Covid-19 has forced many to change the way they shop. There’s a strong shift to online shopping as people get confined by lockdowns, and then many continue to work from home. There has been other shift towards digital consumption with shoppers keen on where to find the best price. Paul Murungi caught up with Ron Kawamara, the Jumia chief executive officer to talk about the surge and what it means for consumers and the future of businesses.
How are the trends like in terms of online shopping trends? Has anything changed due to a slump in the economy?
Covid-19 has been a game changer. It has changed how and what people shop. Before Covid-19, people had more interest in brands. But now, they consider price and saving a little because they have less cash while others have lost jobs.
The shift has been mostly visible among essential. Shoppers are sensitive to price, and we are witnessing an increase in demand locally manufactured products, because imports have become expensive due to disruptions in supply chains.
Have standard operating procedures had a hand in these shifts?
The online space is growing very fast. Customers who came for the first time during last year’s lockdown have stayed. We are growing year-on-year and we are seeing double digit growth. The shift also includes vendors. Last year, we had less than 10,000 vendors, today, we have doubled that number to more than 20,000.
That’s a sign that people are using technology to survive and thrive, and are now able to maneuver the impediments brought by curfew and such others.
What has changed for the last eight years you have been in business?
We have observed incredible strides. Our teams have grown and we have overall coverage of Uganda where we deliver to every district in the country. When we started in 2013, we had about 10,000 products. Today, we have five million.
We have thousands of buyers and sellers, and therefore the ecosystem has grown. We have many companies working with us, and deliver products through Jumia. Our payments’ platforms have grown as well.
Are there some gaps you still need to fix to make online shopping work for everyone?
Yes, there is so much needed. Uganda is still at the beginning of online shopping. Today, we are seeing only one percent of transactions happen online, against 25 to 30 percent in Europe, North America and China. We have a long way to go. We have companies leading the way in educating the market, customers and vendors, investing a lot in awareness, and building the right technology for the market.
But, we can’t do it alone, we need government support and intervention. We need to make the internet infrastructure cheaper and more available. Uganda’s internet is very expensive. Our customers and vendors find it difficult to transact online. This is a time where people are working from home and we have added a 12 percent tax on the internet. At a time when things should be getting cheaper, we are making them more expensive.
When other countries are reducing taxes on electronics, we are adding more tax. It’s a little relapsing to progress in such an environment. Essentially, we are getting a lot of roadblocks in our journey that is slow and difficult.
By demographics and region, who and where do you find Uganda’s online shoppers?
Shoppers are diverse. People assume it’s only young people, or those who are tech savvy that are shopping online. But we see mothers who are buying baby products online for their children.
We notice more Ugandans in Gulu, Fort Portal and Arua are buying online because they lack access to good retail products in their areas. We see students who are buying scholastic materials online. So, there is a wide range of people who shop online.
The biggest part of online business is out of Kampala at 35 percent. We consider it huge because I believe 65 or 70 percent of the economy is around Kampala. That is a good sign of the power of the internet, and innovation that is spreading across the country.
There is an increase in complaints of fraud and substandard goods targeting online shoppers across e-commerce platforms. Where is the problem? Is there a fair refund policy?
Every business in Uganda struggles with products that are substandard. We are fighting this aggressively. We allow our customers seven to 14 days to return a product for a full refund. We have warranty for all our electronics. We do things because our customers need the trust and faith that our goods are safe and durable.
We also allow customers to pay cash on delivery. If you receive an item, you check if it is the right size or color, or if there are any defects. These are very expensive things to do but we need to protect customers. Our vendors receive cash penalties in case of a return from a customer, because essentially we don’t want returns.
Of course it is difficult because we have 20,000 vendors, but our job is to make sure they all provide us with the right quality at all times.
Manufacturing companies are starting their own e-commerce platforms. Won’t this eat into your market?
We want more companies to come into the space. The more companies educate people about online shopping, the better for us. We want more people to sell online because the sector is still very small. We don’t perceive them as competition, we see them as partners in growing the tech space.
Online shopping it the way to go
According to the National E-Commerce Strategy, online sale and purchase is growing at unprecedented rates and The United Nations Conference on Trade and Development (UNCTAD) estimates that 1.45 billion people or one quarter of the world’s population aged 15 and older made purchases online in 2018 and that a growing share of these online purchases involve cross border sales. Regionally, the e-commerce market is expected to grow at 17.1 per cent between 2020 and 2024 and the ecommerce user penetration is expected to hit 37.1 percent by 2024 because an increasing number of people are making purchases online. A study by Trade Mark East Africa (2020) found that 91 percent of those sampled in Uganda had made purchases online, 86 percent in Kenya, 81.3 percent in Tanzania, 58.8 percent in Burundi and 50 percent in Rwanda and South Sudan, indicating a great potential for growth of online market delivery channels.
However, these were mostly domestic purchases and exports and cross border e-commerce sales and purchases within the EAC were low, but with great potential for growth.