Reasons why eCommerce businesses are not successful in Kenya.
Honestly, it’s not that complicated. Kenya seems to be the hub of technology after Nigeria and South Africa, in many ways we are not developing at a tortoise level but at the same time we are trying too many things at the same time but consumers are not necessarily growing. Every now and again we have a new app that comes and at first, Kenyan consumers are usually very excited to use it. Although each new business is unique, there are common contributors to ecommerce failures that we need to understand before venturing into another ecommerce business.
1. No real investment
Opening an ecommerce business might not take up so much money but maintaining the business will definitely take up a lot more than what you started with. Like any new business, a fledgling online store may require several infusions of capital and a significant amount of labor. People usually assume that when you start an online business people will automatically buy things from you because you have quality products and it’s possibly more convenient. But without strategy and marketing, you really won’t go far.
2. No real cash flow
At the most basic level, cash flow is the movement of money into and out of a business. New ecommerce companies can get into trouble when they don’t have enough cash to keep operating. An example of this is when an entrepreneur invests all his cash in inventory and there is no money for marketing — so sales don’t rise and the business is stagnant. Kenyans would also still prefer to head over to a shop and buy something they can see, most people still prefer visiting a physical location because of the fear of being scammed.
3. Majority of Kenyans don’t order their products online
I am still a believer that majority of Kenyans are not educated and are not tech savvy. It is ignorant to think that your product or business will take off without thinking of a way of incorporating the common mwananchi. This is the person who lives in Kibera, the one who has a phone that cannot download more than one app. If you can’t find a way of getting those people then half of your business is already doomed.
4. Competition is high
In the recent past years there have been enough ecommerce platforms trying to sell all manner of things. It is also easier to sell services than actual products because if your products don’t sell then you lose a lot of money. When you’re selling services you need to invest in marketing more than anything else of which you can control the budget.
5. Mismanaging investment money
Many new Kenyan companies get investor money but a number of them end up mismanaging their funds. I am not saying that they use their money on drinks and random things but many end up growing their platforms a bit too fast. They get a large number of staff members and pay them a hefty amount that never really makes sense.
6. Poor content quality
If you’re going to open an ecommerce business in Kenya, please make sure that you have brand love. Kenyans love a brand that they can connect with, this is why Safaricom has done so well because people love their brand and their community management.