Staid corporate Kenya forced to innovate

[hk]

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Corporate Kenya is being forced to innovate( alittle) to reach customers in this difficulty economic environment. Coca cola now has a home delivery service https://www.businessdailyafrica.com/bd/corporate/companies/coca-cola-unveilssoda-home-delivery-service-2561994 Bidco https://www.facebook.com/bidcogroup/posts/today-we-introduced-bidco-duka-on-wheelz-once-every-15-days-duka-will-make-a-sto/3024211397622239/ EABL https://www.eabl.com/en/home-delivery .
There's a great opportunity for new brands to grab market share using direct to consumer model.   

[KenyanPlato]

Direct model has lots of cost. Edtablished brands can take away from marketing to pay for this costs. If you cant reach customers using kiosks and local dukas then there is serious problems

[RV Pundit]

I thought we had formal markets -aka - supermarkets at 30%. I think problem is them failing with manufacturers billions of shs. Nakumatt and Tusky good example. I don't see how direct home can work for low margin goods...for high value goods...including alcohol..it make sense to order and incur the transport cost.

[KenyanPlato]

I thought we had formal markets -aka - supermarkets at 30%. I think problem is them failing with manufacturers billions of shs. Nakumatt and Tusky good example. I don't see how direct home can work for low margin goods...for high value goods...including alcohol..it make sense to order and incur the transport cost.

Kenyan economy has collapsed due to covid and other macro issues. I am seeing lots of people who were making at least 50k per month struggling to even make 20k. It has really decimated middle class incomes.

[hk]

Direct model has lots of cost. Edtablished brands can take away from marketing to pay for this costs. If you cant reach customers using kiosks and local dukas then there is serious problems

Not really, if one factors in distribution margins and cost of cash flow management (delay in payments), direct to consumer model can be quite profitable.

[hk]

I thought we had formal markets -aka - supermarkets at 30%. I think problem is them failing with manufacturers billions of shs. Nakumatt and Tusky good example. I don't see how direct home can work for low margin goods...for high value goods...including alcohol..it make sense to order and incur the transport cost.

The holy grail for manufacturers is reaching consumer directly and obtaining their data.  In America consumer data is heavily sought by manufacturers, they buy from supermarkets and payments gateways. Low margin business can work using mobile shops especially in urban areas.

[gout]

KEPSA captains of sinking boats are singing BBshit, mtukufu rais.

[RV Pundit]

I thought scaling and selling in volumes -  is great. I see this as failure of formalization of retail and wholesaling business. It's retrogression. Supermarkers provide such data far more quickly. Manufacturers should not be hawking their products. They should be busy manufacturing after receiving one large order from super-market chain x.

The overhead from distribution and retail will make such business model unsustainable. It's preferable to have a few super-agents or distributors - handling all the mess - and manufactures can concentrate on manufacturing and advertising their products.

The holy grail for manufacturers is reaching consumer directly and obtaining their data.  In America consumer data is heavily sought by manufacturers, they buy from supermarkets and payments gateways. Low margin business can work using mobile shops especially in urban areas.

[hk]

I thought scaling and selling in volumes -  is great. I see this as failure of formalization of retail and wholesaling business. It's retrogression. Supermarkers provide such data far more quickly. Manufacturers should not be hawking their products. They should be busy manufacturing after receiving one large order from super-market chain x.

The overhead from distribution and retail will make such business model unsustainable. It's preferable to have a few super-agents or distributors - handling all the mess - and manufactures can concentrate on manufacturing and advertising their products.

The holy grail for manufacturers is reaching consumer directly and obtaining their data.  In America consumer data is heavily sought by manufacturers, they buy from supermarkets and payments gateways. Low margin business can work using mobile shops especially in urban areas.

In any business capturing as much of the value chain is what maximizes profit. Obviously for a legacy business is tough to reorient business model. But for start ups its the easier way to market avoiding gatekeepers. In Kenya the growth its in kadogo and informal economy, hacking this segment is what will determine growth prospects of all businesses. New models need to be  establish to effectively address this market.

[RV Pundit]

No HK, the ability to SCALE any business model is the most important aspect. That one brings you holy grail of economies of scale. The more you take on non-core business - the harder it to scale. Unless your business is vertical one...like a consultancy or manufacture of 1,000 roll Royce per year...or like you gourmet coffee for those with high end tastes.

Yes, you can get into a truck, and sell a few products in Nairobi, but can you sustainable scale to sell 1m goods - of consumer goods using the same model - while keeping the cost constants - you cannot.

Therefore this model is failed.

In one of the company I worked for -  it followed a scaling model that was admirable - and company grew really fast.

Ideas would be incubated, product designed, trial done and sold to at least 10,000 clients - but the critical stage - would be the scaling research (Can it reach 1 Million clients) - and that is when most of them would be thrown out.

 If you cannot sell something to say 1M customers - easily and cheaply - then idea is not worth it. If you have to build new expensive structures - then you've already failed. If it's matter of tweaking the existing structure - that is great. But starting a whole division of thousand staff and cars to manage direct sales exclusively of one product sound really daft. It is almost guaranteed it will never make any money...opex.capex...and overheads...will eat up all the profit. But if you're using existing dukas, kiosks and retailers to do this - excellent idea. You may innovate around it - and find out why they are not efficient - and help them - maybe have some cheap phone based software to track sales - and get them offers.

It's like wheelbarrow versus tractor. You can sell 1 million wheelbarrows but only 10,000 cars - and for wheelbarrows - you don't need build your value chain - existing hardware will pick them. So if you're a manufacturer - it make sense to manufacture wheelbarrows in Kenya.


 

In any business capturing as much of the value chain is what maximizes profit. Obviously for a legacy business is tough to reorient business model. But for start ups its the easier way to market avoiding gatekeepers. In Kenya the growth its in kadogo and informal economy, hacking this segment is what will determine growth prospects of all businesses. New models need to be  establish to effectively address this market.

[hk]

No HK, the ability to SCALE any business model is the most important aspect. That one brings you holy grail of economies of scale. The more you take on non-core business - the harder it to scale. Unless your business is vertical one...like a consultancy or manufacture of 1,000 roll Royce per year...or like you gourmet coffee for those with high end tastes.

Yes, you can get into a truck, and sell a few products in Nairobi, but can you sustainable scale to sell 1m goods - of consumer goods using the same model - while keeping the cost constants - you cannot.

Therefore this model is failed.

In one of the company I worked for -  it followed a scaling model that was admirable - and company grew really fast.

Ideas would be incubated, product designed, trial done and sold to at least 10,000 clients - but the critical stage - would be the scaling research (Can it reach 1 Million clients) - and that is when most of them would be thrown out.

 If you cannot sell something to say 1M customers - easily and cheaply - then idea is not worth it. If you have to build new expensive structures - then you've already failed. If it's matter of tweaking the existing structure - that is great. But starting a whole division of thousand staff and cars to manage direct sales exclusively of one product sound really daft. It is almost guaranteed it will never make any money...opex.capex...and overheads...will eat up all the profit. But if you're using existing dukas, kiosks and retailers to do this - excellent idea. You may innovate around it - and find out why they are not efficient - and help them - maybe have some cheap phone based software to track sales - and get them offers.

It's like wheelbarrow versus tractor. You can sell 1 million wheelbarrows but only 10,000 cars - and for wheelbarrows - you don't need build your value chain - existing hardware will pick them. So if you're a manufacturer - it make sense to manufacture wheelbarrows in Kenya.


 

In any business capturing as much of the value chain is what maximizes profit. Obviously for a legacy business is tough to reorient business model. But for start ups its the easier way to market avoiding gatekeepers. In Kenya the growth its in kadogo and informal economy, hacking this segment is what will determine growth prospects of all businesses. New models need to be  establish to effectively address this market.

Actually is both scale and capturing value chain. The business has to be scale-able but also capture as much of the value chain as possible. Obviously it depends on what is being manufactured, fast moving goods low margin products direct to consumer model would be hard to pull off. However the model can be used by manufacturers to offer price signals on the product and protect their margins. The alcohol business for example, distribution was only via bars, wine spirits and supermarkets. Yet the 90% profits of the industry go to retailers and distributors. Now its possible for a manufacturer to sell directly to consumers, scale the business while capturing most of the value chain. Increasingly the young people are consuming "take away" alcohol. 

[hk]

Java after slashing salaries by 40% its now retrenching https://www.businessdailyafrica.com/bd/corporate/companies/coffee-chain-java-resorts-to-job-cuts-3019848 . Next they might start shutting down low traffic stores and renegotiating leases. So much for rising kenya "middle class".

[gout]

The lagged effect of Jubilee corruption and the virus mismanagement is setting in. With the health impact also surging this is serious.

Hospitality industry is dead in next 2 years. And when the virus is taking out obese middle class who frequent the Javas - they are kaput.