Influence of Internet Marketing Strategies on The Market Share of Online Shops in Kenya

The rate of information technology adoption is increasing at an exponential rate and more than half of the world’s population is connected to either a computer or a mobile device. In addition to being a giant repository of information, the internet has now become a giant marketplace. The online commercial ecosystem is also evolving fast especially in Africa. Most shoppers are now able to review the products that they would wish to buy online and make a purchase using a digital device such as a computer or a smart phone (ITC, 2015). Since the inception of the internet in 1991, many businesses have begun migrating from merely conducting part of their businesses online to fully operating over the internet. These companies are referred to online-based firms. Most of these online-based firms also conduct internet marketing. Internet marketing refers to the marketing of a firm’s products or services over the internet. When used as a marketing strategy, the internet has various advantages which include speed, capacity, convenience and precision, which ensures that more consumers can be reached compared to the conventional advertising methods. Most consumers tend to first gather as much information as they can about a product, make price comparisons amongst different sellers and then make a decision.

The seller of the product therefore needs to come up with a marketing strategy that will communicate as much as possible and convince the buyer to eventually buy their product or services (Kabuba, 2014). Online shops have a number of advantages compared to the conventional ‘brick-and-mortar’ shops. To the business itself, they offer operational efficiency, reduced inventory, lower communication costs, twenty four hour operation and access to foreign markets. To the consumer, they also offer twenty four hour services, more options for the consumer before making a purchase, and instant price comparisons between different sellers of the same goods and services. For instance, before a buyer decides on buying a television he will be able to check the different brands being sold online, make comparisons between the different sellers in terms of price and specifications and ultimately make a purchase at any time of the day.

Global perspective

In 1999, there were around 300 million internet users worldwide and the global ecommerce transactions totaled about US$110 million. As at 2013, the global business-to-business transactions had risen to about US$15. 5 trillion, with business to consumer transactions taking up about US$1. 2 trillion (ITC, 2015). Presently the world is a global economy where the large multinational enterprises (MNEs) are able to connect with other MNEs or with the small and medium enterprises (SMEs). As a result of the internet these businesses are also able to connect with consumers across international borders. A good example is the UK-based online store Spice Kitchen which was started by Sanjay Aggarawal in 2013 as a simple showcase on how to blend spices. Originally focusing on just Indian spices, the eBay-based company has expanded into serving over 2000 clients internationally from South America, Asia and Africa. The company also does corporate gifting, wedding favors, spice masterclasses and chocolates (Ebay, 2016).

The adoption of internet technologies is considered to be a potential major contributor to the GDP of various nations across the world. According to Mckinsey Global Institute, developed countries are benefiting more from the adoption of the internet compared to developing countries. According to the international ecommerce report for Africa of 2015, the average contribution of ICT to the G8 economies was 3. 8% whereas the average of African nations was 1. 1%. This gap leaves a huge potential for the growth of ecommerce in Africa (ITC, 2015). Despite many retail bankruptcies and stores closing, online giants such as Amazon and Ebay are still continuing to gain ground. Amazon is currently the world's third-largest retailer in terms of revenues, profits, assets and market value, and ranks 83rd on Forbes' Global 2000 list of the world’s biggest and most powerful public companies. Amazon has ventured into areas such as fashion, and has even rolled out its own private label. The company also deals in online groceries and is considering venturing into pharmaceuticals. In China, their biggest online store is Alibaba which was ranked in sixth place. The firm is the only non-American retailer to appear in the top ten of the Forbes Global 2000 list (Gensler, 2017). The big online shopping stores are now setting up online shopping days that record extraordinary sales. In the United States, there is the cyber Monday where stores like Amazon, Target and Walmart offer discounts on selected goods. In 2017, Cyber Monday was the biggest shopping day of the year and online shoppers spent US $6. 6 billion. Retailers therefore need to find creative ways to market their products online and bring in more customers for such occasions (Amadeo, 2018).

Regional perspective

The internet, e-commerce and technology-enabled platforms have completely changed the way Africa conducts its business. Prior to the internet, businesspeople would often travel long distances in order to make connections with potential buyers or sellers outside the continent. This would often translate to a large portion of their resources being committed to transport costs. Presently, small business owners are able to communicate with international partners without leaving their offices.

The internet has completely eliminated the need for expensive travel or time-consuming networking activities. Technology has presented a good opportunity for Africa to be able to compete with the more developed continents in the global market space. Most of the economies in Africa are either developing economies or least developed economies. Developing countries usually adopt increase in exports as a development strategy. The global marketplace therefore offers developing countries a chance to sell their product. The exporters on the other hand usually gain a lot in technology and knowledge transfer through interaction with buyers from developed economies. Despite the potential gain from online trading, most online shops only thrive domestically but remain marginal in the international scene. While the companies apply considerable innovation towards serving domestic markets, they seem to be blocked internationally. The reasons identified for this include a difficulty in conducting international banking transactions, a negative perception amongst international markets about doing business with Africa and poor infrastructure within the African continent such as road, rail and sea ports. Additionally, there are many sociopolitical factors such as African governments not doing enough to promote SMEs. The internet connectivity in Africa also continues to lag behind other counterparts worldwide (ITC, 2015). Online retail sales in Africa are however expected to expand. The leading nation in retail sales in the continent is South Africa, where e-commerce revenues have been growing at double digit rates in recent years. Online shopping is also becoming popular in countries such as Morocco, Nigeria and Kenya. The largest online business-to-consumer retailer in Africa is Jumia which has over 3 million customers spread out across the continent. Other popular stores include Kilimall in Kenya and Souq in Egypt. Multinationals such as Alibaba, Amazon and AliExpress are also expanding into African market (ITC, 2015).

Kenya perspective

Kenya’s global rate of online shopping is 23% and is currently behind the global rate of online shopping which is 59%. The existing gap with other global economies shows that there is still a long way to go for Kenya. The main reasons for the gap include lack of trust, shipping costs, slow delivery, authenticity of the products, fear of payments methods and lack of knowledge on how to make orders. Despite the gap with other developed economies, there is a rise in the usage of social media platforms like Facebook, Instagram and WhatsApp which contributes to at least 15% of the online shopping. The most sought-after online shopping sites in the country are Jumia and Kilimall which take up 38% and 22% respectively of all the online shoppers (The Star, 2017). The buying and selling of goods over the internet is also on the rise in Kenya. It is estimated that the e-commerce market will be worth US$50 billion by 2018, compared to US$8 billion in 2013. There are several online businesses coming up in the country and more investors are channeling money into this sector (Branding Voice, 2017). Nigeria-based Jumia is Africa’s biggest online shop with outlets in Egypt, Cote d’Ivoire, and Morocco, and has grown into the most popular online shop in Kenya. The online retailer has a similar business model to Amazon by offering a diverse amount of products to their consumers. The company was launched in 2012 and has since expanded throughout Africa. The online shopping store is also participating in the online shopping days like their foreign counterparts. In Kenya, Jumia organizes the black Friday which has turned out to be the largest shopping event in the country. In 2017, Jumia recorded close to two million shoppers on the first day of the campaign (Money&Markets, 2017). For the first time in history, groceries emerged as a major attraction to Kenyan shoppers in 2017. The main products sold online were electronics, fashion items and home appliances.

Companies have also begun investing in technologies. For instance tours and travel agencies have interactive chat sessions with 24 hour customer support. The moment a prospective client visits their website, they are able to initiate a one-on-one communication with the visitor of the website to offer any assistance. 1. 2 Problem statementKenya is the seventh most populated country in Africa with a population of over forty million people. As at 2017, Kenya was considered a young country since approximately 61 percent of the population were either children aged 0 to 14 or youth aged 15 to 24. The youthful population also applies to the rest of the African continent, since the continent had about 226 million youth aged 15-24 in 2015. Youth unemployment rates are therefore high in both Kenya and Africa, and the youth represent the bulk of the unemployed people (Hall, 2017). The online businesses are therefore an opportunity for job creation for the next generation of young entrepreneurs to invest in an area that is not overcrowded. The online marketing space is also still relatively new in Kenya and many firms are exploring the option of selling their products online. In the retail industry, the space has been dominated by the traditional table top stores and supermarkets, and the industry has been growing by more than double digits annually in recent years. As the internet continues to penetrate to the rural areas, it is expected that more consumers will migrate from merely researching about products online to actually shopping online. It is estimated that about a quarter of consumers go online to search about fast moving goods and services, yet there is still a huge gap in the online market space (Daily Nation, 2018). This means that the online-based companies still have to do more in terms of convincing buyers to purchase their product. Online businesses also face various challenges. First, most consumers prefer to see the product they are purchasing in person and even touch it if possible. In the online store, consumers do not have a sense the product that they are seeing in the internet. They cannot see it physically, smell it, touch it or even hear it. The consumers are therefore likely to develop a low trust level due to the lack of face-to-face communication. Before purchasing online, consumers also tend to consider the various risks associated with making the purchase.

Objectives

1. To establish the effect of social media marketing strategies on the market share of online shops in Kenya.

2. To investigate the effects of affiliate marketing strategies on the market share of online shops in Kenya.

3. To establish the effects of content marketing strategies on the market share of online shops in Kenya.

4. To determine the effect of website design strategies on the market share of online shops in Kenya.

Research questions

1. How do the social media marketing strategies influence the market share of online shops in Kenya?

2. How do affiliate marketing strategies influence the market share of online shops in Kenya?

3. How do content marketing strategies influence the market share of online shops in Kenya?

4. How do website design strategies influence the market share of online shops in Kenya?

Justification of the study

The study is important since it will reveal the internet marketing strategies that have the most influence on the market share of online shops in Kenya. The study will also highlight the opportunities and challenges faced by online shops firms in Kenya. The information will be used by online shops in determining the appropriate internet marketing strategies that they could use in Kenya so as to improve their market growth and also meet their overall business objectives. This research will reveal how the internet marketing strategies have been used by online shops as they strive to improve their current market share. The policy makers will be able to use the results of this study to formulate and review implemented policies in the ICT sector. Investors in the ICT sector, both existing and potential, would be able to get information on trends in the online commercial sector and know how best to market their goods and services.

Scope of the study

The study will explore the main internet marketing strategies that are implemented and being used by the online shops in Kenya. Four internet marketing strategies; social media marketing, content marketing, affiliate marketing and website design strategies will be evaluated so as to determine their influence on market share of online shop. It will be focused on evaluating the combined market share of all the online shops against that of the traditional brick-and-mortar shops.

Limitations of the study

There are no official records on internet activities in Kenya as well as no official records of all the online shops operating in Kenya. The researcher therefore relied on online directories to determine the population.