Kenya: After Success in Online Shop Abroad, Investor Now Eyes Local Market
Not many entrepreneurs owe their success in business to a hobby, but for the few who do, it is always a pleasure to tell their story. Mr Segeni Ng'ethe, is among such investors after he ventured into online entrepreneurship.
He speaks of a successful business whose original idea was conceived and pursued during his free time while he was still in employment in the US. Currently, his company conducts 1,000 transactions a month compared to an initial 70 when he opened shop.
"I began as a hobby. It is something I would do at home after work but with time I gained business interest," he says.
This is the story of Mamamike's Online Limited, a virtual shop that now seeks to capture the local market. When he set up the website in 2001, Mr Ng'ethe was into coding - a technology inspired activity. He later launched a business model in which customers shop for gift items and have them delivered to the intended recipients. The site is casually referred to as e-mbuzi in reference to a goat, which falls under the category of traditional products that are sought for such events as settlement of dowry and parties.
But for the past 10 years of its existence, the company has only targeted clients from developed countries, mostly Kenyans in the Diaspora, where almost all business transactions are done online.
"Being online is part of life here. This is the tradition upon which the business was built. It remained a site mostly used by these clients until last year when the fibre optic cable arrived in Kenya and made access to the Internet much cheaper," says Mr Ng'ethe.
For this reason, the company is out to grow its business in Kenya and if his plan to provide products and services is received well he would offer Kenyans an additional online shopping platform. Based on the company's past experience abroad, Mr Ng'ethe plans to venture into selling of flowers, cakes, gift baskets and traditional gift products.
But few changes are necessary to suit the local market. For example, while the main mode of payment has been through credit cards, the local system allows for use of mobile money transfer services that is widespread compared to credit cards.
Over the years, Mr Ng'ethe has had to adjust to his business depending on customer needs and challenges it encounters. For example, the decision to have a goat as a lead product was reached before evaluating possible consequences of communication hitches between the company and the recipient of the product. This then meant that the company holds the product at additional costs before the recipient shows up. To counter such losses, the company outsources its services to dealers in such products who deliver them at an appropriate time. Also, with some customers preferring that such a product be delivered processed for use, Mr Ng'ethe says he engages the services of a butcher. All the expenses are charged on the customer placing an order. The driving force behind online retailing is the need for convenience in shopping just like other industries such banking.
Like a real shop, Mr Ng'ethe spends time and money to promote his virtual store. This is a fixed expense in addition to administrative expenses. But unlike a real shop, online entrepreneurs need not worry about the cost of inventory since they are not required.
Again, the cost of setting up an online retail site is lower than that of a physical shop since all one needs is to invest in technology and time. However, like any other business, an online entrepreneur must employ services of other professionals. "Customer care is central to online businesses. Most online shoppers want an excellent service and this can only be guaranteed through a well established customer service department," he says. It may be a convenient way of doing business but online entrepreneurship has its challenges. The most common is fraud that accounts for major losses to online companies. "It is a reality that most online businesses have been brought down by fraud. We incurred losses as a result of the crime at the beginning but with time we have learnt how to prevent it," says Mr Ng'ethe.