed.

Independent website or online marketplace? 

The answer is, build both but capitalise sales on the online marketplace while using your independent website for general information about your products and services.

Several online marketplaces have emerged in the last couple of years. The most prominent ones being Jumia and Kaymu. Jumia online marketplace  allows retailers to sell their products directly to Jumia’s large customer base. Retailers can list their products on the Jumia website or open a shop-in-shop on the website where only your products are listed on a particular webpage on the site.

Benefits of embracing e-commerce for SME’s

Jumia for example takes an agreed commission only for items sold and offers storage and warehousing for free. The beauty of selling online though is the exemption from costs such as rent, wages, salaries, government and city council charges.

Parinaz Firozi, MD, Jumia Kenya notes that selling online attracts new customers from across the country who can shop 24/7 from any geographical location. She further notes that countrywide delivery that most e-commerce companies like Jumia offers cuts down the operational and order processing costs for the retailers.

“Jumia has for example partnered with different courier services such as Posta, Aramex and G4S among others who ensure we get the product(s) to the customer even in the remotest place in Kenya.”

Firozi adds that risks like fire, looting are also exempted and the retailer is able to track the products most viewed and purchased by customers to make informed decisions. Among the brands selling on the Jumia online marketplace include Microsoft, Innjoo, Infinix, Maybelline, Darling hair, Bata, Nairobi Sports House, Africana designs, Riri Designs among other brands. Some of these companies use Jumia as a launch pad for new product models offering exclusive distributorship and prices.

Similar sentiments are shared by Estelle verdier, MD, Jovago Kenya, “Listing on an online marketplace offers you more value than an independent website since most e-commerce companies invest in site traffic a rather expensive affair for a sole proprietor.”

However, Estelle notes that most companies haven’t invested in e-commerce and face the imminent threat of redundancy, “Most hotels and holiday destinations have the opportunity to make more profits by embracing e-commerce but they don’t. It’s rather cheap to do so and reap benefits.”

Begin the voyage!

Building an online presence should be the next agenda of your business. Find an online marketplace where your products will sell and while it won’t happen overnight, it is a step in the right direction towards reaping a plenty market share and staying ahead of competition. Throw the sails, Sell online, don’t be redundant.