Kenya’s online business dreams took a tumble recently with the passing away of Kalahari.co.ke. to the graveyard of dead businesses.

The Forum likes to see flourishing businesses in Kenya, so the demise of any business is seen here as both a loss and sadness. Closures mean loss of jobs, loss of income to the State, and loss of structure to the business community, apart from the personal losses of the seniors who invested time effort and hope into the enterprise.

In the KenyaForum article on the late Steves Jobs we mentioned that “all businesses need a vision, they need direction and they need someone to lead them.” Another set of qualifications we would add to the formula for a thriving business is “being in the the right place at the right time with the right idea.” This we feel was Kalahari’s original and fundamental mistake.

The leadership of Kalahari is not in question, Kalarahi.co.ke was part of MIH Ltd who are part of the mighty media group Naspers. Naspers operate in 131 countries worldwide, reaching to several 100s of millions people daily with sites such as 24.com, Tencents (China), Mail.ru, Allegro, Mweb, Ibibo, Gadu-Gadu and Ricardo (to name but a few…!). Their ability to lead and get things right is not in question. Except, isn’t it…

Questions about Kalahari’s closure

Why has Kalahari closed in Kenya? (and in Nigeria). The company says its down to the lack of uptake of credit cards in Kenya, which whilst undoubtedly true, we feel was only a partial answer.

Kachwanya delves one layer deeper when he identified that “the problem lies with trust… I think [in Kenya] that is lacking at the moment”

Its not surprising really that people in Kenya don’t trust online services, when, according to the CBK, the banking system alone loses Sh5m per day through cybercrime fraud.

Although the government are addressing some of these security issues, or at least attending the right conferences, there is still much more do be done to make the Kenyan internet a safe place. This lack of indigenous financial security forced Kalahari to use overseas finance portals which added to their costs and further burdened suppliers with delays and exchange rate fluctuations.

Another aspect that MIH may have overlooked when they were planning their domination of African retailing with their Amazon.com inspired model, was the problems with deliveries in Kenya. In all of the countries where Amazon thrives there is already a well tried and proven system for secure deliveries. What is there in Kenya? The international transport groups offer a decent service but are costly for this type of delivery, and the postal system is relatively primitive.

Until a system evolves which can quickly and cheaply deliver goods to the right door and put the goods in the hands of the person that ordered them, then we think it unlikely that online goods sales will flourish in Kenya.

Amazon in Western Europe can deliver to the door within 24hrs on most goods, and it has been a key to success. If the online provider inconveniences the customer in any way they lose custom. The Amazon model is a great one to aspire to, but it didn’t happen by accident. In the USA and Europe almost every household has a credit card, the internet is mostly secure, and Amazon themselves are very secure (you can safely leave your credit card details with them for quicker checkouts) Their warehousing is automated for faster picking and packing and distributors line up to take the goods for next day delivery.

And that’s not all. We havent mentioned which products are appropriate for online sales yet.

Online retailing in the West, evolved, like in Kenya, through a process of trial and error, and there were many early casualties. The goods that initially sold online were either: unique (you can’t get them anywhere else) or cheaper than normal retail, or were listed so as to be easier to find than conventional shopping (ie early days of Amazon with books and CD’s).

Convenience, cost and uniqueness then became the model, and Amazon encompassed all these aspects, making them the world largest online retailer.

So dont give up just yet… Kalahari.co.ke found out the hard way, maybe it was too ambitious for Kenya… just yet… (Kalahari.com is still fully functioning in South Africa).

Maybe the next contender will look also at M-Pesa transfers, and consider the mobile market (biggest internet growth area in Kenya) lower cost or unique goods, and a more appropriate delivery system.

The prize has still to be taken.