Upcoming entrepreneurs should take a leaf from the veterans

BY VICTOR ADAR

Between 2012 and 2013, smartphones could pass as fashion gadgets. Today, a majority of the people in own them, bringing with it a whole new benefit of owning one.

The clear reality is that phones revolution is bringing better days and indicators are that e-commerce is winning in a big way. Most of the time, knowledgeable people would download mobile applications that promise a wide range of services from loans to games, sports to health and even education.

Consumption of mobile apps is currently huge, and the rise of what has been termed “super apps” is a clear answered prayer especially to the capital constrained lot. The penetration, adoption and usage of e-commerce is quickly changing, and could completely disrupt the legacy of brick and mortar stores as millennials slowly acquire purchasing power while digital immigrants appreciate its value and relevance in everyday life.

“Merchants are good sellers,” says Sam Chappatte, MD of Jumia Kenya. “Vendors want to make money; they want to make sales, and commissions. A market place like Jumia is simply offering small sellers a platform to sell. So the vendor is paying you because you are making them sell more. That’s the value of market place.”

From a technology perspective, market places are making a difference on the ground so much that what a player needs in order to thrive is just a well thought out plan. A market place like Jumia, Kilimall or Alibaba is a darling of many in this digital age. In a few mouse clicks, tiny to big sellers can post their products on those online platforms, a move that help in cutting down working capital while making money on the side. This is also a great tool for job creation.

As e-commerce business gathers more steam, Mr Chappatte says that vendors can save working capital in terms of space rent and employee wages. He challenged those engaged in the sector to create more marketing channels and invest in training to attract more vendors and consumers to their platforms.

“Ecommerce offers more sellers and entrepreneurs a platform to reach consumers directly and we need to open up more opportunities for them as a way of building the marketing place by bringing vendors on board,” he says.

To become a big player, it is even best to leverage social media to build a great market place. By targeting small independent businesses, stores, and also the big brands while also trying social media platforms like Facebook, Twitter, Instagram, having guys who can go offline, doing walk-in or scheduled visits in town, market place model can truly pay off.

Alibaba and Jumia are just service providers to vendors. Although vendors can turn in good fortunes through the online portals, they should be allowed to go live on minimum trading. They should not be allowed to sell more simply because they ought to undergo some training first, and as time goes by, they are upgraded.

“You want vendors to make money. So show them the money but don’t allow them to sell more to give you time to know them,” Chappatte points out, adding that active group is generally few with semi-active being the largest. But how do you continue to educate vendors, to make them active so that both parties win?

Most of the time, when people dive into business, they try to answer the “so what?” question. Multi channel options are really worth it. Find right partners to expand your consumer base. For example, retailers can do direct delivery. In this case, volume is driven by what people need most.

Cheki CEO Michael Mureithi on the importance of artificial intelligence and machine learning in predicting and responding to market demands says that data has been key in business growth but with the rapid developments in the digital landscape it is best to exploit new technologies like artificial intelligence to determine market needs and move ecommerce to the next level.

“Predictive analysis is the new thing…you need to have those capabilities,” says Mureithi, pointing out that for Cheki, power of branding has made an impact, and users are growing. The firm has served 310 users per month this year compared to 150 users per month in 2017. Arguing that in 2015, the company was focusing on wrong things – they didn’t know what consumers really.

“If you are running a business you should be consumer centric. Know what you’ve been hired to do. It’s not about features. It’s about creating solutions for the job that you’ve been hired to do. Talk to your customers and listen to them. It’s not about surveys,” says Mureithi.

The chief executive of Gobeba, an app that offers on-demand ordering and delivery services, Peter Ndiang’ui, however, regrets the emerging trend where ecommerce players are locking out competitors from manufacturers through contracts that give exclusive rights on online trading of certain products, saying if allowed to continue it would kill the industry.

“Exclusive deals will have a negative impact on our ecommerce innovation ecosystem and the Competition Authority of Kenya should reign in such practices to enhance fairness,” he said.

Mr Ndiang’ui who is also the former OLX country manager talks of individuals who trust the courier and taxi guys to an extent of even sending them to ATM booths to get cash, and pay utilities at an agreed commission. This, he says, “is completely unlike Kenya but it’s happening in countries like Europe and US.”

According to market survey report by Proctor & Gamble, total retail spend in Kenya in the year 2016 was $17.62m. Of this, only 30% is spent in modern retail while 70% is spent through the traditional retail channel, an indication that a big chunk of the retail business is happening offline in physical brick and mortar stores. With more than 7.6 billion people in the world with 4.1 billion using the Internet, it is projected that the global retail e-commerce sales will reach $4.5 trillion by 2021.

Figures from Communications Authority of Kenya (CAK) September 2018 report show that the Kenyan population is 46.6 million and the internet has 42.2 million users with 100% mobile penetration. During the same period, the number of mobile commerce transactions was recorded at 526.9 million valued at Sh.1.5 trillion.   

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