29 August 2013

Kenya: E-Commerce Picks Up in Kenya

Nairobi — With about 10 million people having access to the Internet in Kenya, entrepreneurs are quickly shifting their strategies to tap into this growing market.

Experts term e-commerce in Kenya a 'mammoth' that is yet to maximize its full potential.

"We started our operations in August 2010 with zero subscribers; now we have 45,000 subscribers and growing, this shows you the uptake and confidence Kenyans are now having on online shopping," Ben Maina, the Chief Executive Officer of online trading firm Rupu told Capital FM Business.

Maina said that e-commerce is experiencing rapid growth especially due to the uptake of mobile banking.

"People have realised that it is cheaper to shop online (because) you do not have to get a store and all the nitty-gritty that comes with it, thus products are cheaper, "he explained.

"We meet new customers every day, they sound sceptical, but later when we have delivered they trust our brand," Maina revealed.

He however asked the government to make clear policies that will support e-commerce, pointing out that people can use this platform to steal from others which will be bad for business.

"The current Information Communication and Technology (ICT) Draft policy is lacking in many areas and many players agree that certain provisions need to be incorporated to support e-commerce, and a framework provided," he said.

According to a survey conducted by MasterCard in May 2012, around 71 percent of online shoppers have expressed satisfaction with the overall experience.

According to the survey, most goods and items were cheaper online than when offered for sale offline, with the most popular online products being music downloads, DVDs, CDs, computer software and digital entertainment content.

"It's also cheaper for businesses as they reduce overhead and inventory through increased automation and reduced processing times, labour costs of creating, processing, distributing, storing, and retrieving paper-based information and of identifying and negotiating with potential customers and suppliers are drastically reduced," Maina added.

He asked more entrepreneurs to come on board and offer online shopping or supporting services to online shopping.

"The demand is huge but the supply is still poor more entrepreneurs especially who will specialise on specific products like baby stuff is a great venture," he advised.

He says secure payments delivery systems need to be addressed as most online shoppers mostly go for items that do not need to be delivered physically such as air tickets, music, movies, software downloads and bookings for hotels and restaurants.

He said the number of people with computers and debit and credit cards is growing rapidly and banks should also look into this market.

"Currently we use aggregators who have multiple channels of mobile banking put together in one occasion and get commission for every sale, however banks should think of giving their customers this service," he said.

One company that seems to address the cashing issue to their advantage is OLX Kenya that gives buyers and sellers a platform to transact.

OLX Kenya Managing Director Peter Ndirangu says that the company is not going to provide any payment services but rather a market place for buyers and sellers to transact on their own terms.

He says the company will seek to enlighten Kenyans on how the product works before it monetizes the product.

"The uptake so far is on a positive note as we have tripled our traffic since we started two years ago which is very encouraging," he said.

According to the Communications Commission of Kenya (CCK), by the end of the first quarter of 2013 (January - March 2013) there were 9.6 million Internet subscribers up from 9.4 million recorded during the previous quarter.

CCK attributed the increase to mobile data/Internet subscriptions that have continued to dominate the internet sub-sector over the period.

"The mobile data/Internet subscriptions grew by 1.9 percent to reach 9.5 million up from 9.4 million posted during the previous quarter," CCK statistics indicated.

The number of fixed fibre subscriptions grew by 1.1 percent to 55,007 up from 54,400 recorded during the previous quarter compared to the same quarter of the previous year, an increase of 41.2 per cent was realised.

CCK says data service promotions and special offers by mobile operators during the period confirm their keenness to continue growing their market shares.

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