Home ECONOMY Interview With Copia CEO Tim Steel on Solving Africa’s Poor E-commerce Penetration

Interview With Copia CEO Tim Steel on Solving Africa’s Poor E-commerce Penetration

by biasharadigest

Africa has seen a surge in the number of e-commerce platforms in the past ten years. Disrupt Africa states that the continent is home to 264 e-commerce startups, mostly targeting middle-class consumers with tech, fashion, and household items. The growing number of platforms is a no brainer, given the region’s growing mobile and internet connectivity, as well as booming business. International trade Center predicts that Africa’s consumer spending will exceed $1 trillion annually by 2020 whereas the IMF argues that consumer spending will hit $2.1 trillion by 2025.

While the numbers show potential in the African e-commerce space, the majority of the region’s citizens remain underserved, owing to their remote location, and poor access to banking services. Almost 75% of the 1.2 billion African people lack access to formal retail and e-commerce, limiting their product choice. Worse still, a majority of this population resides in the continents’ hinterland, with limited access to the road network. As a result, mainstream e-commerce would incur high costs to deliver products to rural customers.

E-commerce adoption in rural Africa experiences dominance of informal retail, consumer distrust on online retail, infrastructure barriers, low card, and internet penetration. Unlike their urban counterparts, rural consumers have different product needs, mostly foodstuffs, and household items as opposed to tech products. The amalgamation of these features locks out a majority of the population in Sub-Saharan Africa from e-commerce.

Nevertheless, emerging e-commerce models present solutions that potentially include underserved 750 million customers. Copia, a 3-year-old mobile commerce platform is attempting to bridge the gap through blending online and offline commerce to reach customers not served by formal retail.

Here is an excerpt from a chat between Kenyan Wallstreet’s Mwakaneno Gakweli and Copia CEO Tim Steel on how Copia is serving customers online and offline.

Mwakaneno: Tell us a little about Copia.

Tim Steel: We {Copia} are a mobile commerce platform that delivers good to the underserved populations through a network of 5,028 agents and efficient delivery systems. We target the unbanked, underserved population, which stands at about 750 million people in Africa in remote areas. A majority of this population is not tapped by mainstream commerce because of high logistics costs among other reasons.

Mwakaneno: How does your online/offline model work?

Tim: It is good that you have mentioned online/offline. Copia allows a customer to order goods from a catalogue at a Copia agent closest to their location. The agent then keys in the order to us and then we deliver the goods within two days after which the customers pick up the goods from the agent. The Copia online/offline model allows customers to order goods and receive them offline, at no cost.

Image of how Copia works.
Image courtesy of Copia Global

Mwakaneno: How do you manage to deliver for free, given the high logistics costs in serving rural markets?

Tim: We leverage efficiency to keep costs as minimal as possible, as well as work directly with manufacturers to cut middlemen. This allows us to deliver to our customers for free.

Mwakaneno: Why do you use agents in your delivery model?

Tim: Agents act as a point of trust in e-commerce. In most cases, Copia agents are people who already have the respect of the people within their society, like shopkeepers. As a result, locals can comfortably place orders and pick up goods at their locations. Agents earn extra income through commissions through aggregating delivery, increasing their income by 37%. Besides, the agents also receive more customer traffic to their premises.

Mwakaneno: Do you think you are missing out on the middle-class by exclusively focusing on low-income customers?

Tim: Not exactly. We target the rural, underserved population who cannot access mainstream commerce. They represent the majority of the consumer. Still, we allow middle-income city dwellers to buy goods through our site and use our channels to deliver to relatives in their rural homes.

Mwakaneno: What are some of your milestones in the Kenyan market?

Tim: We have reached customers in mostly Central Kenya in places like Embu, Karatina, Naivasha, as well as other areas close by. We serve these locations from our main distribution centre in Tatu City as they serve the agents within their locations. We have completed over 3 million orders, with 97% accuracy, with returns staying as low as 4% of the total value of goods delivered. Copia ranks high on satisfaction in both customers and agents. Our Net Promoter Score (NPS)is 50, which is quite impressive given Apple’s NPS is 72.

Mwakaneno: Now that you have talked of locations, what drives your expansion plan?

Tim: We focus on areas with a continuous population first, which explains our presence in the Central and Rift Valley. Copia’s current footprint covers 22% of Kenya’s rural population. 

Mwakaneno: What are some of the challenges you face within the local market?

Tim: Logistics has been one of the biggest challenges. Some roads leading to agents are not as wide, so our trucks cannot go through. Further, the rain gets in the way sometimes.

Mwakaneno: How did you overcome them?

Tim: We focused on data-driven route optimization to allow our trucks to serve as many agents as possible within a location. For the roads, sometimes we opt to outsource travel means like boda bodas (motorbikes) to make sure the products reach the agents. In some cases, our team chooses to carry the goods to the agents, in cases where the rain does not allow vehicles to pass.

Mwakaneno: What is the future of Copia?

Tim: We are looking to expand our operations. We are now in the Western part of Kenya in Kisumu.

SEE ALSO: Kenyan E-Commerce Platform Copia Raises $26 Million for Expansion

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