Free deliveries may answer Africa’s e-comm challenge

Bloomberg

In the three years since becoming an agent for mobile e-commerce company Copia Global Inc, Samuel Kihara has boosted revenue at his general store fivefold, opened a second shop, bought land and a truck and moved his children to private school.
“The commissions I earn as a Copia agent have been my working capital,” Kihara, 48, said as he stood in green overalls at his small shop in Kawaida, a village near Kenya’s capital, Nairobi. “All this has been possible due to money from the business.”
Copia takes mobile-phone orders for goods ranging from kitchen appliances to tinned food and delivers them to remote parts of Kenya within about two days at no extra cost. That’s when Kihara and about 6,000 other agents in the country come in.
They own businesses such as a shop or hairdresser that Copia can use as a central delivery point — and earn a commission on every order.
Copia’s slogan, Maisha Rahisi, means ‘simple life’ in Swahili. The company, founded in 2013 by American social entrepreneurs Tracey Turner and Jonathan Lewis, is still making a loss. But its sales are growing at a rate of 15% a month in Kenya, a country whose citizens have been quick to take up mobile e-commerce services ranging from money transfers to digital-loans.
“The model solves a number of issues in terms of merchandising that exist in rural areas on the continent,” said Future Advisory founder Herman Singh, a former executive at wireless giant MTN Group Ltd and one-time board member of Africa’s biggest e-commerce business, Jumia Technologies AG. “The challenge is doing this at a profit. The models don’t compute unless you have huge scale on your side.”
While Copia currently serves just over a fifth of Kenya’s rural population, Tim Steel, its chief executive officer, has bigger ambitions. His target market is Africa’s 750-million middle and low income consumers, who spend $680 billion a year.
Within 18 months Steel expects to have 18,000 agents, he said, and to have begun expanding into Uganda, Rwanda and Tanzania. He expects the company to turn a profit within two years, though he declined to give financial details.
“We are able to deliver a package at one-sixth of the price than any other best in class e-commerce business in the world,” Steel said. We aggregate “multiple orders, rather than having a one-on-one delivery system that prices a lot of customers out.”
That may give Copia an advantage over rival Africa-focussed online retailers such as Jumia, which has been dubbed the continent’s version of Amazon.
Founded by two Frenchmen in 2012, Jumia listed in the US last year to great fanfare but is also yet to turn a profit, and the stock has slumped 71% since the initial public offering.
Malaicha.com, which allows groceries purchased in South Africa to be collected in Zimbabwe at a small number of collection points, operates a similar system to Copia, albeit on a much smaller scale.