Africa has seen a surge in the number of e-commerce platforms in the past ten years. Disrupt Africa states that the continent is home to 264 e-commerce startups, mostly targeting middle-class consumers with tech, fashion, and household items. The growing number of platforms is a no brainer, given the region’s growing mobile and internet connectivity, as well as booming business. International trade Center predicts that Africa’s consumer spending will exceed $1 trillion annually by 2020 whereas the IMF argues that consumer spending will hit $2.1 trillion by 2025.
While the numbers show potential in the African e-commerce space, the majority of the region’s citizens remain underserved, owing to their remote location, and poor access to banking services. Almost 75% of the 1.2 billion African people lack access to formal retail and e-commerce, limiting their product choice. Worse still, a majority of this population resides in the continents’ hinterland, with limited access to the road network. As a result, mainstream e-commerce would incur high costs to deliver products to rural customers.
E-commerce adoption in rural Africa experiences dominance of informal retail, consumer distrust on online retail, infrastructure barriers, low card, and internet penetration. Unlike their urban counterparts, rural consumers have different product needs, mostly foodstuffs, and household items as opposed to tech products. The amalgamation of these features locks out a majority of the population in Sub-Saharan Africa from e-commerce.
Nevertheless, emerging e-commerce models present solutions that potentially include underserved 750 million customers. Copia, a 6-year-old mobile commerce platform is attempting to bridge the gap through blending online and offline commerce to reach customers unserved by formal retail.
Here is an excerpt from a chat between Kenyan Wallstreet’s Mwakaneno Gakweli and Copia CEO Tim Steel on how Copia is serving customers online and offline.
Mwakaneno: Tell us a little about Copia.
Tim Steel: We {Copia} are a mobile commerce platform that delivers good to the underserved populations through a network of 5,028 agents and efficient delivery systems. We target the unbanked, underserved population, which stands at about 750 million people in Africa in remote areas. A majority of this population is not tapped by mainstream commerce because of high logistics costs among other reasons.
Mwakaneno: How does your online/offline model work?
Tim: It is good that you have mentioned online/offline. Copia allows a customer to order goods from a catalogue at a Copia agent closest to their location. The agent then keys in the order to us and we deliver the goods within two to four days for bulky items, after which the customers pick up the goods from the agent. The Copia online/offline model allows customers to order goods and receive them offline, at no cost. Copia’s brand promise to customers is “maisha rahisi” – “making living easier every day” for our customers. We offer our customers convenience – they don’t have to travel to seek the products they need and take time away from their every day livelihoods. We also ensure we supply the best quality products, key to maintaining our brand trust.
Mwakaneno: How does Copia manage to deliver for free, given the high logistics costs in serving rural markets?
Tim: We leverage efficiency to keep costs as minimal as possible, as well as work directly with manufacturers to enable us to pass on the best margins to our customers. This has enabled us to deliver goods to our customers for free.
Mwakaneno: Why do you use agents in your delivery model?
Tim: Agents act as a point of trust in e-commerce. In most cases, Copia agents are people who already have the respect of the people within their society, like shopkeepers. As a result, locals can comfortably place orders and pick up goods at their locations. Agents earn extra income through commissions, increasing their income by 37%. In addition, the agents also receive more customer traffic to their premises.
Mwakaneno: Do you think you are missing out on the middle-class by exclusively focusing on low-income customers?
Tim: Not exactly. We target the remote, unconnected populations who cannot access mainstream commerce. They represent the majority of the consumer base. Still, we allow middle-income city dwellers to buy goods through our Copia online shopping site, and use our channels to deliver products to relatives up-country, conveniently and affordably.
Mwakaneno: What are some of your milestones in the Kenyan market?
Tim: We have reached customers mostly in Central Kenya. We serves places like Embu, Karatina, Nyeri Muranga, Nanyuki, Naivasha, and Narok as well as other areas in the environs. We serve these locations from our state of the art digitised distribution and fulfillment centre in Tatu City. We have completed over 3 million orders, with 97% accuracy and returns staying as low as 4% of the total value of goods delivered. Copia ranks high on satisfaction in both customers and agents. Our Net Promoter Score (NPS)is 50, which is quite impressive given Apple’s NPS is 72.
Mwakaneno: Now that you have talked of locations, what drives your expansion plan?
Tim: We focus on areas with a dense population first, which explains our presence in the Central and Rift Valley areas. Copia’s current footprint covers 22% of Kenya’s rural population.
Mwakaneno: What are some of the challenges you face within the local market?
Tim: Logistics has been one of the biggest challenges. Some road networks leading to our agents are not wide, so our trucks encounter challenges navigating through the villages. During the wet season, some roads also become impassable.
Mwakaneno: How do you overcome these challenges?
Tim: We focus on data-driven route optimization to allow our trucks to serve as many agents as possible within a location. To overcome the road navigation challenges, sometimes we seek assistance from the local boda bodas (motorbikes) to make sure the products reach the agents who they are familiar with. In some cases, our team chooses to carry the goods to the agents, especially when the rain makes the roads untraversable.
Mwakaneno: What’s in store for Copia’s future?
Tim: We are looking to expand our operations across Kenya and the rest of the African contintent. We are now delivering products to Western Kenya, along the Nakuru-Kisumu-Bungoma road corridor, Kisii, Nyamira, and Homa Bay. We are expanding rapidly to serve the entire Western Kenya Region. We have also set our eyes on Africa, to ensure that Copia is accessible to serve the untapped, 750 million middle and low-income remote, unbanked, and unconnected African consumer market.
SEE ALSO: Kenyan E-Commerce Platform Copia Raises $26 Million for Expansion
