Arguably, one of the most popular jingles on TV and radio today is OLX’s sell-a-brate promotion. Once you hear it, its ‘sell and celebrate’ call keeps playing in your mind.
It is a simple communication that surmmarises how OLX, now the biggest online classifieds company in Kenya, has managed to revolutionise e-commerce in the country. A few years ago many Kenyans scoffed at the idea of selling stuff online, but today they have embraced the platform with zeal, thanks to the aggressive media campaign.
For Mr Peter Ndiang’ui, the head of OLX Kenya, the campaign represents the most important lesson borne after the company was forced to change its name from Dealfish Kenya two years ago. He was then the regional manager for East Africa. Back then, the company ran its marketing campaign entirely on the internet. It was, after all, an internet based firm.
“One of the key lessons I learnt is that when we communicate to Kenyans, and to an extension the whole emerging market, we have to be careful that we don’t assume that the internet is the only channel you can communicate an internet brand,” he says.
Mr Ndiang’ui realised that a platform like OLX, which purely facilitates consumer-to-consumer transactions required a marketing model similar to fast moving consumer goods like beverages. He says this lesson can help other internet startups to avoid the Deafish pitfalls. “This is a market where the use of the internet is at its infancy. If you are going to do something that extends that usage, then you have to think differently from the way other brands have grown in the west,” he advises.
The OLX Kenya manager says the media campaign is an expensive but necessary venture. Because of the heavy expenditure, he predicts that the firm will break even in 2018. Presently, he points to the quick uptake of their product as proof that the campaign is paying off. “I have never bought into the notion that Kenyans have a knack for distrusting any business conducted online. It has always been an education issue. And that is why we have invested heavily to educate them, ensure that they understand what they have to do to trade with each other online,” he adds.
Logistics weaknesses
The government has done well to lay the foundation for e-commerce in the form of increased bandwidth and Mr Ndiang’ui feels that with a few reforms, greater growth can be spurred still. He takes issue with the logistics that operators have to work with due to a poor addressing system. Logistics is a critical part in making sure that customers get the goods they ordered in good condition, in good time and at their addresses.
“Kenya’s postal services are not up to scratch. In economies that have good working postal services, e-commerce companies have been able to plug into the postal services in a very compatible way,” he says.
He is not altogether flattered by the postal corporation’s seemingly inability to define the internet as a huge opportunity for itself. “One of the biggest things the government can do is look at a dying corporation, redefine its business model and consider the same partnership we did with Vodafone, which has become Safaricom,” he says.
Additionally, Mr Ndiang’ui faults the law enforcements as well as the judicial processes. Having police who are not conversant with ICT has been a big hurdle in fighting some of the ills associated with e-commerce, he says. “Today we are able to track down fraudsters on our network, but the most we can do about it is inform the police who are not digitally savvy and to compound the problem, if there is prosecution, the justice system is also not capable enough to handle some of the internet-based fraud cases,” he points out.
The government, he says, needs to cultivate an e-commerce talent pool that can scale up businesses from small startups to enterprises, and in so doing, employ thousands of people. The best way to achieve is investing in training that enables graduates to have internships. Over the last few years more e-commerce companies have come into the market but Mr Nding’ui says the surface has barely been scratched.
More room for new entrants
“It is still too early in the day for the market to get congested. As the market evolves we will see certain consolidation. As it is the market is not big enough for maybe more than two verticals in the classifieds focusing on one category, for example real estate,” he says. “We’d probably end up with two competitors in the property market that are successful, same for the horizontal where we may have maybe one successful classified and maybe a laggard that would never make any money.”
He says the evolution is going to start becoming apparent in the next two years and some companies will drop out as others are bought out or forced to merge to survive.
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