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Corporate

Firms shift battle for consumers to the Internet

Companies are establishing an online presence with electronic commerce sites in order to tap tech savvy customer.
Companies are establishing an online presence with electronic commerce sites in order to tap tech savvy customer. 

Online trade is set to be the next biggest battleground for companies as industry giants race to outdo one another in a bid to attract more sales.

Uchumi Supermarkets is one of the latest firms to venture into the world of online consumers as it seeks to increase sales volume through technology.

Although the retail chain is still in the final stages of launching the service, Uchumi customers may begin shopping online as early as March.

The retailer, which enjoys a countrywide presence with 26 stores, becomes the third supermarket chain after Nakumatt and Naivas to transact part of its business online in what is becoming a trend among corporates.

Naivas and Nakumatt launched their e-commerce trade last year.

The online market has in the recent past attracted more retailers as consumers shop on the Internet for their daily supplies. Among the reasons that have largely contributed to this mode of trade is changing lifestyle of the modern working professionals.

These individuals find it almost impossible to find ample time for shopping in brick and mortar stores and are therefore shifting online, which is more friendly and convenient than buying from the retail outlets.

High Internet speeds have also boosted e-commerce, making it possible for consumers to transact business online.

Things are bound to get even better if the government finalises plans to launch 4G Internet technology, which is faster than the existing 3G system.

Government policies and legislation like the ICT Act with provisions for e-commerce have created enabling environment for online trade to flourish.

Car & General, a local company dealing in vehicles and machinery with presence in other African countries, says it was attracted online because of the potential for expansion the new technology presents.

The company is also among the new corporate giants making their presence felt in the unfamiliar but rewarding virtual market.

In a couple of days, Car & General will start selling motorbikes, generators, lawn mowers and spare parts from its website. The company targets consumers across Africa.

However, due to logistics constraints, deliveries beyond Kenya would be done through distributors in concerned locations.

According to statistics from Visa and MasterCard, two international pay service providers, online card transactions in the East Africa is said to be in the region of Sh1 billion.

This is commendable considering card fraud has caused anxiety among online shoppers, with some staying away.

However, safer mobile payments for online transactions could encourage many Kenyans embrace e-commerce.

Online shopping has a big potential for growth given that 13.5 million access the Internet, mostly through mobile phones. The international online market stood as $100 billion in 2006.

The payment cards have been made secure to prevent fraud using latest EMV technology, a multifunctional microchip with superior security features unavailable on the magnetic stripe cards (common on ordinary ATM cards).

Visa and MasterCard have already adopted this technology and are encouraging banks to embrace it.

“We see any additional investment in security as an opportunity to enhance business opportunities through additional channels, grow cross border transactions through renewed confidence in the payment system and reduce fraud losses due to counterfeit fraud,” said Jabu Basopo, Visa country manager for Southern and East Africa.

Bata Shoe Company is another firm seeking to cash in on billions of shillings online. The company launched its e-commerce platform last year.

Bata made the service available to customers in Nairobi, Nakuru, Mombasa, Kisumu and Eldoret with a maximum waiting period of 72 hours for processing and delivery of orders.

The system used by the firm, is similar to other e-commerce services. The consumer goes online on its website, clicks on the cart and orders what they want.

The value of the items selected is calculated and the shopper proceeds to choose the mode of payment.

A notification from the store and software supplier is sent to the customer and an invoice of the transaction produced.

Visa, MasterCard, and mobile payment platforms including Tangaza can be used to purchase the company’s products online.

“Visa is committed to safeguard the local industry, the merchants and card holders from fraud,” said Mr Basopo.

Uchumi, will place 1,800 products online for starters. These include electronics, groceries and other basic commodities on demand by consumers.

MasterCard places consumers in Kenya as the fourth largest online lot in Africa after South Africa, Nigeria and Morocco and the second fastest growing in mobile shopping in the entire continent.

JamboPay, an e-commerce payment facilitator supporting Uchumi and Car & General to transition online, has already registered 401 companies.

“Any business can go online,” says JamboPay chief executive Danson Muchemi. “To prove this, look at the newspaper classifieds which are now carried out online. Clients no longer queue for adverts.”

The technology company is behind some of the online classified advertising systems used by media houses.

The shift to e-commerce is also set to see a decline in operational costs among companies that adopt the technology.

“This is the way to go,” contends Car& General IT manager Joel Muya.

esituma@ke.nationmedia.com

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