Small businesses turn to e-commerce to compete with establishments

Jumia MD Sam Chappatte (left) and Ann Kirima, Chair of the Kenya Investment Authority during a media briefing in Nairobi.

NAIROBI, KENYA: Small businesses have taken advantage of Kenya’s booming e-commerce to soar up sales.

Online retailer Jumia has revealed that 80 per cent of the products on its platform are now from accredited small businesses - many of whom have only recently made their first ever online sale.

While declining to give the actual number of merchants on the online marketplace platform, Jumia Managing Director Sam Chappatte said the number of SMEs leveraging on the platform grew by 45 per cent in 2016. A trend he attributes to Jumia opening up its platform to vendors in new categories (like Beauty) and retailers rushing to join the platform ahead of Black Friday

“We have seen a spike in the number of merchants joining our platform in recent months. This is great news for customers, as it means more choice of products and will lead to better prices. It also proves that our platform offers a great money making opportunity for professional, ambitious vendors of all sizes” added Sam Chappatte.

Harrison Kiarie, Managing Director of Unique Collections, one of the many vendors selling on Jumia, was employed at a local firm in 2016 while selling products on Jumia alongside his full time job. He soon realized that his Jumia sales were earning him more money than his job and thus quit to focus on building his virtual shop on Jumia.

“In just six months selling on the site, my business grew in leaps and I quit my job to focus on selling. Jumia has enabled me to create a new sales channel of revenue that wouldn’t have been possible any other way,” Harrison said. He has since hired 6 people to work for him.

Recent data indicates that the online marketplace is rapidly diversifying into new categories such as consumer goods (up over 100 percent year on year), Beauty (80 per cent) and Baby, Kids and Toys (+44%). Unsurprisingly, categories such as automotive, books and stationery have not been focus areas to date.

With Kenyan consumers spending more than Sh10B on online shopping platforms in 2016, according to global marketing firm AC Nielsen (up from Sh2.4B in 2014 according to the Communications Authority of Kenya), e-commerce has become an integral part of the economy.

This was reiterated by Anne Kirima, Chair of the Kenya Investment Authority:“By helping small businesses grow and creating employment for thousands of Kenyans, e-commerce contributes immensely to Kenya’s economy. The fact that sellers can sell from the comfort of their homes without opening expensive stores is pretty impressive.”

To help small businesses further grow, the e-tailer has launched a project dubbed #GrowWithJumia – designed to educate and equip retailers with the technological knowledge to sell online. Jumia will allow them to sell on the platform and benefit from its large customer base taking only a minimal commission of 1 per cent on their sales for a 3 month incubation period. In this formative period, Jumia will offer weekly payment terms (to help them recycle their cash) and is working to facilitate their financing needs.