After reading One Click: Jeff Bezos and the Rise of Amazon.com, John an ambitious software engineering student at Makerere Univeristy gets a Eureka moment in the solos of his dorm room. Bang. It hits him that he could build the next African Amazon or maybe a Craigslist for his campus using only his laptop. He has already read about how multi-billion dollar companies began in their founders’ dorm rooms such as Google, Facebook.
The industrious student rolls up his laptop, installs all the necessary software development tools. He quickly designs his website and says Hello world in less than 3 weeks. Done. He frantically awaits for thousands of users to flock his new website so that they take advantage of the convenience that online shopping would instantly give them at a click of a button.
But he begins to notice a few challenges that could cripple his dreams of building the next African Amazon.
House addressing system
Even though Google with all its ingenuity has managed to digitize our entire planet, that rosy digital representation isn’t nearly as perfect as it looks in the real world. For virtual stores to work, physical goods must be shipped to a known, uniquely identifiable physical address. That’s where the reality bites.
Giving directions to anywhere in Kampala outside of the main city center is one of the most bewildering things I have ever done. That’s because properly planned housing estates are rare, often reserved for places historically known for only the super rich. Typical directions to most residentials in and outside of Kampala follow something like “get off the main road next to the Muvule tree and follow the murram road on your left till you reach a green gate. Branch to the right till you reach a house with a green rooftop”. This isn’t the kind of address the sleek address fields in most e-commerce registration forms expect.
Perhaps for our situation, online businesses need to device a new addressing system that doesn’t rely on plot numbers and well planned streets. LocName, an Egyptian startup might already have the solution. The startup launched a system that allows users to register their address permanently using Google Maps under a short memorable name they call a “LocName”. Users can then share their “LocNames” with their friends, just like they do with Whatsapp location sharing without going through complex tales of giving directions. Perhaps this is what we should be entering in those Physical address form fields.
More than the broken address system in the brick-and-morta world is yet another monster — logistics. Not only does John have to accurately know the location of his ordering customers, he also has to ship products — on time. 2-3 days is unacceptable. One-day shipping might not be that convincing since John’s customers might as well just walk to Mama Frank’s shop afew blocks away. John needs a reliable logistics and transportation company to deliver products within a few hours, if not minutes.
Now while we have had some transportation and logistics companies such as DHL, Aramex, Interfreight and the good-old postal service, these providers have mainly handled heavyweight B2B customers, not small players like John. More so, the notorious potholes that plague Kampala’s roads, let alone crazy traffic jams might further increase on delivery time and costs.
One of the attractive features about e-commerce has always been lower prices. This won’t happen if logistics and delivery services aren’t fixed. Fortunately Jumia, one of the pioneers of online shopping in Uganda have figured out a way.
It’s estimated that they are about 200,000 Boda Bodas (Motorcycle Taxis) in Kampala alone although only about 20,000 are registered by KCCA, the city authority. These Boda bodas are cheap, reliable and fast. They are terribly known for disobeying traffic laws in their haste to beat trafffic Jam and get passengers to their destination. They get the job done in record time.
Tugende, is a for-profit social enterprise based in Uganda, that provides loans in the form of a new motorcycle to recommended drivers in a lease-to-own arrangement. If paid on time, the drivers own the bike after 18 months or less. But in the recent years, the company is pivoting into a Boda hailing service similar to Uber. More so when e-commerce giant Jumia came into the Uganda market and was met by logistics challenges I’ve already mentioned above, Tugende saw an opportunity. Now the Boda lease-to-own company turned Boda boda-hailing service also now makes timely deliveries for Jumia customers. Now SafeBoda and more recently but less known EasyBoda are at the forefront of uber-izing Boda bodas in Kampala.
Branding and Marketing
However great your product is, if nobody knows about it, let a lone convince to use it, you are simply taking a walk in the park. E-commerce specifically online shopping is a new industry in the Ugandan market much as its been as old as the internet itself. That means there needs to be lots of money poured into branding and marketing to gain market acceptance.
OLX and Rocket Internet-backed e-commerce companies such as Jumia, Kaymu, Lamudi and HelloFood Uganda are injecting crazy amounts of money into offline and digital marketing. TV and radio commercials luring users into the conveniences that online shopping would avail them rock the airwaves on a daily.
Olumide Ogunlana Founder at Prepclass.com.ng lists some internet companies using offline strategies to drive customer acquisition and close sales offline in Nigeria. He also shares some of this experiences building an internet company on Techcabal, a Nigerian-based Tech blog.
“I have learnt that this hustle is largely offline. Especially in the beginning. The formula is simple. Drive brand awareness to capture market mind share online, but have offline business development to drive actual sales.”Advertisement - Continue reading below
Does it work? Is it safe? These are some the big elephants in the room currently as far as online shopping is concerned in Africa. Writing about the challenges of E-commerce in Africa in an HBR blog post, Ndubuisi Ekekwe, founder of the non-profit African Institution of Technology lists cases of online fraud as one the things holding back middle-class from using e-commerce.
“Rich Africans have yet to embrace online shopping, due to online fraud. In Nigeria, for example, where phishing is common, people are skeptical about putting their credentials online. Without attracting the best spenders, the sector will continue to serve primarily college students and a younger population. Some of the companies offer cash-on-delivery to mitigate this challenge.”
Issues of trust among potential customers need to be overcome with testimonials of early adopters who have risked and used the service. Word of mouth marketing might drive virality about this new world of online shopping. But that is highly dependent on economic conditions, the right timing, social and political interactions among early adopters.
In conclusion, I will never forget what Elijah Kitaka, one of the old-time Tech entrepreneurs in Uganda and a Googler told me. In what turned out to be a long discussion about building online businesses, Startups and yes Google, he said “Offline drives online in Africa”. It’s a campus, a simple guide, a timeless rule on building the next mega online empires in Africa.