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Solving the last-mile problem
– by Sophia Waweru, Hans Dembowski
Copia’s fulfilment centre in Tatu City.
In what sense is Copia making life better for members of Kenya’s underserved rural communities?
Copia brings convenience to rural communities by delivering quality products that customers want at affordable prices. We spare our rural customers the efforts and costs of travelling to the nearest town to look for what they want. The town can be up to 20 to 30 kilometres away, but even if they go there, they have no guarantee of finding what they desire.
What goods are most in demand?
Our customers need household goods, as well as food items, personal care, beauty products and baby products. They also buy electronic applications, construction materials and many other things. We sell lots of rice and maize, and even about one motorcycle per month.
Where do you source the goods?
We procure them from manufacturers, distributors and wholesale markets. We have also begun the process of directly importing products that are not manufactured locally. The majority of our food items are sourced locally from Kenya.
It is unusual for an e-commerce company to rely on agents with a physical presence near the customers. Why does Copia need them?
The key challenge is to serve customers in remote areas where many people do not have formal postal addresses. Despite a 44 % smartphone penetration rate in Kenya, moreover, poor internet access and the cost of data are barriers. Our agents are therefore the solution to accessing our customers today.
Who are they, and what do they do?
They are micro-entrepreneurs who run a hairdressing business or small grocery shop, for example. In the areas, where we operate, we strive to establish a network of agents so that our customers do not have to walk for more than 30 minutes or so to reach one of them. Today, we have a network of over 4,500 agents servicing over 35,000 customers. They can place orders with the agents, and pick up the goods within two to four days. The agents have smartphones with internet access, but they also use paper catalogues which list the products we offer. We know where our agents are, we stay in touch with them via phone and use digital applications to ensure the safe delivery of products to our agents. The agents benefit from Copia as their turnover businesses grow by approximately 40 % on average. They attract additional customers. We take pride in their commercial development and the growth of their businesses. We estimate that Copia has thus contributed the equivalent of an accumulated $ 6 million to the economies of the communities we serve by the end of the second quarter of 2019.
How many end-customers did Copia have two years ago and how many do you reach today?
Two years ago, we served 21,000 customers. Today, we serve approximately 35,000 customers. We are targeting to serve 100,000 customers across Kenya and East Africa in the next two years. Our monthly sales currently amounts to the equivalent of about $ 1 million to $ 1.2 million per month.
Are you operating all over Kenya?
No, we currently operate in Central Kenya. This is where we have spent time ensuring we have a successful business model and supply chain, able to meet our customers’ needs. We recently opened a new depot in Embu which will enable us to expand further north and east in Kenya. Very soon we will be expanding into western Kenya. The plan is to expand operations further west across the border into Uganda. We’ve also been building a network of Copia agents in densely populated, informal urban neighbourhoods, where people actually face similar problems as rural communities do in the sense of not having time to shop around and to travel considerable distances to get access to the range of produces they require.
What kind of public infrastructure does Copia need to be able to serve low-income communities?
Copia relies on mobile-phone penetration and mobile money. Today, mobile money transfer is commonly used all over Kenya and its neighbouring countries. One great advantage of mobile money is the security it offers when customers make payments. It also reduces the money interchange between agents and Copia. Everything is done cashless. The road network is critical too – especially rural feeder roads. Critical to us reaching our agents and customers is the existing road network, especially the interior village roads.
What kind of company-owned infrastructure has Copia built so far?
We have set up a world class distribution and fulfilment centre in Tatu City, Ruiru near Nairobi. It is basically a large computerised warehouse where we have storage facilities to be able to fulfil orders timely. To date, we have fulfilled over 2.5 million customer orders. We also have a fleet of 50 leased trucks that do daily delivery trips to our customers, combined with a workforce of 405 permanent and casual employees.
What difference do micro-finance institutions such as Kenya’s Savings and Credit Cooperatives (SACCOs) make – and do they treat consumer goods (TV sets for example) the same way as they do investment goods (like farm tools)?
The SACCOs are transforming members’ lifestyles by providing access to loans that enable the SACCO members to purchase costly assets such as refrigerators, chaff cutters and washing machines that they may not have been able to afford previously. The loans are repaid in monthly instalments. How much money they can borrow is typically determined by the money they have saved rather than by what they want to use the credit for.
Does Copia have any policy on protecting customers’ personal data?
Copia respects the privacy and personal data protection rights of all our customers. We ensure that customer data is stored safely within our enterprise resource planning (ERP) software. Our ERP system was sourced from Europe and is compliant with all EU regulations including General Data Protection Regulation (GDPR).
Sophia Waweru is a junior sales manager with Copia. The interview was done by e-mail. She first met Hans Dembowski as a member of a group of journalists who were invited by DEG, the German Development Finance Institution, to visit innovative private-sector companies in Kenya in April. DEG has supported Copia with a large loan, appreciating that the company is improving disadvantaged people’s access to affordable goods as well as boosting microenterprises. DEG belongs to KfW banking group.