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About this report
Jumia is pleased to announce the launch of its 3rd White Paper. This paper aims to give a unique insight into; trends in the smartphone industry, how these impact Internet penetration in Kenya; and the profile and behavior of online consumers in Kenya.
This study has also been carried out in 15 other countries where Jumia currently operates in; Algeria, Nigeria, Morocco, Tunisia, Egypt, Ethiopia, Mozambique, Ghana, Ivory Coast, Cameroon, Rwanda, Uganda, Tanzania and Senegal. These countries represent more than 80% of Africa’s total GDP, and as a result give a good overview of mobile Trends in Africa. The top sources of data which has been presented as part of this report have been taken from; GSMA Mobile Report 2017, We are Social 2017, & Jumia Business Intelligence.
As we move towards a more digital economy, we find that the Kenyan consumer is becoming mor sophisticated, with Kenya leading the Africa Internet penetration with 67% of the population in Kenya classified as Internet users. (31.99m Internet users) versus 18% of the total African population defined as internet users. Mobile subscription penetration is at 82% driven by a continuing favorable landscape of the smartphone industry brought on by increased competition with current players and new players entering into the market.
Mobile Market Trends
The competitive landscape in the smartphone industry has shifted over the last five years as Chinese brands dominate and drive the democratisation of smartphones (The “Chinese Brand Era”). In 2016, Chinese brands continue to dominate on Jumia, with Infinix, InnJoo & Tecno featuring within the top 5 Mobile Brands. Infinix continues to be Africa’s top smartphone brand across Jumia’s 15 Markets.
The democratisation of the smartphone industry is significant and can help drive economic development, by transforming local services in health, education, agriculture and financial services. A recent example of this is the financial inclusion created by the recently introduced M-Akiba government bond to be offered exclusively through a mobile phone.
The most significant shift driven by the democratisation of smartphones is the reduction in average price of a smartphone. Over the last five years the price of a smartphone has more than halved from 231 dollars in 2013 to 97 dollars in 2016 . This is largely accelerated by Chinese brands Infinix, Tecno & InnJoo entering into the market with high spec phones and decreasing price points. The lowest price smartphone currently sold on Jumia is the X-Tigi P3 – a 4 inch phone at 2,799 Kshs.
It is expected that the price of the smartphone will not decrease significantly over the next two years. However, brands will look to develop their market share by investing in new technology and more sophisticated features such as the fingerprint scanner, Iris scanner, virtual reality, better camera resolution etc. For example, Fero recently launched it’s Iris model exclusively on Jumia at 7,999 Kshs, with Iris scanning technology to reinforce security on the phone.
With the rising middle-class, increase in purchasing power and reduction in average price of smartphones sold on Jumia, there is a continued upward trend in smartphone sales from 2014 to 2016 (with over 200,000 units sold in 2016 in Jumia). This is however heavily concentrated in urban areas; with 65% of Jumia’s smartphone sales concentrated in Nairobi. There remains a significant opportunity to take the democratisation of smartphones up-country in Kenya.
M-Commerce & the Kenyan Consumer;
Kenya continues to embrace e-commerce. Traffic on the Jumia website increased by 28% over the last year with an average of 3.4 million people visiting the website monthly, or the equivalent of 11% of Kenya’s internet users visiting Jumia every month.
The phones and tablets category at Jumia consists of 1000 smartphones, 7500 accessories and 580 tablets from a variety of top brands and distributors. This category continues to be the most popular on Jumia, both in terms of number of items sold and in terms of revenue it generates. Other categories such as Baby, Beauty & Grocery have gained share over the last year. The strength in electronics is in line with the current gender split of Jumia’s customers (61% are Male and 39% are Female), as the category tends to over-index Male. This is reversed in other markets in Africa such as Egypt, where the Fashion category continues to dominate with a larger proportion of the customer base being Female.
There is a strong migration of customers using their phones to access Jumia. The trend since 2013 was that customers would browse and window shop using their mobile, but when it came to the actual act of buying, they would prefer to do it on a desktop. Over 2016 we observe more and more people browsing and completing their purchase directly from their hand-set. 68% of visitors access Jumia from their mobile now, generating 53% of all orders . This is a trend that is expected to continue in the future with improved internet speed driven by the roll out of 4G.
50% of the customers who access the Jumia Mobile Site, do so using Opera Mini. Opera Mini is favored amongst new mobile internet users because on high savings mode it is much faster than Chrome on 3G. It also is the preferred choice for people who cannot afford high performance phones and costly internet data packs. Over the next 2-3 years, the trend is expected to reverse favouring Google Chrome, as the effects of lower cost of data driven by the migration of wireless to fibre optic take shape. We will also see more local operator’s promoting products geared towards affordable flexi data bundles.
E-commerce businesses need to adapt to mobile customers who go online using low specification smartphones and do not have access to lot of data. Jumia has developed progressive web apps to bridge the gap between conventional web pages and native mobile applications. The result is a lightweight, faster web application that drastically improves the user’s experience on mobile. For instance, not only do customers get a faster loading e-shop, but they get push notifications with useful information and will be able to browse the shop while offline (saving cost).
Outlook for 2017
In 2017, smartphone penetration will continue to increase as more Kenyans (especially up-country) become aware of the benefits of connectivity and local operators give them more reasons to connect.
Smartphone brands which offer customers value for money with increasing minimum specifications will be best placed to benefit from these new smartphone users. Chinese brands will invest more in research and development, service centers and marketing over the next few years as they look to cement their foothold as household names. Whilst internet speed and costs progressively improve, E-commerce companies that continue to develop proprietary technology which meets the specific needs of Kenyan customers will be best placed to win.