Distribution and aggregation, the new competitive plays for Kenyan businesses

September 24, 2020

“Generation Y are too busy and too lazy to start thinking about buying vegetables, cooking oil et cetera to go cook. They want things delivered quickly, at their convenience”, says Professor Bitange Ndemo on the topic of 10X growth. What does that mean? It means that businesses that invest in bringing services closer and faster to this generation will see unprecedented growth. “That’s why I like businesses like Errands Guy, he is in the right space for this current business landscape” he concludes.

Professor Ndemo goes ahead to share an example of JD.com in China which has turned small businesses all over China into their fulfilment centres, practically making them viable, some of them having almost collapsed. Founded in 1998, JD.com is a Global Fortune 500 company, serving over 320 Million customers, and is one of the two largest E-commerce players in China alongside Tmall.com, an Alibaba company. Jumia has copied this model, and recently announced partnership with thousands of small businesses around estates as fulfilment centres. He also cites the recent partnership between Jumia and Twiga foods, where Twiga will take advantage of Jumia’s distribution network to get their goods to customers.

Home delivery is not going to stop, it has only just began. The convenience of having a motor bike deliver all your essentials to your door step is a great value add to the lifestyle of today’s consumer.

Look at Carrefour or Naivas. Did you know today you can get a Hamburger at Carrefour for 100 shillings? It is cheaper to get your dinner from Carrefour than to go and buy ingredients to cook at home. Naivas will give you two Chapatis plus stew at a price far cheaper than the cost of buying Unga, Cooking Oil, meat, gas for cooking, not to mention the inconvenience of time spent making these Chapatis.

We are living in the age of convenience, trust and data, and if your business is not thinking along these lines, then get ready to be disrupted or to remain stagnant. Not only is your competition the existing players in your industry, but distribution and aggregation has dramatically reduced barriers to entry. With some money and a warehouse, I can get into retail today, using any network of distributors to access thousands of customers overnight, concludes Professor Ndemo.

Prof. Bitange Ndemo was a guest at Un.thinkable roast (our monthly 10X Growth Leaders Meet-up) in July 2020. Click here to apply for membership in Un.thinkable.

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