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Will E-Commerce Take-off in Kenya

Will E-Commerce Take-off in Kenya

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

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.

Buying and Stocking of local goods…

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.

Internet Penetration Levels

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

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.

Payment Gateways and Secure Transactions

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

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.

Reviews

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

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…

  • ziwani

    You mentioned it ,trust is the biggest thing.
    we are generally distrustfull of new expereinces. Think of your relative from shags first time in the city, first advice do not trust anyone, ask directions from police or shopkeepers etc. Trust has to be built. Internet ecommerce sites MUST be self regulated offer good service since it is still a nascent inidustry. If not people will be turned away from it.

  • Hmm, I think one can also look at developments like http://www.dukapress.org as things that make the online e-commerce space in Kenya more easy to get into.

    The tech. scene in Kenya is red hot at the moment and I fully expect things to take off wildly soon.

  • MugweruSN

    The maths here is quite simple. which Kenyan product have you ever shopped online? why did you buy or did not?

    The culture of buying online is just not with us expect for the niche market. how do you instill a culture into people? quite easy! where did you learn how to use the internet? did they teach you how to buyonline? which kenyan website did they tell you to visit? topkenya.com? NO! for me it was just a yahoo mail and thats all.

    Making it work is quite simple if key players like safaricom can stop sending SMS’s to the likes of my mum to telling them to join facebook! what for? I wish they told her to visit http://www.kra.co.ke or any other website that wont take me a whole day to explain the benefits!

    Lets make it local and everything will flow……..

  • Marvin Tumbo

    I really like Dukapress. I don’t why I had not come across it sooner. I also need to make a list of all e-commerce sites in Kenya. Thanks for that.

    I think so too. Things will start spiraling very soon. Just placing my business to ride the wave 🙂 up…

  • Marvin Tumbo

    Trust is a big issue. I like that shags anecdote. I wish I had used that in the post :).Earning trust is a process and I think all players in the e-commerce industry need to get together and address this trust issue. They may do joint education sessions, campaigns both on and offline and get people comfortable with online shopping. This also includes people whose payment gateways are being used to make these online transactions as well and legal experts.

  • Anonymous

    Nice Post … If I were prospecting for eCommerce in Kenya, I would bookmark this blog post. Many of the potential pitfalls are well highlighted.

    I would also place my bet on M-PESA for my checkout processes. I agree Safaricom has done enough to market Facebook to Kenyans. I would not fault them for that though. Perhaps we first need to develop an internet culture – even if it means marketing facebook in the process

  • Marvin Tumbo

    Thanks for the props.

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  • John

    A very good read indeed.I have this to say:
    First, Safaricom is simply focused on making profits fullstop. So when they urge people to get on facebook of course they know guys will use safaricom credit to surf through facebook right? Secondly, we cannot rely on companies like safaricom to market the online experience in kenya on our behalf. Their focus is simply different. You see, they want as many people as possible to use as much airtime as possible to surf the internet even if this means spending the whole day on facebook saying “I love you my dear”. But this=super profits for safaricom. Of course we are happy that they are pushing more and more people to get online. But do what? Just chat, gossip and fantasise!! If we are serious about getting people to shop online in kenya, trust me those of us who see the opportunity will have to roll our sleeves and do some work. People just need to be taught, be convinced that you can sit in your house in Eldoret for example, order a sack of Coconuts from Mombasa and get it delivered at. We need workshops to teach people and I dont mean the kind of workshops that people are asked to pay KSHS60,000!! I mean free workshops even if this means we hold them at Uhuru Park or Givanjee Gardens. And before I forget,online shopping in Kenya WILL have to be integrated with mobile web. Such that instead of guys receiving empty things like ‘entertain your callers with dunda’, they can receive helpful communication like ‘Buy handbags at best prices at ladyhandbagskenya.co.ke’ or even ‘Sell your products now at “tuuzesasa.co.ke’

  • realy an intresting article on e-commerce, which payment gateways are available in kenya?

  • Newton Waithaka

    Good article, just came across another online shop http://www.isaacobjectsofdecor.com ecommerce is picking up at a good pace now that companies like zuku are installing fibre internet connection. The question now is NOT internet availability but how to find this online shops. Online directories like Mocality should have a refined search for this 🙂

  • Dishmwanza

    Awesome article! I am an online Trainer at http://www.elleinteriordesigners.com when I begun my job I frankly thought the the image of e-commerce has been servery tainted but I thank God because with a lot of prayer and faith, online students are beginning to really stream in and am really humbled that despite all the online scams people still buy items online!

    Our job is to get e-commerce back on its feet especially in Kenya and through building a lot of consumer trust and offering services that are above and way beyond self 🙂