Tuskys has invested Sh30m ($300,000) to revamp its online store, promising same day delivery in Nairobi and coverage across its 61 stores in Kenya and Uganda. We question its ability to execute what it is promising.
The new platform is aimed at both consumers and also incorporates a supplier portal. Tuskys CEO Dan Githua has promised that it will enable customers shop for furniture, electronics, crockery, clothes, mobile accessories and home appliances. In a statement to media, he said:
Alongside the existing army of more than 1,200 suppliers to Tuskys physical stores, the online portal will undertake a recruitment rally for an additional 1,000 online suppliers where we shall target enterprising youth currently engaging in online sales ventures on social media platforms.”
Tuskys is promising same day delivery services within Nairobi and overnight delivery to stores outside Nairobi. Customers can also pay for selected products in installments via the Lipia Pole Pole Layby service that Tuskys, introduced in September 2017. Tuskys claims that the Lipia Pole Pole Layby service that has generated Sh500m ($5m) in sales since its introduction.
Among the leading domestic retailers in Kenya, we have seen a notable trend towards click and collect and home delivery services. Tuskys, Naivas and Chandarana (previously at foodplus.co.ke) have all reconfigured their corporate websites around their online services. In fact, Chandarana’s website has now become GroceryPik* (ostensibly a start up web only supermarket that promises delivery in Nairobi within as little as two hours). Even smaller retailers such as Eastmatt and Quickmart attempt to present as if they have an online offer.
None of the four leading international supermarket chains in Kenya – Carrefour, Shoprite, Game or Choppies – offer either click and collect or home delivery.
There is no question that what Tuskys is offering is extremely ambitious. Especially on a development budget of just $300,000 – a tiny amount for what is supposed to be an international, cutting edge e-commerce platform. It is potentially a smart move leading Kenya retailers to leverage their scale, networks and operational capabilities to deliver an online service as a point of differentiation. Kenyan consumers are also used to digital payments and receptive to buying online.
But in the case of each of Tuskys, Naivas and Chandarana, the execution has a strong feel of panic about it. We question whether any of the leading three domestic supermarket chains have the experience or have invested enough to execute an e-commerce service successfully. Furthermore, across Sub-Saharan Africa a standing issue is that home delivery services lose money – because of the low volumes of business, high set up costs, need to take cash on delivery (many consumers cannot/will not pay online). In the case of food delivery, those problems are exacerbated by the potential for products to spoil and additional complexities around refrigeration.
By contrast, focusing on just click and collect alone offers something that Carrefour, Shoprite, Game or Choppies cannot match at the moment: local, convenient presence. It is the sweet spot for retailer and consumer alike, offering the consumer access to wider range of products (especially non-food and general merchandise) but also limiting the operational complexities and costs.
We strongly question if Tuskys can deliver to its promises of a groundbreaking online offer in Kenya, let alone in Uganda. We also question the extent to which it, Naivas’ online store or Chandarana’s platform can deliver the customers and point of difference they need.
* GroceryPik is the same platform and has the same ownership as GoMarket, an as yet unlaunched delivery service.