The Kenyan e-commerce sector has been a death bed for many startups – both large and small companies have failed in a bid to launch viable online businesses. Google’s Getting Kenyan Businesses Online failed to gain traction, Mocality (an online business directory)lacked a sustainable revenue stream and had to shutdown, Sahara books didn’t have enough customers to break even. As Jumia, OLX and Kili Mall set up shop there are lessons to be learned. Peter Misiani Mwencha is ensuring those important lessons are archived through a working paper titled ‘2016 E-commerce Sub-sector Assessment Report for Kenya’.
In the paper, Peter puts forth two factors that hamper success of e-commerce businesses in the country. These are; slow uptake, and lack of a critical mass to make online businesses profitable. It would be of interest to know how the three large players in the markets (Jumia, OLX and Kili Mall) are circumnavigating the two problems.
Lack of trust in online transactions has also resulted in cash-on-delivery as the preferred payment option of majority of the Kenyan buying online, forcing a number of firms to experiment with this payment model as a way of increasing online sales. For instance, G4S has partnered with OLX to enhance customer trust and reliability by ensuring payment is made once receipt of the goods for dispatch to the buyer is confirmed.
In 2014, information by the Communications Authority of Kenya (CAK) put the value of B2C e-commerce in Kenya at Sh4.3 billion, in comparison to South Africa’s Sh54 billion, Egypt’s Sh17 billion and Morocco’s Sh. 9.6 billion.This figure shows that the e-commerce market is still quite small even by regional standards, and that its role in the Kenyan economy remains relatively low, especially when compared to total retail sales of Sh1.8 trillion ($17.62 billion) in 2016.
Nonetheless, there is a growing consensus that e-commerce in Kenya will continue to develop based on the current trends especially when one considers the impressive numbers of internet users, the growing smartphone penetration rate, the massive number of mobile money subscribers ubiquitous mobile payment services as well as millions of courier items sent locally per quarter.
In order to be successful, online businesses in the country need to excel in five key stages enshrined in the e-commerce value chain. These are; information sharing, ordering, payment, fulfilment, and service and support. Owing to the government’s commitment and targeted investment in ICTs, some of the value chain items would be achieved and scaled with ease. But like all ‘old-school’ businesses, it boils down to support in which Kenyan online businesses are yet to crack.