The Sharing Economy: a driver for e-commerce in Kenya and Africa.

Technologically advanced innovations and solutions are disrupting the somehow settled e-Commerce sector.

According to a report by Price WaterHouse Coopers (UK), global revenues generated by the growing phenomenal that is shared economy or peer to peer (P2P) business is predicted to be worth $335bn by 2025. However, this figure is only said to represent revenues generated from the main sharing economic sectors that is financing, accommodation, transport, online staffing and video and music sharing. These numbers are probably an indication of the need for traditional businesses to adapt their offers to the fast changing environment. The numbers cannot be ignored.

The rise of technologically advanced innovations in leading sectors such as hospitality, transport, property and finance have stirred an evolution where new trends disrupt conventional models, causing the need for businesses to anticipate and adapt to new models in response to market demands. Kenya, being a pioneer in the tech-frontier has for instance seen an emergence of platforms in the market that offer such services as crowdfunding, peer to peer lending, book-sharing, office space sharing and even domestic services such as cleaning and laundry that do not basically adhere to laid-out rules governing traditional businesses.

But while traditional buyer-seller and “rental” sectors toy with the idea of either adapting their models to the new era, or overhauling systems to accommodate these growing megatrends, players in the tourism industry seem to feel the heat more. The emergence of such facilities as Airbnb, couchsurfing and adaptive hostel amenities are seen as competition to the otherwise well put together hotel chains.

Estelle Verdier, Managing Director for Jumia Travel, associates this dynamic growth to technology and the youthful population-Gen Y, “ traditional business models have largely transformed in response to technology advancement. More than ever, people are experiencing their initial contact with the Internet through a smartphone, and connectivity has greatly improved through the last years.”

Verdier also notes that players in the tourism industry are also adopting new models to enhance not just their services but also convenience to the customers. “More hotels are investing in technological solutions in a bid to personalize their services for guests. In a web-based platform that has both global chains and home stays, you must make your guest identify with not just the room, but also connect with you as a human being,” says Verdier referring to the need for suppliers to reinvent and adapt their services  to new demands.

A joint Digital Evolution Index (DEI) report by MasterCard, DataCash, and The Fletcher indicates that about 40% of the world’s 7.4 Billion population is on some “sort’ of connection, quoting the Internet to have come of age. The world Wide Web now forms the core of the global economy, thus forming a solid base for the proliferation of peer to peer economy. While it took the Internet just slightly over a decade to garner its first billion users, a third of this time frame (about four years) was enough to mark its third billion. Worth of note is the fact that, while the current users pave way for the remaining 60% to get plugged in, mobile penetration is flourishing, thus increasing popularity as the first point of connectivity for the new users.

DEI classified Kenya, Egypt and Nigeria as “watch out” countries together with Indonesia and Russia, with common underlying factors such as institutional uncertainty and low commitment to reform joining them in this grouping. The report cited that a lot of energy is expended in innovating around institutional and infrastructural constraints for the countries in this bracket. At position 33, South Africa took the lead in digital readiness; joining the likes of China, Chile and Brazil in the “breakout” category. The countries are said to have a potential to develop strong digital economies and have displayed consistent upward trajectory.

Sam Chappatte, Managing Director for Jumia Kenya, which has been identified as the leader in Africa’s e-Commerce, notes that the emerging megatrends in e-commerce will require concerted efforts from both parties. “Africa is on the right track, with new digital products & services emerging on a daily basis across the continent and payment platforms becoming increasing hassle-free,” he explains, noting that as long as capital providers see growth potential in the sector, new models will evolve.

This article was written by Lilian Gaitho. Lilian is Head of PR & Communication, Jovago (now Jumia Travel) Kenya. 

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