Firms look to e-commerce for growth in 2015


The Jumia website. The online portal is among many that sellers are using to reach out to busy customers while promising a convenient shopping experience. PHOTO | COURTESY

For a fee of between Sh1,500 and Sh2,000, an online start-up promises to make doorstep delivery of a package of vegetables, cereals or fruits to any location within Nairobi.

The firm claims on its Facebook page: “Most of our products are farm-fresh and organic, sourced from farmers in Lower Kabete area, Wangige and Karatina. Some of the fruits like oranges, tangerines and pineapples are sourced from Voi and Lamu.”

Shipping & Logistics could not immediately verify the claims by the firm but if genuine, the start-up is the latest among companies increasingly making a no-holds-barred entry into the shopping logistics segment of the market to serve busy clients keen on saving time.

The Internet community is familiar with names like Petty Errands Ltd, Yum, Hellofood and Mama Mikes, which shop and offer home delivery services to busy clients, including Kenyans abroad who want to send shopping home at the touch of a button.

Increased Internet use and the expansion of digital payment platforms have improved the logistics for those offering shopping services.

The last time Japheth Kamau wanted to replace his two-year-old sound system, it took him only two days to get a buyer for his old system via OLX, an online market.

With cash in hand, he visited Jumia, another online retail shop and bought a new system that was delivered to his doorstep three days later.

The Communications Authority of Kenya estimates the value of e-commerce in Kenya at Sh4.3 billion.

Conventional shopping outlets have taken to creating online platforms to push up sales in a bid to keep up with the buyers in the new marketplace.

The Text Book Centre (TBC) recently partnered with Jumia to sell more than 4,000 books on the portal. Bata, Armco, Nairobi Sports House, Sangyug, Victoria Court Furniture and other small and medium enterprises are already riding on growth of online platforms to reach tech savvy customers.

Bata Home, for instance, is a portal that allows users to browse for shoes, make their purchase and have the item delivered to their choice location.

The firm’s managers say they launched the portal on realisation that more people have been turning to online platforms as an alternative to traditional brick and mortar shopping.

“We have high expectations this year as more people take up e-commerce, more companies come up and the online market expands,” said Bata advertising manager Robert Mburu.

He believes online shopping will show exponential growth as more people seek convenience and time-saving experience.

“With this growth comes trust, which has been one of the challenges before. Once more people believe they can safely buy online, more will actually buy online. The prospects are high,” he added.

Jumia Kenya allows merchants to showcase their products online, transforming their physical store to an e-store and bridging the gap between online and offline sales.

The seller centre allows merchants to monitor sales as well as pending, shipped and cancelled orders on their own. Jumia takes an agreed commission only for products sold.

“Kenya has been an extremely viable country for e-commerce and specifically Jumia, which has grown by double digits, expanding to towns like Nakuru and Mombasa and Eldoret since setting base in the country 18 months ago,” said Jumia managing director Parinaz Firozi.

“We have set very high targets for 2015 that include expanding to other towns in Kenya and forging more partnerships to boost sales.”

Kenya has also attracted other online traders such as Rupu, Bid or Buy, and Cheki in the last two years, driven by wider use of smartphones.

The freelance home delivery services have enabled Kenyans to beat traffic jams and elbow hectic work schedules to run their homes away from home.

The fast food chain KFC recently launched a drive-thru restaurant, which enables clients to order and receive packed food without getting out of their cars.

The first socio-economic Atlas of Kenya released last year shows that more than 100,000 households in Nairobi own a motorised means of transport, making drive-through a high-potential business.

KFC Kenya managing director Justin Melvin says busy lifestyles are fuelling the demand for quick and swift service while increased preference by the youth to access information on their mobile phones has opened a window for investors in the retail industry to leverage on technology.

Online advertising is on the rise in Africa with numerous firms coming up in South Africa and Nigeria, some offering the service for free.

One Africa Media (OAM) does real estate sales besides running classified advertising websites like BrighterMonday for jobs, Cheki for cars and Staynow for travel.

Last year, it got a capital injection of Sh1.8 billion ($20 million) from Australia-based recruitment portal Seek for a 25 per cent stake. The deal valued One Africa Media at Sh7 billion.

OAM chief executive Justine Clarke did not disclose acquisitions the company was eyeing, but said talks were still at an early stage.

Among firms competing with OAM in Kenya’s online classified advertising market are OLX and Jobskenya.

According to online data portal Statista, online advertising for both Africa and the Middle East stood at Sh109 billion ($1.24 billion) in 2013 and is set to grow by 38 per cent to Sh150 billion ($1.71 billion) this year and again by 30 per cent to Sh195 billion ($2.22 billion) next year.