Business

Retail sector banks on e-commerce for growth

Online traders are leveraging on unique products whose demand is rising

E-commerce still commands only one per cent of the market share despite the retail sector growing fast last year with major players reporting positive growth in the last three years.

Driven by Kenya’s solid technology infrastructure, surge in affordable smartphones and a growing middle class, expectations are that in coming years online shopping will be the game changer for the sector.

This projection comes against the backdrop of a weakened performance from the brick and mortar retailers whose fortunes have been dwindling.

Unemployed youth

But going by performance of Kenya’s leading online market space like Jumia, online retailers are growing fastidiously, giving hope for further expansion in a sector considered to have great potential for Kenya’s unemployed youths.

Jumia managing director Sam Chappatte says that most of the growth leveraged on setting up one of the largest Black Friday events last year.

The online retailer says it witnessed 100 per cent growth compared to the previous year.

“For us the Black Friday concept is now becoming a phenomenon. It is no longer a Jumia event as initially seen. You saw even offline retailers had similar ru which was good and shows it works,” he said.

More importantly, for online retailing, this was a marketing gimmick of sorts because it drove more people online during the festive season giving them the desired numbers.

The growth in online market segment is, however, leveraging on certain unique products whose demand is increasing very fast.

Market share

“We are seeing a disruption in TV sales for example. For us, this is a category which is informing a significant market share of our sales for some reason,” he said.

On the demand side, and being a new concept, managing customer expectations remains one of the largest challenges for online retailers.

The industry needs to step up and meet customer expectations as the market gets ready for further disruption.

“We witnessed close to 100 per cent growth from last year due to growth in traffic and relevance of products having increased product range from 500,000 to four million,” says Chappatte, adding that demand for online retail will grow further in future.

“People are getting busier daily, the traffic jams are getting worse and this will not change any time soon. This pressure will continue opening up demand for e-commerce,” said John Kiprotich, an avid consumer of online retail products.Jumia hopes to expand market share by roping in up to 10 million customers by end of the year.

“Going by the look of things, we are heading to a stage in life where people will start making online orders a couple of times a month as opposed to once a month,” says Chapatte.

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