This tweet by @gmeltdown caught my attention a fortnight ago.
TEAMS, SEACOM and EASSY are great; but am not convinced we needed international bandwidth to grow e-commerce in Kenya
It really got me thinking…
Then that Saturday, I caught up with Joshua Mwaniki at iHub during the World Cyber Games which Kalahari had sponsored. Mwaniki is the country director of Mocality and is currently doubling up as the acting manager for Kalahari. I was curious why Kalahari decided to sponsor the WCG Games and when I put the question to Mwaniki, he had a smart answer…
Online shopping is here with us now. Some of the most Tech Savvy people in Kenya are the gaming people and that is why we are here – to showcase what we have and to learn…
And showcase they did as every other screen that was not used for gaming was running Kalahari this and Kalahari that. On learning, I sought to learn more about e-commerce in Kenya and Kalahari’s role in it. Kalahari is an online shop which has been quite successful in South Africa and looking to replicate the same success here in Kenya. They have over 3 million products on the site and primarily cater for niche products that cannot be easily found here…
E-commerce is currently not as big as it could be in Kenya. Compared to South Africa, not enough people are buying products online in Kenya hence the big discrepancy in online shopping between Kenya and South Africa. But this discrepancy (on the face of it at least) can be easily explained with the economic difference between Kenya and South Africa. Note however that there are far more issues at play here and hence the reason I sought Mwaniki’s insight on why the discrepancy?
His answers while outlining the discrepancies also delved into factors inhabiting e-commerce in Kenya.
People do not go online to buy local goods… Kalahari’s stocks niche products that people have difficulty finding locally because people do not buy local products online. If we are in Mombasa and want to buy an electronic that we cannot find in Mombasa, we take a flight or travel by road to Nairobi and go shopping. People usually ask me when I will travel to a certain place so that I can buy something for them. If you are in Nairobi and are looking for something, you don’t even go online but rather head over to the CBD and start searching. I guess it boils down to convenience and perceptions. And if that is the reason, are Kenyans willing to test the convenience of online versus route 11 type physical shopping? What do you think would be more convenient?
When it comes to stocking and buying online, we must also delve into perennial question of which came first, the egg or the chicken? In the same way Kenyans do not shop online for local goods, Kenyan businesses as well have not shown initiative by placing their goods online for sale. Quite a number of them now do but if you ask me, not enough. Would Kenyans shop more online if there were more local products online or would businesses start stocking more products if more Kenyans started shopping online? Who will follow who online? Is it economically viable to place local products for sale online? What will it take for people and businesses to embrace e-commerce if international bandwidth is merely an issue?
Mwaniki pointed me to three fundamental issues, internet penetration levels, trust and education.
He points out that in South Africa, internet is used so much and that makes it easier to sell online. Let’s face it, before any of us made any purchase online, we were quite internet savvy and therefore could find our way around the net more easily without getting scammed. We could spot a Nigerian prank from a server away. For e-commerce to really pick up in Kenya, internet penetration levels in Kenya need to improve therefore allowing more Kenyans to develop the comfort levels needed to spur online purchase. High internet penetration levels may also be the thing that will get companies fighting to get their products online. The international bandwidth in this case may become important not so much because of the speed of the internet but rather in terms of access. Getting every corner of Kenya wired up and bringing more people online will increasingly make it easier or even compulsory for Kenyan businesses to sell online.
Trust is another big factor when it comes to e-commerce. Remember, our first money encounter online were probably the scams ran by West Africans. I remember many first timers including two of my brothers’ almost falling victim to these scams before I slapped some sense into their heads. It is a “traumatic” experience that will have you questioning any other online transaction you make. So how do you get Kenyans to trust online transactions? How do you make them comfortable to use credit cards? How do you assure them that once they buy something, it will be delivered to them? At the end of the day, even for the tech savvy, we will only do our online transactions over platforms and payment gateways that we trust and have read positive reviews about. According to Mwaniki, protection of both consumers and merchants through legislation will also go a long way in establishing this trust by giving people a legal recourse in case of a breach of trust.
There are many horror stories involving credit cards and online transactions. Credit cards will definitely not fly for a majority of Kenyans. Even for Visa Cards, I know of a number of very tech savvy friends who have separate accounts which they only load with money when they need to make online transactions and even then, they load the exact amount of money needed for those transactions. And let’s face it; fear is a big aspect when it comes to making online transactions. Trusting is letting go of this fear. A big part of making this happen is through providing payment gateways that offer secure transactions. While PayPal is cool, you cannot receive money with it from Kenya. I like the fact MPESA is now integrated into these sites and now online transactions can be handled via MPESA. There are other local payment gateways like PesaPal and Mobipay that let people make online transactions from their phones with relative ease and most importantly, securely. The people at Symbiotic have released theirs too called Pay.Zunguka. Mwaniki believes number portability will be a game changer for online payment once it is implemented.
Education plays a big part in online shopping… Educating people that they can shop online safely, educating them that it is more convenient and even cheaper to shop online, educating people on the various payments gateways at their disposal, educating people on the range of goods that they can find online, and educating businesses that it is in their interest to have their products online. Education is central in earning people’s trust and getting them shopping. For Kalahari, Mwaniki informs me that participating in events such as WCG allows them to mingle, show case what they do and educate people while learning too.
The best way for people to learn is through user experience and part of this education for Kalahari also involves giving people free trial vouchers. At iHub, I remember asking Nathan, the organizer for WCG games in Kenya where the prices were and he told me that winners will be given vouchers and redeem the prices through the Kalahari website – official sponsors. Do you see the genius in that? USER EXPERIENCE… The winners will go through the motions just like any other person purchasing products online. In doing that, they get to experience the whole process from purchase to delivery and they might even become evangelists of not only Kalahari but e-commerce in general.
I mentioned that reviews might go a long way in getting people shopping online. He agreed but to get people to review products is quite the task. He understood that people usually write reviews in cases where they have had bad experiences. This is true! Chris Brogan put it really nicely when he said that “The percentage of people who read the manual is a lot lower than the percentage of people who get frustrated fast and complain even faster.” Mwaniki however said that the numbers of reviews will pick up with more users and that they will work on getting more people to write reviews. I think they should even incentivize reviews.
Competition for online shopping platforms is heating up. In addition to Kalahari, there is Online Duka, Bagalicious, Maduqa, and I was this past Saturday informed that BidorBuy is coming to Kenya soon, Totally Toto, Mama Mikes, and a host of other online shops. When I asked Mwaniki about this competition, he said that in a virgin market, competition is always good since it reaffirms the market potential. It means they are not backing a losing horse, a dud venture.
Let’s see how this plays off. What I am really interested in now are the numbers. How much is e-commerce in Kenya worth today? What has been its growth path since 2008? How much are we spending online in comparison with other African countries? I am curious at what the preferred payment gateways for Kenyans shopping online are and the works.
I am really interested in hearing your thoughts on this…