How e-c*mmerce can help buyers manage cost of living

Maurine is a single mother in Githurai 45. She runs a small beauty salon. She shops at a local kiosk 2-3 times per week. She spends 40 per cent of her income on groceries (about Sh2,000 per week). After rent, school fees and transport, there is little left.

For reference, the average American household spends six per cent of their income on groceries.

It’s expensive to sell goods from kiosks. These small business owners sell small volumes and need to cover their costs. Distributing goods to many small locations is also expensive. This is why kiosk prices are higher than supermarket prices.

But supermarkets are far from such a consumer. And paying 50 or 100 shillings on transport does not make sense when you are spending Sh500 at a go.

What about online shopping? E-commerce sites have cheap prices - but are hard to navigate and cost is higher because they charge delivery fees.

This dilemma is lived daily by many. It represents a significant problem for society (there are more productive uses of this cash – for instance, insurance).

The forces that drove efficiency in other parts of the world are not working well enough in Kenya. They are not suited to how customers shop (spending little, often and close to home).

Inspired by new retail models from China, E-commerce start-ups can create a way to drive efficiency and drive down retail costs. Such a path can help in building a more relevant model of e-commerce and saving consumers billions in the process.

Lowest cost

This model can be Africa’s version of Costco and can play a role at modernising the trade.

One of the most exciting aspects of this model is connecting manufacturers to consumers directly. Through our model, manufacturers can make their products available everywhere instantly, control retail pricing  and pass targeted consumer level promotions.

One big challenge that e-commerce platforms address very effectively has to do with making goods available and affordable to the vast majority, especially in an economic environment in which many of the families are seeking innovative and cost-effective ways to meet their daily needs.

Food remains critical in such an environment because on average, a family in Kenya, spends close to half of its collective income on food.

This is quite high given that in countries like America, the average family spend on food stands at about six per cent of income. The question for us now is; how can we use technology to reduce this gap?

E-commerce can help consumers to pay less for more food, and by doing so, frees up incomes to be spent on other necessities, such as health and education. But for this to happen, there will be a need to create a mass market that then leverages on economies of scale.

This, basically, means creating the equivalent of an online kiosk that is both easily accessible to the consumer and meets their most urgent needs as they arise while also allowing them to make savings on their purchases.  

– The writer is CEO of Kapu, a Kenya e-commerce start-up