E-commerce remains a nascent industry in Kenya. So far, about 70 per cent of Kenyans have already had an experience of buying an item online, an indicator that consumers are fast embracing digital outlets.
While there is notable growth of the sector locally, trust remains the greatest impediment to the industry, says a survey by Geopoll. Kenyans buying items online, the survey expounds, prefer to pay for goods on delivery despite the option of paying via mobile money, which is widely used.
About 51 per cent of Kenyans prefer paying for goods on delivery while 38 per cent use the mobile money option to pay for goods bought online, states the report. Only three per cent and two per cent prefer paying using credit and debit cards, respectively.
“In Kenya where mobile money is hugely popular, it is the second preferred payment option after cash on delivery.
“This underscores the distrust most shoppers have with online stores. Most would rather pay once they have actually received the item,” the report said.
This is also the case in Nigeria which has also seen an increase in e-commerce while South Africa is more of a card based economy with a higher use of debit and credit cards than cash options.
In addition to the cost of purchasing a good, the expense of delivery increases the total price of goods.
Some online stores indicate prices exclusive of value added tax to woo buyers. When all the costs are put together, the items are usually more expensive than expected, lowering the appetite by users to shop online.
The extra cost that comes with shipping is due to the fact that most local online outlets use courier services that can charge up to Sh500, depending on the item destination in Nairobi.
For instance, local online mall Jumia’s lowest courier charge is Sh150 for items picked at the office and this can go up to Sh360 for a small package delivered in Garissa.
If the item is larger, the e-retailer will charge about Sh1,350 if it is delivered in Nairobi and its environs. The same item could cost up to Sh9,000 to transport it to Garissa.
Chinabuy, an online store launched last year, allows locals to buy items directly from China. While Chinabuy has prices of items indicated on the e-catalogue, buyers are also expected to pay for the shipping fee and the related taxes as well, raising the price by almost two fold.
Most people also opt to buy common items from local stores and will only go for online shops when they are not available.
In Kenya, Jumia is the most popular online shop followed by Chinese-backed Kilimall, according to the survey. Others include Kaymu, Bidorbuy, Vitumob and Savostore.
While the global e-commerce outlets have set shop in Kenya the growth of the sector has also fuelled the development of local online based companies such as Electrohub and MissKerre, a clothing e-shop.
The industry has also inspired growth of shipping firms such as Sendy, a Nairobi-based package delivery start-up that connects parcel senders to a network of transporters using motorcycles to deliver commodities within Nairobi and Kisumu.
Penetration of the Internet and smartphones has greatly influenced the growth of e-commerce sector in Kenya, the survey says. More than 30 million Kenyans have access to Internet enabling them to access online stores.
Google country manager Charles Murito said Kenya’s online market has developed significantly presenting a growth opportunity for business.
“In 10 years Africa alone will be remitting revenue of Sh7.5 billion ($75 million) per year from business conducted online,” he said during Google Year in Search 2016.
“People need to know that every business can have a presence online. This is a space they need to leverage considering the high numbers of locals online.”
Kenyans visit online shops to mostly buy mobile phones. A survey of Black Friday and Cyber Monday by Geopoll says 51 per cent of consumers went online in search of mobile phones.
Other items that were top on the list included clothing and footwear, beauty and accessories, household items and TV sets.
