Transport

E-commerce drives increasing demand for warehouses

Demand for warehouses is set to increase as the number of companies setting base in Kenya keeps growing.

Funds directed towards construction of warehouses in coming years is set to increase as more investors opt to put their money into construction of storage houses.

According to Attitude Survey by Knight Frank, a property management company, more resources will be put into warehousing and logistics and the sector may end up as the preferred investment option, overtaking shopping centres and high-street retail shops.

The entry of global e-commerce companies and the start of local online based companies have fuelled demand for warehouses.

According to the report “warehousing and logistics sector grew by 24 per cent over the last 10 years in Africa and given another decade it will experience a 41 per cent growth.”

Companies lease space for non-core activities like storage. Developers are diversifying into industrial property because they are cheaper to construct as they also move away from the increasingly tight commercial and luxury space segments. More developers are set to explore the sector in coming years.

Late last month, for instance, Vikken Thirty Industrial Park Limited announced that it will build 250 godowns to provide space for industrial and manufacturing activities and for use in storage of fresh and finished goods. The facility will be built at a cost of Sh300 million.

Great contributor

Kenya is home to a number of e-commerce companies like Bidorbuy, Kilimall, Kaymu, Jumia, VituMob and a recent addition—Chinabuy—and have been a great contributor to the growth of warehouses in recent past.

The e-commerce companies use warehouses to store their merchandise and run their operations online because orders are placed online and deliveries are done through courier services. Previously, warehouses were only popular with manufacturers and importers.

The growth of e-commerce in Kenya has been greatly influenced by penetration of Internet which enables people to make orders online.

The number of Internet users in the country grew to 31.9 million in July to September last year, up from 29.6 million in the previous quarter, according to the latest statistics by the Communications Authority, meaning more than half of the population has access to online services.

The online community comprising mostly the youth has embraced the convenience of the Internet.

Lee Elliott, Head of Commercial Research at Knight Frank says: “There is going to be an inevitable rise of urban logistics in direct response to the growth of e-commerce.”

Locally, companies like Sendy, a Nairobi based package delivery start-up, are riding on the growth of e-commerce in Kenya. Launched a year ago, Sendy connects parcel senders to a network of transporters using motorcycle, vans and pick-up trucks to deliver commodities within Nairobi and its environs.

The Sendy app offers convenience and enhances senders experience by allowing them to keep track of the goods in transit through live updates.