Thursday, September 3, 2009

New news (Part 2)

Two weeks ago -- on a warm, semi-cloudy day at the Nairobi Holiday Inn across from my office -- my colleague and I had the privilege to enjoy a cup of tea and many profound words with the founders of Rachel's Bargain Corner (or, what I like to call, the Amazon.com of Kenya). Even before I emailed the two to request a meeting, I decided that the story of Rachel and Enoch is one that needs to be shared: one of vision and courage and dependence and opportunity.

Rachel and Enoch conceived the idea to launch an online business while studying biomedicine and computer science (respectively) at the University of Egerton. With the growing domestic popularity of the Internet (underwater fiber optic cables were recently laid, connecting Kenya to the 'world network') and Enoch's background in building websites, the 26 year old couple knew the time was right to start an online business. The question then became, what is a product that is in demand that they could provide to Kenyans in a way that would be valued.

Kenyans don’t read

Founding an online bookstore would likely be an idea few would consider viable, given the prevailing typecast that 'Kenyans don't read.' Fortunately for society, however, entrepreneurs tend to look at things differently, and the Essendis believed that Kenyans actually have an aspiration to read, but struggle to conveniently access reading material. The closest bookstore for some could be day-journeys away, and for others, long queues serve as determent if the stores and books are available (particularly when buying text books). The Essendis also believed that books never go out of fashion and recognized the low cost of shipping and handling in order to deliver the products to their customers. Thus, Rachel's Bargain Corner was conceived.

A low risk business model

Instead of buying books and maintaining a burdensome inventory, the Essendis have been able to establish key partnerships with over a dozen publishers and retailers, who provide books to Rachel's Bargain Corner at discount (usually 25-30%). Once the Essendis receive an order, they can then go to the publisher's site (all of which are located in the same area in Nairobi) and purchase the book directly.

Rachel's Bargain Corner sells all of their products at retail price, and provides free shipping to anywhere in Kenya, so the margins they make are small; however, they've adopted an Amazon.com perspective (it took Amazon over 6 years to earn a profit) and realize that as time develops they will become increasingly profitable through volume (i.e., as their popularity grows, they will receive better discounts from publishers, enjoy greater synergy when shipping, be able to sell higher margin products, etc.).

Doing business in Kenya


Doing business in developing countries has certainly proved challenging for many entrepreneurs and multinational organizations. Fortunately for the Essendis, however -- having been born and raised in Kenya -- they are very familiar with the culture and economic landscape and can organize their business in order to best take advantage of opportunities that others might have failed to cease in the past. For example, although Amazon.com sells and delivers to Kenya, the shipping costs are very high, and more importantly, a majority of Kenyans do not have credit cards. Rachel's Bargain Corner has realized the hindrance these two provide, and as a result, provides free shipping and accepts mobile payments via M-Pesa (which nearly 1/3 of the population uses).

They have also realized that many Kenyans are not familiar with buying goods online (e.g., phrases like 'Add to cart' have little meaning to someone who has never shopped online before), and so they have focused on educating consumers. They also have to focus on establishing trust with their constituents, as some are unaccustomed to the practice of paying for a good before it is received.

The never ending story


Although the Essendis just launched their site less than two months ago -- and are still operating out of their home office -- they are already receiving over 30 book orders a day and plan to hire additional help soon. They have also begun to sell CDs and DVDs, and look forward to providing other higher margin products as they gain their customers' trust and develop new industry partnerships. And the story will only continue to grow, as they move forward, page by page, on their way to becoming known as the Amazon.com of Kenya.


Me, Rachel, Enoch and my colleague Annah

2 comments:

  1. YEA BOI!! i love it! great post! i'm so so so stoked for you my friend.
    i love how your innovating on the other side of the world!
    So proud of you, praying for yea...
    DO WORK!

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  2. B--Wow, I am very impressed by your courage and exploration. You are becoming very inspirational. Please keep on sharing your journey!
    PCJ

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