Like every good Kenyan, I keep a running list of get-rich-quick schemes. From this catalogue I have recently crossed out opening a duka. Who am I to succeed in this business if the ubiquitous Nakumatt empire could crumble so dramatically? And this trend continues worldwide.
The evidence is mounting that less and less people are choosing to go to physical stores and more and more people are choosing to click to buy stuff online.
The twin A’s, Amazon and Alibaba dominate this digital marketplace. Jeff Bezos of Amazon is now the richest man in the world and Amazon commands a massive 38 per cent of all online retailing in the US. Alibaba, China’s largest e-commerce platform, which is listed on the New York Stock Exchange, posted 42 per cent growth this quarter and doubled its profits.
Boohoo, and no, this is not a cry for help, is one of the most successful online clothing retailers and from its origins in 2006 in Manchester, it is set to top almost a billion pounds sterling in sales. (Note, if you don’t know what this is, ask your teenage daughter.)
To be clear, though, it doesn’t mean that you are destined to fail if you own the bricks-and-mortar Githurai Supermarket. Its more that you need to adapt to the shopping habits of the Age of Instantaneous Gratification.
The jury’s verdict is out and omnichannel is the way to go.
A recent study published in the Harvard Business Review says 73 per cent of shoppers combine both online clicks and store visits to make purchases.
The winners of this approach are Walmart and Target, two of the world’s largest grocers.
So why isn’t e-commerce taking off in Africa, if it really is the trend of the future?
The reasons given vary from suspicious patrons who will not part with their money before seeing the goods. This leaves online retailers managing cashflow with a largely cash-on-delivery model despite their upfront expenditure to secure supplies.
Then of course there is the question of how the vendor gets your order to you. Our traditional method – which involves such vagaries as “from Argwings Kodhek Road turn left where you see the jacaranda tree and then after you pass the second red gate you will see the blue one” – is not necessarily the most efficient.
To be honest though, I still don’t understand why an Uber driver can find your home in a few minutes whilst it takes Jumia about a month.
Local players just don’t have the cash to put more money behind their loss-making operations to support extra warehousing and logistics centres to manage the exhaustive inventory required for a 24/7 on-demand economy.
In some Yoda-inspired lessons: An Amazon-like retailer isn’t yet in Africa and when they do evolve, we will all know it.
Also the day a grocery store solves my monthly pilgrimage to their store and delivers to my doorstep – they will have my undying loyalty.
Thirdly, don’t underestimate Alibaba’s ability to sell hair weaves to African salons. And you don’t even need to learn Chinese – Google Translate or Ding Talk are your personal interpreters.
The lessons are, therefore, don’t start a shop, or if you already have one, to avoid future bankruptcy and stay relevant, you need to incorporate your customers’ online convenience and embrace e-commerce.
Click, confirm order and exit checkout.
The author is the Managing Partner of C. Suite Africa, a boutique management consultancy. [email protected]