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The online hustle: It's never been easier to start a business

By Dominic Omondi | Published Wed, March 29th 2017 at 09:40, Updated March 29th 2017 at 09:45 GMT +3

Amos started a business selling women’s clothes in 2013. At the time, he also held a permanent job. And despite the increased demands on his time, he never had a run-in with his employer over absenteeism — and his customers never visited his store and failed to find him.

It was not magic: Amos runs a virtual women’s clothing store on Facebook. His page is his boutique, and bears thousands of images of women modelling the latest dresses, lingerie, bags, shoes and wedding gowns. Each picture lists prices and the sizes available. The page also prominently displays the business’ contacts and a Paybill number that customers can use to pay for goods through their mobile phones, though most prefer to pay on delivery. As at yesterday, Amos’ page had 149,694 likes. This means any stock updates to the page are seen by about 150,000 people — and their friends. Many brick-and-mortar businesses would struggle to draw this kind of traffic.

Opportunity: Online platforms like Facebook have given young people like Amos, who asked that his second name not be used to protect his privacy, the chance to follow their dreams of being entrepreneurs. And this way, they do not have to spend start-up capital they struggled to raise on overheads. Instead, they can dedicate this cash to buying stock.

Side hustle: At a time when the unemployment rate is rising and wages are depressed, more and more young people are finding their way into self-employment. And with the growth of Internet usage — particularly on mobile phones, where the number of users stands at 32 million, according to Communications Authority of Kenya data — there has been a mad dash to set up online shops. The boom in side hustling — which is driven by uncertain job security, rising costs of living and low salaries — has also helped fuel the craze.

In the beginning: Amos, in an effort to boost his salary, started his business with Sh200,000 that he had saved up. He used the money to buy his first shipment of clothes from China. In four years, the Facebook strategy has worked out so well that today, he brings into the country clothes worth Sh8 million a year. He says he does not keep a keen eye on the number of likes the page has: “I lost count. I just look at the orders”. Amos’ first shipment, however, was not very successful as he used an expensive logistics company that ate into his profits. Still, friends kept asking for more clothes, so he got his wife, Annah Kituku, involved. She had recently given birth and was looking for something that would keep her busy, but that would not take her away from her newborn. The online business was a godsend.

No regrets: “I don’t regret getting into the online business. I am on top of everything in terms of management of the business. My phone is all I need,” she says. The business receives between 150 and 200 calls a day, which has seen Amos and Annah hire four people to man the business’ four phone lines.

Managing demand: To drive traffic, Anne markets the Facebook page on other social media platforms, including Instagram, Twitter and WhatsApp. And Amos has since quit his job to get more involved in growing the business, which has since expanded to a new page that sells baby clothes. The couple uses a room in their house to store the clothes they import. Once an order is placed, a motorcycle rider attached to the business makes the deliveries, which are limited to Nairobi. Within the Central Business District (CBD), delivery is free; customers outside the CBD are charged a Sh200 fee.

Value add: Amos’ clothes are also cheaper than what is found in many physical boutiques that sell new items. This affords him the room to add value to the customer experience, with things like Valentine’s Day cards, birthday flowers and thank-you chocolates. “When we send out these gifts to our customers, their workmates learn about us and this translates into new orders or at the very least more visibility,” says Amos.

Small traders: The online space has also drawn in small traders. Eveline Njeri is a sales agent for an insurance provider. She also runs a cereal store on Facebook and online store OLX. She delivers rice to her customers as long as they buy more than five kilogrammes of the product. The 23-year-old works with her mother, who organises the deliveries. “My pishori is cheaper than the one sold in cereal stores because I don’t pay rent, I just store it at home,” she says, adding that she also has the advantage of a steady market in her workmates.

Pushing sales: Corporates have also begun to plunge into the online space to push sales. Companies like Bata, Nairobi Sports House, Armco and Toy World are now in online marketplaces like Jumia, OLX, Kilimall and PigiaMe. Marketing for an online business is also simple and cheap. Mobile money platforms and pre-paid cards have helped entrepreneurs push their products and services on social media. Before, the difficulty of having to activate a Visa or MasterCard card or set up a PayPal account was a major hurdle. And online, the size of your bank account does not matter, unlike when setting up a physical store where a deep-pocketed investor’s store can outshine a young entrepreneur’s efforts.

Overheads dodged: Amos, for instance, would have needed to put down goodwill, which can run into hundreds of thousands of shillings for a small space in the CBD, before starting to pay rent. It would also require hiring a trustworthy person to open the store every morning, talk to customers and keep an honest record of sales. And then there are the electricity bills, security fees, licence costs and other fixed expenses. And after all these, you would still struggle to get as much foot traffic into your store as Facebook can bring to your page.

Thinking global: According to official statistics, there are about five million Kenyans on Facebook – or 16 per cent of the Kenyans online. In total, Facebook has close to 1.44 billion active users, which is 44 million more people than the population of China. Online businesses are also giving people an opportunity to access international markets in a way that was not possible before, and could the perfect way in for businesses thinking global. “Entrepreneurship will be a big avenue for young people to make something of themselves, as long as the Government respects the process,” Annah says.

Paying taxes: The trouble, however, is that many online businesses do not pay taxes as the Kenya Revenue Authority has no way of tracking all of  them down. But the taxman has mooted a plan to bring kiosks into the tax bracket by charging a turnover tax rather than going after their profits, which can be difficult to prove. This strategy may soon spread to online businesses. However, many businesses online lack any kind of company registration documentation — you don’t even need a KRA Pin certificate to set up shop — which makes tracing their existence difficult.