Ecommerce is increasingly becoming popular as more people opt for greater convenience and time saving.
A report by KPMG indicates that many traditional consumer businesses and new start-ups alike are moving away from models that are shop-centric or geographically-focused, to ones that are customer-centric and virtually borderless.
“Clearly, ecommerce has been growing globally across many ‘usual suspect’ categories like apparel, books, and music. But what we are now starting to see, and where we expect more growth, is from categories where showrooming often occurs, such as mobile phones and laptops, as well as furniture and decoration items. Even in the grocery retail market we see opportunities. Very few retailers get their online grocery model right, but when they do, it can be very successful. Winning companies in this segment have focused on Millennials and young professionals, where the focus on prepared fresh meals has been a growth driver.” Said Willy Kruh, Global Chair, Consumer Markets, KPMG International.
Types of products being bought online
The online shopping landscape, according to the report, is gradually changing in terms of the types of products that are being bought online. Generally, consumers’ planned online purchases indicated a year over year increase for most product categories. These results signal a higher willingness to buy new product categories online, particularly those more traditionally sold in shops.
“I sometimes just browse the internet seeking for a product and once I find it I immediately purchase it. Of course I pay on delivery after I have set my eyes on the product and confirmed that it indeed is what I purchased,” Anne Murugi a middle aged civil servant who admits that the trend has pushed her to try out the ecommerce craze.
“I like it. The convenience that comes with it is what I look at when I go for such products,” She adds.
Greater options for shipping and delivery have made it easier and more common to buy bulkier products online – including furniture, appliances and even vehicles. Meanwhile, although ‘easier to ship’ products such as books, music, electronics, accessories and apparel remain the most popular online categories, relative growth in these segments is expected to be minimal.
“There is a little Millennial in each of us. A number of Baby Boomers are starting to understand and appreciate the technology that is out there. They’re also trying to appreciate and experience the convenience of buying online.” — Mark Larson, Head of Consumer and Retail, KPMG in the US.
Another research by Consumer Insight, also indicates that online shopping particularly in Kenya is on the rise with 48% of internet users citing that they use the internet to shop.
“The average number of annual online purchases among the interviewed internet users is 7.7, with females being more likely to shop online than their male counterparts. With a majority of internet users accessing the internet via their mobile phones, looks like it’s officially goodbye to window shopping and hello to screen shopping,” the study stated.
Source: Consumer Insight
New Generation consumers fuel online shopping
Enabled by technology, according to Mr Kruh, the continued year over year growth in online shopping has been fueled by a new generation of consumers who want greater convenience, value and options. For consumer businesses, this trend poses both challenges and significant opportunities. Competition is no longer limited to local shops during business hours. Consumers today are shopping all the time and everywhere; and in a truly global online marketplace, products can easily be purchased from retailers and manufacturers located anywhere in the world—or from those with no physical retail locations at all.
“However, despite the rise of online shopping, ecommerce still makes up a relatively small percentage of total retail spending. Retailers’ brick and mortar strategies also need to evolve to continue to draw customers into their stores, and to compete with the online retailers opening their own physical outlets. Increasingly, we are seeing innovative marketing strategies, as well as new technologies such as smart shelves, robots, self-checkout, and interactive and virtual reality, being deployed in stores as retailers strive to compete on all fronts,” he adds.
New entrants into the online market
Last year in October, the first budget online shopping made a debut into the East African region. The shipping website is now serving Kenya, Tanzania, Uganda, Rwanda, Burundi and South Sudan in addressing the missing link for online shopping and shipping from the U.S. to East Africa. StatesDuka does weekly air shipping and monthly ocean freight to Kenya and surrounding East African countries.
“Current and prospective clients also have the flexibility of making their purchases via mobile money which is a major economic driver in East Africa, as the region continues its transition to cashless payment methods. The entry of StatesDuka into the industry comes on the heels of a wave of online shoppers in East Africa demanding quality products from the U.S. due to their appetite for genuine products and the rapidly growing middle class in the region.” Reads a statement from StatesDuka on the announcement.
Stateduka now joins other online platforms like Jumia, Ebay, OLX, Pigiame,Kilimall, Cheki and Electrohub among others.
Online banking is also another trend that internet users have embraced. As revealed by Consumer Insight’s DigitalK Report, internet users in Kenya are shunning the banking hall in favour of internet banking.
According to the study, 46% of those who use the internet for banking revealed that they typically do so an average of five times a month. The main functions accessed on banking applications are cash transfers and bank statements, at a usage rate of 61% and 31% respectively. It seems traditional banks need to go so that they can be replaced by banks on the go.
Source: Consumer Insight