Aggressive investment in local content, pricing, and new entrants in over-the-top (OTT) services – like Netflix – are driving a dramatic ... shift among premium customers, posing a threat to pay-TV providers like Multichoice, according to analysts.
The company’s business model is driven by population density, making the Lake Victoria region the logical next step, Steele says from Nairobi. Copia, already present in Uganda, is also interested in West African markets such as Nigeria, Ghana and Côte d’Ivoire, as well as southern Africa, he adds.
The speed with which further scale is achieved in Kenya and Uganda will determine how quickly Copia enters new east African markets, Steele says. It’s “very possible” that entry into Rwanda and Tanzania will occur in 2022, subject to the progress of Covid-19, he adds.
Copia’s model aims to extend e-commerce availability to people who do not have Internet access. It does this through a network of 30,000 agents, often shopkeepers and local grocers, who have catalogues of products and can place orders online. Copia says that 77% of its agents are women. According to the company, the commissions it pays them raises their incomes by more than 30% and lift foot traffic in their shops by more than 25%.
Africa has about 750m potential consumers with mid to low incomes who have been poorly served. Steele says Copia can accommodate that kind of consumer profitably and with urban levels of service. The company can supply everything that can be bought in a supermarket or a builder’s merchant, he adds. Steele contrasts Copia’s approach with that of Jumia, which he describes as a “Western e-commerce model” aimed at mid to upper-income groups.
Customers can also place orders online, by phone or via USSD messages. The expenses of last-mile delivery are reduced for Copia because the customer usually goes to the agent to collect the goods. Returns of goods are less than 1% of purchases, Steele says. That, he says, is because he is selling essential goods to people with modest incomes.
- Price-consciousness has become even more imperative during the pandemic. “People are not buying speculatively. They know what they want and are making considered purchases.”
The company was founded in 2013 by Tracey Turner, who remains chairman, and Jonathan Lewis. Steele joined in 2017. Investors include the Bill and Melinda Gates Foundation, the Mastercard Foundation’s Fund for Rural Prosperity and the Savannah Fund. No single investor has a majority.
Copia has 1.2m unique customers and has generated expansive amounts of customer data that it can share with agents, Steele says. The company has a 6,000 square metre warehouse north of Nairobi. As Copia enters new markets, it will use new purpose-built warehouses, he adds.
- Agents have benefited from that capability during Covid-19 as they can wait for deliveries rather than trying to source goods themselves in crowded markets, Steele argues.
- Copia’s unit economics are profitable and it is approaching the break-even point, he adds.
- The business will need to keep raising funding in the medium term, Steele says. The latest investment will likely be ring-fenced in specific markets and is likely to be a mixture of debt and equity.
Copia sees agent networks as the way to crack B2C e-commerce across Africa.
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