Uganda: Can E-Commerce Sustainably Grow Business?

Regionally, iHub-a Kenyan firm known for its main innovation platform for web technologies, in a research they carried out in 2013 on e-commerce in Uganda, Kenya and Tanzania showed that the first e-commerce ventures in East Africa used to focus on affluent customers and the diaspora, with payment by credit cards, mostly in the travel and gifting industry,

This survey which was run for one month on Binu- a platform that facilitates opinion research on mobile findings showed that 40 per cent of the respondents of the research proved to be e-commerce consumers, with slight differences between the three countries of East Africa (Kenya, Tanzania, and Uganda).

"The most popular product within East Africans is airtime, which is understandable. Airtime is itself mobile money used to transfer value through mobile phones. Mobile phones and gadgetry came second as a 'true' product," the research survey indicated.

Uganda's status

The question we should continue to ponder is: Should Ugandan retail chains interested in the growth and sustainability of their businesses enter e-commerce?

According to the Africa Internet Statistics as at March 31, 2017, there are 13 million Facebook users in Uganda, representing a 31.3 per cent penetration of the total population.

This represents a growth from the 2.2 million users recorded in 2016. The number of internet users in the country has also equally grown a hundred folds. Statistics from the Uganda Communications Commission indicate that there are more than 15 million active internet users.

These statistics serve to show a growing need and demand for technology based solutions in the shopping behaviours of people.

Mr Newton Buteraba, an IT specialist in Uganda, says the growing need for online market places in Uganda started around 2012.

Back then, the thought of sitting at your computer and paying for an item that you have just seen without feeling it was unthought-of. Those who did so took their chances and waited for their goods to arrive.

E-commerce, as this is known, has grown in the recent past, making life more convenient for those who are busy and don't have time to go look for items they would like to buy.

In Uganda, e-commerce was popularised with the arrival of online startup portals such as Hellofood, Kaymu, Lamudi, which allowed people to trade online. These portals were all merged into one brand: Jumia, last year.

Mr Neville Igasira, the head of marketing and public relations at Jumia, says e-commerce has rapidly grown in the last five years in Uganda and across Africa.

Mr Igasira says the growth of such start-ups is because of the visible positive outcomes the online industry has had on various industries including food, travel, tourism, and hospitality sectors, with a ripple effect on entire economies especially in developing countries such as Uganda.

Mr Igasira says vendors and companies who have ventured online have seen increased revenue returns as businesses diversify their clientele reach, as well as efficient and faster transactions both online and via mobile money solutions.

According to the Ugandan Communications Commission, there are 23 million registered mobile phone subscribers in the country. Of this statistics from Bank of Uganda (BoU) as at December 2016 show that there 21 million mobile money accounts while the number of mobile money agents stands at 132,937 agents.

Dr Charles Abuka, the director financial stability at BoU, while speaking to Daily Monitor recently said in December 2016, the total value of mobile money transactions stood at Shs43.8 trillion up from Shs32.5 trillion witnessed in December 2015. This trend shows an increased use of mobile platforms to transact as opposed to the traditional ways.

2fumbe's Bagambagye, who is already into the waters swimming- thinks that e-commerce makes shopping more fun as someone can browse through the entire store in the comfort of their office on laptop or mobile phone.

"It also allows clients to budget for monthly expenses due to the fixed prices year in, year out," he observes.

Mr Igasira says Jumia's e-commerce model offers everyday solutions for Ugandans - on both the consumer and seller side.

"On Jumia platforms, people have the convenience to get all their needs with a tap on the phone. Whether you are looking for food, houses, jobs, electronics and fashion or want to go on that vacation - Jumia brings it to your doorstep," he adds.

Mr Igasira agrees that more companies should go online much as most trade happens offline because people want convenience and efficiency.

"The Internet has been a big tool for this in the last two decades. So with growing middle class in Uganda, deepening Internet penetration and mobile phones becoming the primary tool through which people engage with the world, the trend suggests that it's inevitable that Ugandan consumers will migrate to e-commerce," he adds.

It should be noted that Uganda has not fully embraced e-commerce as the electronic payment aspect of it is left out. What usually happens is an exchange of money when goods are delivered or payment via mobile money.

SUCCESS

According to Mr Bagambagye interactions with clients, joining this business has saved many people the hustle of moving around looking for kitchen ware.

The company has saved on the city rent space by operating fully online with a store where they keep their products.

Three years later, 2fumbe boasts of more than 32,000 followers with 8,000 active clients who keep engaged through their weekly cooking tutorials and tips.

Imbalance

Some people are still skeptical about e-commerce and prefer to go to the shops themselves where they can bargain for a better price and feel the goods they are purchasing.

Mr Francis Akankwasa, the general manager of Mega Standard Supermarket, confirms this. Currently they are not fully involved in e-commerce apart from some clients and suppliers who use mobile money which aids transactions.

SOURCE:THE MONITOR