By Wambui Mbarire
With a burgeoning population estimated to be close to the 50-million mark, Kenya is generally considered a growth market for a wide variety of products. This is largely due to a number of factors, including a young, educated population, urbanization, devolution, a large diaspora and exposure to the global marketplace among others.
It is not surprising therefore that outside of South Africa, Nigeria and Egypt, most global producers eyeing the African market usually consider Kenya as a base point for both their entry as well as initial target for penetration.
The rise of technology and particularly the Internet has played a large part in this growth. According to the e-commerce blog EcommerceDB, Kenya is the 54th largest market for eCommerce with a revenue of US$2 billion in 2021. The site says that with an increase of 44%, Kenya’s eCommerce market is credited with contributing to the worldwide growth rate of 29% in 2021. As retail services surge, revenues for eCommerce players have registered a continuous rise. At the same time, new markets are emerging while the existing ones show potential for further development.
Quoting Statista’s Digital Market Outlook for Kenya, the site notes that local expansion is expected to persist with predictions holding that the compound annual growth rate (CAGR 21-25) to 2025 will be 12%. Online selling is now a thing as more people trust the Internet as a source of goods and financial transactions becoming safer. In fact, according to the site, nearly one quarter of Kenyans had by the end of 2021 purchased at least one product online, showing a strong penetration of e commerce.
At 41%, electronics and media form the category with the largest portion of online sales, followed closely by fashion at 31%, furniture and appliances at 1%, toys and DIY merchandise at 8 % and lastly food and personal care at 7%.
While the online buying is not a recent trend in Kenya, observes and retail industry insiders posit that the COVID 19 pandemic accelerated its uptake, with the period between March 2020 and December 2021 registering the fastest growth.
A number of factors may have triggered this surge: first was the restrictions that led to hone deliveries, especially in the larger urban areas becoming a preferred option to in store shopping. Second was the readjustments that came with job losses as many people found themselves needing to secure alternative sources of income as some organizations shed their staff. Third was the shift by existing businesses from their brick and mortar to online stores as a cost cutting measure in order to stay afloat. Four was then the entry of robust technological platforms that enabled people to stay in communication and at the same time transact by selling products and services online as well as receiving online payments safely.
These are the realities of the economy that we all found ourselves in, an unprecedented change that no one had control over and which required everyone to adjust in their own way. But even more profoundly, is the impact these changes made on Kenyan psyche. In a matter of months, online business became mainstream and is unlikely to lose steam for the foreseeable future.
The bug has bitten a large portion of the population and reputation has become important online just as it is offline. Indeed, we have seen anecdotal instances where business people are called out for either delivering sub-standard good and services or engaging in financial fraud. Social media has played a strong role in entrenching this level of accountability and all indications are that both positive and negative online reviews will increasingly become part of the currency of e commerce transactions. The boat has set sail and the brick-and-mortar shop can no longer determine the extent of one’s business territory and customer catchment. It is normal to see online businesses state that they deliver countrywide. It is unsurprising that cargo and courier firms have taken note and are fast expanding the routes they serve in order to meet the last mile need for online sales.
The future can only be more eCommerce heavy for every product and service there is to be offered in Kenya.
The writer is the Chief Executive Officer of the Retail Trade Association of Kenya (RETRAK)