5 Reasons Why Direct-To-Consumer (D2C) Digital Businesses Will Soon Take-Off In Kenya
As I write this blog post it has been nearly two weeks since many of us started working from home after the coronavirus or COVID-19 became a reality in Kenya with an increasing number of cases being reported on a daily basis. At the same time, yesterday, President Uhuru Kenyatta announced that Kenya will have a mandatory 15-day curfew starting tomorrow, Friday the 27th March 2020. The world and the lives we once knew have been irrevocably disrupted.
Everything Has Changed. Change Is The Only Constant.
In Kenya and globally, we are all taking extreme measures to avoid exposure to the coronavirus by limiting our movements and becoming adept at regularly washing our hands with soap and water, as well as sanitizing them every chance we get. No one is taking chances. We are seeing a scenario where ‘social distancing’ and ‘staying at home’ has become part of the new normal as we become digitally proficient in all aspects of our lives.
The Internet has unexpectedly become the great enabler we always knew it could be in the days we spoke of it ‘leveling the playing field’ Indeed, it’s starting to feel like we are finally living in the matrix! We are safely using digital services to cater to more or less all our needs whether it’s closing a business deal, educating our kids on zoom, ordering our groceries from Naivas or our next fix of Netflix. We have all become part of digital nation-building using bits and bytes.
As these seismic digital shifts happen in Kenya, my prediction is that we are going to see the rapid growth of direct-to-consumer or D2C businesses. The D2C business model is basically where a manufacturer or producer of products sells them directly to their customers via their own digital channels instead of using intermediaries in the form of traditional or digital retailers. The businesses also control the entire supply chain from start to finish, usually by working with strategic partners.
5 Reasons Why D2C Digital Businesses Will Explode In Kenya
My reasoning why D2C will take off in Kenya is that many small and large businesses that depend on traditional retail channels to reach customers are currently struggling due to the coronavirus pandemic and unless they adapt to the new market reality, they will have very few options to stay viable. D2C offers an alternative way of sustaining and growing their businesses as consumer behavior evolves in-line with a post-coronavirus reality.
Firstly, this means that the consumer can acquire the product without the additional costs loaded on to accommodate an intermediary in the form of an online or offline retailer. This completely destroys the notion that you need to go to a supermarket or mall when the products can be delivered directly to you from the source. It also means that the manufacturer can retain higher earnings if they have an efficient and cost-effective supply chain.
The second thing that makes D2C viable for many businesses is that consumer behavior in Kenya and the rest of the world is rapidly changing in our new reality triggered by the coronavirus. This means that people who traditionally would have preferred buying products in person in a shop or the mall would now rather do so online. Ultimately, they will look for brands they know, trust and love and if they happen to be sold online by the manufacturer they will buy them there instead.
The third thing is that building a D2C business via a mobile app and/or a website with e-commerce integration is no longer as hard as it used to be. There are many digital agencies, digital designers and application developers in Kenya who can do it for even the smallest businesses for a reasonable investment. Mama Mboga (a small trader) can showcase her products online and sell them using M-Pesa and/or credit cards. The integration of payment processing platforms is easy to do thanks to APIs from Safaricom, Cellulant, Finserve, PesaPal, DPO and many others.
The fourth thing is that since everyone is now online, all the time, consuming digital content and going about their digital lifestyles, they are more receptive and available to digital advertising and social media content that is aligned to their needs. Therefore, businesses that want to explore the D2C model can target customers precisely at scale to create awareness for their offerings to drive sales conversions on their e-commerce platforms (which could be as rudimentary as a Facebook Page with a WhatsApp number and MPesa payment details).
The fifth thing is that D2C is infinitely much easier to do these days than it was just a few years ago when the logistical aspects of getting products from the manufacturer to the consumer made it costly and inefficient. Consider that a small manufacturer can hook up with on-demand logistics companies like Bwala, GoBeba, Glovo, and Sendy to handle their supply chain from a digital perspective. A manufacturer does not need to invest in their own vehicles or bikes to do deliveries when they can outsource the logistics to any one of these companies.