Tech-Savvy Entrepreneurs Bring the Street Trade Online

Nairobi | 03/11/2013 9:13am
Sam Sturgis | Informal City Dialogues

E-commerce entrepreneurs in Nairobi are beginning to sell items that have been produced locally and informally. Photo credit: Erik Hersman via Flickr Creative Commons

“I’m always online. If I could live online full-time I would,” Asha Mweru tells me with total sincerity the first time we meet. Constantly armed with a handbag housing her smartphone and tablet, Mweru, a college student turned technology wonk turned e-commerce businesswoman, is the living embodiment of the technology and culture shift that’s currently engulfing Nairobi.

With college graduation quickly approaching, Mweru and three of her classmates from Nairobi’s Strathmore University have opted to take the road less traveled. They see much of the city’s job market as a time-suck with few rewards. “We just decided to work for ourselves,” she explains with a confident smile. So the quartet pursued a business objective with a simple framework that they felt couldn’t miss: To create a Kenya-focused shop that sells just about anything you could think of.

“Chochote means ‘everything’ in Swahili,” Mweru says, “and we’re going to sell everything.”

Everything means everything, from iPads to high-heeled shoes to Burberry cologne. With products ranging from 3,000 Kenyan shillings ($30 USD) all the way up to 80,000 ($900 USD), Nairobi-based resembles your typical mainstream retail website; the layout looks as if the Swahili language and the Kenyan currency hacked into Macy’ And the products are as diverse as women’s knee-high leather boots and custom engraved wine glasses — just a few of the many items that Nairobi’s online consumers can put in their Chochote shopping cart.

What separates Chochote from other Nairobi-based e-commerce websites, however, is that alongside the smart phones and designer fragrances, some of the website’s most sought-after products come directly from Nairobi’s informal retailers. Beautiful jewel-encrusted handbags and artisanal bracelets, more typically found on the wooden tables that crowd Nairobi’s sidewalks, are now for sale in an online marketplace thanks to technology startups like Chochote, taking full advantage of an emerging Kenyan middle class that wants to shop from their sofas.

While many informal retailers are hesitant to trust the internet, Mweru and her business partners believe that the marketability of the informal sector is simply too great to pass up. “They’re extremely talented, whether engraving glass or making stools and handbags – the informal sector has talent.” Nevertheless, many of these retailers hawk their merchandise in an unstable market. Plying their trade at the curb has benefits – they can remain nimble, and costs are kept low – but it can also downgrade their skills in the eyes of the public, regardless of how impressive their products may be. E-commerce sites like Chochote combat that image. They’re pioneering an effort to technologically formalize informal retail, with the internet offering a shared space from which informal retailers and formal tech workers can mutually benefit.

“We give them exposure,” says Mweru, adding that in return for a final sale commission of between 7 and 15 percent, her website provides free photography and even delivers the products to the consumer. In a city where informal vendors can often be found rushing from one neighborhood to the next in search of potential customers, Chochote’s relationship with the informal sector is almost unprecedented.

While such e-commerce sites are changing the scope and nature of Nairobi’s informal retail market, such activity speaks to a larger shift in the formal-informal dynamic that has emerged in response to what can only be described as an information and communications technology (ICT) revolution that is transforming the city.

Don’t take my word for it – Nairobi rang in 2013 with a visit from Eric Schmidt, Executive Chairman of Google and the 45th richest man in America. As quoted in the Daily Nation, Schmidt believes that Nairobi “may become Africa’s leader” in technological innovation – a belief shared by many of those working around the clock in the sprawling offices of 88 mph, a Nairobi-based ICT investment group.

Mdundo cards, which Kenyan musicians can sell to their fans, who can then use them to download music on the company’s website. Photo credit: Sam Sturgis

Located in Nairobi’s Junction neighborhood – straddling the borders of the Kibera and Kawangware slums – 88 mph operates at the breakneck speed its name suggests. The company aims to invest in up to ten local ICT startups each year, all of which have so far been owned and operated by entrepreneurs under the age of 30. When asked whether 88 mph focuses on investing in projects that aim to benefit the city’s informal sectors, project manager Hannah Clifford replied simply, “We just invest in projects that we think can succeed. Just pure investment.”

Even so, the informal world is unquestionably reaping benefits from these investments. “There’s a good amount of Kenyan musicians who can’t distribute their music. They’re often forced to play small gigs or play at a bar when they can find work,” explains Gustav Ericsson, a Swedish national and CEO of mdundo, one of the ICT startups supported by 88 mph.

In operation for roughly six months, mdundo works to curb piracy of Kenyan music. Similar to iTunes, it’s an online medium where Kenyan artists can have their music legally downloaded onto mobile phones. Moreover, the startup is earnestly trying to bring Kenyan musicians into a more formal music market. “If you have a guitar and don’t sing terribly, we’ll sign you up,” Ericsson laughs.

Establishing a more formal music market in Nairobi, however, isn’t just a lofty ideal. As Ericsson points out, when it becomes cheaper and more convenient for Kenyan music to be bought formally than in pirated form, there will be a lot of money to be made. “Mobile money is absolutely enormous in East Africa,” he says. $8 billion is transacted annually through the Kenyan mpesa network – roughly 25 percent of Kenya’s overall GDP. Additionally, according to mdundo figures, Kenyans consume up to $10 million each year in music, most of it off the books.

Seeking to use Kenya’s mobile network as the catalyst to create a more formal, profitable music industry, mdundo has already distributed over 50,000 scratch cards to the Kenyan musicians they partner with. Each card allows their fans to download five of the musician’s songs on the mdundo website. If the musicians – many of who have spent the majority of their lives living in Nairobi’s slums – were to sell each of the cards, it would add up to an impressive 5 million shillings ($58,000 USD) in total.

In Ericsson’s view, “Africa is really skipping a technological generation compared to what we saw in the U.S. and Europe,” and Nairobi seems poised to lead the revolution. For example, iMentors, an ICT think-tank focused on sub-Saharan Africa, recently named three Nairobi “tech hubs” as being among the best on the continent. And startups like Chochote and mdundo are emblematic of how e-commerce may become one of the most critical links between this city’s formal and informal worlds.

“I need to go to another meeting,” Mweru tells me, slipping her Asus tablet into a handbag that likely came from one of Nairobi’s informal markets — she’s off to meet someone about a potential collaboration. “This photographer wants to work with the website, but I’m not sure in what capacity. We’re just going to brainstorm. I’ll figure something out.”