London — Going into the vacuum left by Jumia's pull-out in 2019, inalipa has over a short period built up both a B2C and B2B customer base in Dar es Salaam and has ambitions to roll-out into other Tanzanian cities. Russell Southwood looks at whether a local contender can crack the difficult nut of African e-commerce.
Inalipa's launch had two roots. Firstly, the founders run a digital agency called AIMS and deal with large consumer brands who were always looking for more effective ways to get to market. Secondly, Tanzania has many Instapreneurs who use the Instagram and WhatsApp platforms to hook up with customers to sell mainly imported brands:"Initially the idea was to cater to these micro vendors. That was going to be the original market."
When the first wave of the Covid-19 crisis came along, things pivoted and the launch date was accelerated to 21 April 2020:"Suddenly a number of consumers were worried about where they were going to get their goods from and suppliers didn't know how to get to consumers. So we shifted to focus on large-scale suppliers, manufacturers and importers."
It had two types of business model in mind: the megastore with everything supplied end-to-end with its own warehouses and fleet and a Partners Store, where it would only handle payment and delivery, similar to Amazon's marketplace:"The Partner Store was for those who had inventory that was so diverse it would be impossible to warehouse. We picked up quite a number of these suppliers."
It has 90 suppliers, 5000 product SKUs (Stock Keeping Units), 3000 of which it warehouses. The B2C volume products are groceries (meat, poultry, fruit and vegetables, household essentials and cleaning products. The high-value B2C products are sometimes very niche, hardware products like power tools, toys and baby-related items like diapers, infant formula and pacifiers.
Its own fleet consists of a number of 2 and 3 wheeler bikes and a 2-ton truck for really large pick-ups and dekliveries:"The reason that we have our own fleet is that a number of e-commerce players in the market have a big reliance on third party logistics. This poses three challenges. Firstly, it's very difficult to control QoS and SLAs; secondly, we want get our model right first and it involves multi-stop route-planning and pickups; thirdly, it takes larger up-front capital but we can keep delivery costs down. We don't charge for delivery."
Payment is cash on the doorstep, Visa/Mastercard or mobile money: it has direct integrations for credit cards and mobile money:"Initially we didn't take cash on delivery but we launched it in July and it's 50% of our orders with the balance split between credit cards and mobile money. The majority of the latter is M-Pesa. There's been no fraud. Once in a while when you deliver a cash on delivery order, there's no-one there.
In October, after talking to suppliers about their major challenges, it decided to add B2B to its offer, delivering to places like Dukas, bars and restaurants:"The businesses can make their own orders online and we have sales reps. Early this year we rolled out Version 2, with an enhanced user experience with improved product discovery. It's also now on IoS and Android and has been continuously growing month-on-month. B2B is now the largest segment, 3:1 against B2C but the latter has the greatest margins." On the B2C side it has been taking 1,200 orders a month and each customer makes about 1.5 orders a month and monthly growth is 15-20%.
On the B2B side it was initially alcohol only and it created a GPS mapping of all the outlets: 800 in Dar es Salaam. It is able to make daily deliveries, something appreciated by small outlets that often lack the capital to hold large amounts of stock:"Dar is a tier one city and within our growth plan we want to add three additional cities by the end of 2022."
Jumia pulled out of Tanzania in December 2019 and a number of players emerged in the vacuum it left behind:"A lot of them are focused on takeaway food delivery and we do not operate in that space but most of these players have added other products." These competitors include Duka Direct (operated by local payments aggregator Selcom) and Pika (launched by a former Jumia manager).
Its B2C deliveries have thrown up some interesting anomalies. A beer like Budweiser is seen as a premium product and usually only distributed. in premium neighborhoods:"Products typically seen as premium are not just being purchased in premium neighborhoods."
It has its own back-office call centre that follows up on orders that are not completed:"When you call, you increase their trust in the system. Before they were worried about whether it was a real business. 7 out of ten convert to becoming customers.
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