Valued at over Sh740 billion, Kenya's retail sector is one of the leading drivers of the country's economy and a source of livelihood for millions, particularly in the informal sector.
As of 2019, the sector (combined with wholesale, hotels and restaurants) provided over nine million jobs, according to government data.
However, Kenyan retail has had its fair share of challenges that have seen it rocked by turbulence including the collapse of renowned brands.
One of the weaknesses has been poor business automation with the use of manual systems causing poor inventory management and pilferage.
This has provided some budding start-ups with an opportunity to venture into this lucrative sector with tech-based solutions.
One such start-up is Drift Consult Ltd founded in 2018 by Ferdinand Eloto and Derrick Matheka.
The firm has a product named RACK, a cloud-based point-of-sale system (PoS) that helps retailers accept payments from customers and keep track of sales and inventory in real-time.
How it started
The duo met in 2015 when they were consulting for another IT firm. Around that time a large manufacturer was in the market for a PoS system which saw them join hands to handle such projects.
They approached prospective clients eager to automate their businesses and among the first was a flower shop that made them realise they could fully venture into retail business automation.
Now Drift, which is barely a year old, has a team of five engineers and has bagged 24 merchants who use its software solution. As part of building their market share, the firm targets both small and large businesses.
Ferdinand, a user interface developer, does the bulk of business management while Derrick, a developer, coordinates the team and product development.
"We've grown organically and fast in the last few months owing to client referrals," says Ferdinand.
Most of the local PoS systems he adds, are old and offline and their competitors in the market haven't tailored their solutions to the Kenyan context.
“If you don’t own the source code, it’s very limiting for you to even do much of it. We built our system from scratch,” says Ferdinand, adding that the company wants to expand across the region.
“Our greatest advantage is that our system is 100 per cent customised whenever you go to a merchant and his business is probably not conventional, our system is able to adapt to that environment."
He says that the other systems in the market don't own the source codes but are only resellers.
Drift also enables retailers to manage their inventory and integrate with e-commerce platforms and is the first local Software-as-a-Service (SaaS) platform with end-to-end integration and inventory management.
Lack of business automation, notes Derrick, forces business owners to fear leaving their business premises owing to a lack of control or trust when they are away.
This is despite business owners wanting to pursue other activities.
“So we thought, why not create a full cloud system where if the owner decides to go for a business trip in Turkey, for instance, they still have a clear visibility of how the business is doing in real-time?”
He adds that their software solution attempts to capture every single business aspect and is cost-effective, offering business owners insights that help them plan.
According to Ferdinand the team is now looking to deploy a tailor-made product for the hospitality sector where there is a big potential for automation.
“We have something that’s probably going to change the tourism landscape," he explains. "For now, our primary focus is the PoS. We want to take the next six months to enhance and perfect it.”
The founders have also received several offers from external investors for their product but have declined.
The entrepreneurs did extensive market research, especially in the Nairobi Central Business District (CBD) which has plenty of small-scale retailers and businesses.
Accessing business owners
"There are many entrepreneurs running extremely active businesses but have been largely neglected," says Ferdinand.
They want to accommodate these small businesses which are still manual yet move thousands of volumes of stock daily.
A key challenge has been accessing business owners as most of the businesses are heavily influenced by employees who might not like technological change.
“A PoS is something that brings checks and balances to a business and is definitely an employee’s greatest enemy," explains Ferdinand.
"Our main challenge most of the time is just to get direct access to the merchants or business owners.”
Derrick urges entrepreneurs to firmly pursue their ideas and keep a steady vision.
“If you have an idea don’t sit on it just try to find an investor who shares the same things you want to solve,” he says.
The firm has partnered with PesaPal which has over 3,000 merchants. They’ve had the privilege of being mentored by PesaPal founder and CEO Agosto Liko.
The duo encourages young entrepreneurs to find the right mentors in their field who can help them grow.
“When young try as much as possible to create networks, these are things that you’ll eventually cash out on,” says Fernandes.
“You can’t just wake up and approach a person and ask for mentorship. This is a relationship that has to be cultivated. When you are young try to interact with people you look up to. Try to find partnership or work.”