No one likes competition due to the advantages and benefits that come with being in control of a particular area. It’s only natural – more so in business where having (or entry) of a competitor can spell doom.
This is the situation currently facing Kenya’s e-commerce which has for long been controlled by Rocket Internet-backed Jumia and latest entrant, Kilimall.
With the news that mobile network provider Safaricom is working on a new business-to-consumer (B2C) e-commerce platform called Masoko with plans to go live in the third quarter of this year, current market leaders are putting all their efforts on strategies meant to ensure that they don’t lose their position – that is suppliers, clients and the revenues that come from the platform.
For example, Jumia’s on-boarding process takes only a day to enable suppliers get online, upload their inventory (of items) and get approved physically to start selling in less than 24 hours. Jumia says it aims to make selling on the platform as easier as buying and is currently reaching out to vendors via its online sign up forms, web chats, social media and a dedicated hotline.
Jumia believes that the more the sellers it can manage to sign up and retain on the platform, the more the number of clients it will retain due to the variety of items and possibility of price competitiveness among vendors.
Upon verification, Jumia is using tutorials for continuous training of suppliers in various aspects including market trends, pricing and promos among others. Jumia also offers its suppliers get free accounts, digital marketing training as well as advice on tax compliance, with the sessions taking place either online or in-person during Vendor Forums.
The online retailer conducts weekly surveys to gauge vendor sentiment and satisfaction. The firm has invested significant resources in its platform and on the engineering team in order to make the user experience as seamless as possible. The firm’s global digital marketing team also trains vendors on how to get the best leads and increase conversions.
Even though they are competitors in the same marketplace, there are requirements which both Jumia and Masoko suppliers have to meet before they can sell on either platform. Both require vendors to be either registered businesses or sole proprietorship and have proper KRA PINs.
The difference between Jumia and Masoko however comes when it comes to the mode of disbursing payments to the vendors. Masoko suppliers are currently using Safaricom’s ‘Lipa na MPESA’ service which requires them to apply for and be issued with a Till Numbers even though they won’t be restricted to it when the platform is fully launched beyond the pilot phase. Their Jumia counterparts, on the other hand, have a variety of options when it comes to accepting payments – including cash transfer to one’s account, cheque and even MPESA.
The early adopters say Masoko will charge a 10 per cent commission on every sale regardless of the value of the item sold plus 1 per cent normal charge for Till Number use.
Presently, the major disadvantage with Till Numbers is that it doesn’t itemize what has been sold and at how much making it harder for a vendor to track which items are moving and which aren’t.
Hopefully Masoko will find out how to mine and share that data with vendors by coding items. If categorization doesn’t happen, Masoko is likely to send vendors SMS notifications on every sell to replenish their inventory.
Masoko is set to have a central hub for efficiency and clearance compared to Jumia’s flexible drop-off centres or mini-hubs across the city. Having a central hub reduces the speed of delivery for goods and returns even though it might be helpful for keeping down storage and warehousing costs.
Though Safaricom has built a trusted brand as a reputable smartphone vendor (through direct relationships with device distributors and manufacturers), opening up the Masoko platform to everyone could come with its own disadvantages and affect the telco’s own smartphone inventory. To maintain this trust, Safaricom may be forced to restrict itself to smartphone dealers who have OEM distributor agreements if the firm wants to maintain foot traffic to its physical shops.
All in all, only time will tell how the e-commerce environment responds to the entry of another player. Let’s hope it brings additional benefits for the clients and suppliers.