Online Market Development in Kenya

Written by ChrisK

March 18, 2019

Overview
It’s interesting that three-quarters of the African population are yet to start using the Internet, as of 2019. However, there has been progressive indicators on the business-to-consumer e-commerce space.
For instance, according to UNCTAD’s report dubbed Business-to-Consumer (B2S) E-commerce Index for 2018; by December 2018, there was at least 21 million online shoppers in Africa, with Nigeria, Kenya and South Africa account for upto half of the shopping stats.
When it comes to online market in Kenya, this is a subject that’s influenced by three major things: mobile penetration, internet access and purchase power of the citizens.
As internet penetration deepens and data costs drop, the e-commerce industry is recording a boom. Furthermore, Kenyans are shopping online especially due to attractive lower prices and home/office delivery.
The virtual space market is tricky – for merchants; majorly due to heightened competition for customers online. And for one to make it on the industry; you have to swiftly identify emerging trends and integrate that into their company’s operation chain. For instance, quick technology changes and specialty markets is a new trend to keep focus on.

Mobile Industry in Kenya
The mobile industry is a major contributor to economic growth in any country. In 2018, the sector contributed $3.9 trillion to the global economy (which is equivalent to 4.6 percent of world GDP.
According to the latest statistics, Kenya’s mobile industry is rated to be the second most improved in the sub-saharan Africa; after Cameroon. The improvement is attributed to better infrastructure and more affordable services.
Looking at the Kenya’s electricity connections per household; the number rose to more than 50 percent of the population in 2018 (Approx.22.5 Million) from only 30 percent in 2014. Whereas, In terms of network cover, access to 3G internet increased to 85 percent of Kenyans in 2017 from 67 percent in 2014.
The quality of internet services has also advanced for the past four years. For example, Stiff competition in the mobile internet sector has seen data prices drop to more affordable rates for Kenyan consumers; and as a result, more people are able to buy data and hence growth in the mobile internet sector.
Additionally, an increase in connectivity on mobile internet services has led to several economic benefits including; increased job opportunities, enhanced financial services, and better access to information.
As of December 2018, Kenya has at least 42.2 million active internet subsribers.

E-commerce Platforms
In Kenya, most ecommerce platforms woo in customers by offering after-sale services that tempt highly. This includes: shorter wait for delivery of ordered items, price slashes esp. for orders sourced & delivered within a given city.
For instance, leading brands in Kenya deliver online orders within 3 business days within Nairobi and almost 2 weeks upcountry. But this is about to change the industry big time; with a new player in market offering a better solution between demand and delivery. This includes introduction of free warehouses to online vendors, and delivery within 24 hours across the country.
Some of the online vendors, have expressed positive views on the Kenyan online purchase power. One of them, is the South Korean electronics company, LG, anouncing over 60% of their product sales being recorded as purchased online. For this reason, they are looking to expand their online offering to the shoppers and take the advantage of internet penetration in the country for dependable growth.
Other players include, Carrefour supermarket chain (2nd most largest in the world after Wallmart), Jumia, etc
Upcoming specialty markets include food-related platforms. Mostly, a central point for different restaurants offering gourmet food for online customers. Also, fashion stores; especially jewellery and makeup – these have got quite a catch in Nairobi.
Apart from the normal retail – consumer services; we’ve seen introduction of monetary service related business such as online foreign exchange trading. This means, any vendor/provider granted permission by the Capital Markets Authority, is basically, licensed to chose and manage investments; prudently, for its online forex trading clients – this is one of a kind in East Africa

Bottomline: The online market in Kenya is quite rapidly developing and might soon be a common thing in the country; which could mean Kenya realizing itself as the Silicon Savanna of Africa.

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