E-commerce in Kenya: A bittersweet opportunity for online sellers and shoppers

Kenya has been at the forefront of technology and business innovation in the region.  For the past couple years, something else has been brewing behind the scenes and its impact has only been felt much recently.

If you’ve spent any amount of time in the country, then, you know that Kenyans view things from a different perspective; especially when it comes to digital entrepreneurship.

E-commerce, or as many Kenyans refer to it as simply “online” has had a profound impact on the way we view - and do - business nowadays. It’s not uncommon to find entrepreneurs from different age groups - Gen Zers, millennials, and a growing number of boomers - taking photos of their products and services for their online storefronts.

So, now comes the bigger question: why are many Kenyans still reluctant to take advantage of the opportunity?

The scene is set for long-term growth. So, why aren’t people taking maximum advantage of e-commerce and other digital opportunities?

For context, here's some data to help us understand the current status quo for digital opportunities and why business owners are still reluctant to migrate their marketing and sales online (at least partially).

• There are some estimated 54 million people in Kenya. Data from the Kenya National Bureau of Statistics (KNBS) showed an estimated 47.5 million people in 2019.
• Over 22 million people use the internet in the country. Of these, 10.55 million use social media, which is about 19% of the country’s population.
• WhatsApp, Facebook, YouTube, X, and Instagram remain some of the most popular social media platforms.

Despite the many opportunities brought on by infrastructural growth and expansion, nearly half (46.3%) of businesses close within the first year. Credible sources further reveal that 400,000 SMEs die annually.

And with business conditions projected to get tougher in the coming months of 2024, it’s clear that many more are on the path to closure if they’re not already there yet. Yes, that includes online businesses.

Overall, online entrepreneurship has faced a wide range of issues as highlighted below:

#1 Insufficient expertise in e-commerce casts doubts on the viability of digital entrepreneurship

Arguably, the number one reason why Kenyan business owners shun online selling avenues, platforms, and digital opportunities has to do with lack of sufficient knowledge of the opportunities themselves, how to tap into these opportunities, or the platforms that offer them.

Take the following data from a series of surveys commissioned and conducted by Jane Njambi, a digital marketing specialist and lead trainer at The Daily Learners.

• In one poll, when asked “Do you have a business plan for your digital business”, 88 out of 94 respondents said “No”.
• Another poll found that only 14 out of 36 respondents knew that WhatsApp channels existed in the app.  
• In a separate poll, it was discovered that 75 out of 107 respondents do not have a Facebook Ads account, either from a lack of knowledge about its existence or the cost implications of running one.

Considering the fact that Facebook and WhatsApp are two of the most widely used social media platforms for online business, insufficient knowledge about embedded tools remains an issue for resolution.

#2 Customer and seller distrust still run rampant (unfortunately)

Younger generations are more receptive to emerging technology and the opportunities that they bring compared to older generations. Older generations prefer older mechanisms that have proven to work over the decades. Here, personal networks and “friendships” run the show.

This includes in-person store visits and physical storefronts over online stores. Physical interaction between buyers and sellers at a physical location reassures trust, unlike virtual interactions.

With physical contact, buyers can affirm the quality of the products that they purchase, and the sellers can request payment on the spot upon acceptance by their customers.

Platforms such as Jiji, Jumia, and Marketplace, however, appear to have found a way around this where buyers and sellers don’t always have to meet in person. Trust is bestowed upon the platform itself, rather than the individual sellers themselves.

#3 Fraudsters have scarred online shopping experiences

“Wash wash” schemes, phishing campaigns, pyramid schemes, online bank fraud, crypto fraud, and other malicious schemes are a growing concern entrenched deep in the country’s digital history. In 2020, it was reported that the number of fraudulent cases reported rose five times.

More than 80% of internet users access digital products, services, and content on their mobile phones. With increasing exposure to the internet, it’s only logical to expect increasing incidents. A good number of online buyers are wary of the risks and are taking precautions when shopping online.

James Mwangi (not his real name) shared his ordeal with EA Dialect.

“Hizi vitu labda nione kile nanunua. Kuna siku nimenunua simu ya kushikilia, kumbe nimeuziwa phone case cover ya 5,000. Kumbe majamaa walinifanya ile kitu. So ukiona vitu zimeanikwa online itisha kwanza, ona ni nini, halafu ulipe. Mimi kama haina pay on delivery wacha ikae.”

He explained.

Here's Mwangi's story translated in English:

“I want to see what I’m buying. One day, I bought a phone for temporary use, only to realize later that I’d bought a phone case cover at Ksh. 5,000. Those guys wronged me. When you see items displayed online, order first, see what it is, then pay up. In my opinion, if there’s no option to pay on delivery, I won’t order.”

Mwangi’s case is not an isolated occurrence. Several incidents of online shopping gone wrong serve as a reminder that online buyers must remain vigilant with their online shopping activity.

In a desperate move to save face, online sellers are providing multiple shopping options for their customers with “Pay on Delivery” and in-person invitations for order pickups.

What Next?

Given the fact that e-commerce is still in its infancy in Kenya, it’s clear that room for greater opportunity lies within sight. But to get there, more time must be spent on educating the masses - and even more importantly business owners - on the role digital systems play in making business easier and more efficient.