Price, Convenience drive shift to E-commerce, report shows

Kenyans continue to adopt online shopping and cashless transactions since the start of the COVID-19 pandemic. A whitepaper by SCANAD has shown that Kenyan retailers reported tremendous growth in online retail activity and anticipated that this trend will continue even post-pandemic.

The study, which looks at Kenya and other Sub Saharan countries, provides a deep look into the growth of digital markets in Africa, providing insights on how COVID-19 has shifted consumer behaviour across the markets. 

Based on the study, respondents in all markets anticipate that consumers will do more of their shopping online from now on. This will be accelerated by a shift to E-commerce channels and further supported by an increase in internet usage in Kenya. Kenya currently has 43% internet penetration and a daily average of three (3) hours spend on social media.

“The world is changing, for merchants, service providers, and shoppers. This new season is an amazing opportunity that has leveled the playing field for everyone. “ said SCANAD Chief Executive Officer, Mr. Sandeep Madan.

While many industries were affected by the pandemic, the curfew, movement restrictions and the alcohol ban has had a substantial impact on food and beverage consumer spending, forcing them to move online. As a result, there has been a 31% increase in food and beverage (F&B) online spending during the research period.  The increase in online spending is also true for services and household cleaners which have reflected a 41 and 32 percent increase respectively.

Contrarily, majority of consumers have reduced their spending on segments such as beauty, clothing and electronics with most consumers experiencing fears of reduced income over time. The study showed that 80% of Kenyan incomes will be affected due to COVID-19, pushing them to be more cautious around their spending. Majority of consumers surveyed admitted paying extra attention to prices and promotions over time, choosing brands that gave them more value for their money. 

Commenting on the study, Glovo’s General Manager, Priscilla Muhia said the survey results are supported by an increase in businesses, including restaurants, signing up on Glovo to reach their customers through online platforms.

“E-commerce has recorded exponential growth in 2020 with both retailers and consumers moving to online channels. As consumers get more attuned to online buying, businesses will have to create superior, integrated digital experiences that improve the customer journey,” said Ms. Muhia.

Supporting this perspective is CEO & Founder of Yego Innovision Ltd, Mr.  Karanvir Singh who noted that East Africa was well positioned to have a thriving digital economy owing to high mobile money and smartphone penetration.

“Businesses that provide practical, homegrown solutions and create an optimized 360-degree customer journey will have better chances of succeeding in the long run. Going forward, consumers are likely to become accustomed to online commerce and cashless payment; It’s the businesses that leverage on technology and create shared value with the customer that will record sustainable growth,” said Mr. Singh.

As the report demonstrates, COVID-19 has jumpstarted the digital economy and this digital transformation will expose SSA to more growth opportunities across different sectors. Recorded developments including a 500% growth in P2P transfer over mobile money in Rwanda and a 300% increase in demand by both customers & sellers as reported by E-commerce platform, Jumia in Q1, 2020, indicate that E-commerce is here to stay, accelerated by a cashless economy and resilient infrastructure.