Kenyan digital startup Copia has launched a new online retail service aimed at underserved ‘bottom of the pyramid’ consumers, in rural areas. The system works by allowing purchases made in the city to be delivered to agents in rural areas, and describes itself as “the best of Amazon plus Fedex.”
Copia was founded in 2013 and received $2m in funding from Netherlands-based social investor Goodwell Investments in January 2019. Overall it has raised $20m in equity financing, mostly from social investors. Prior to launching the new retail service, Copia primarily focused on the FMCG sector, as well as farming inputs as construction.
Copia has also opened a new logistics and distribution hub at Tatu City Industrial Park, north west of Nairobi. It is a 4,000m² modern facility designed to streamline the fulfilment of customer orders. It will also help the company expand in Western Kenya. Copia is seeking to expand within in Kenya and also into Uganda.
Currently, Copia has 3,700 agents in Central Kenya and the Rift Valley and covers just 22% of Kenya’s rural population. Agents typically operate small retail outlets such as hair salons, tailors and kiosk stores. Agents are responsible for recruiting new Copia customers, advise them on available products and promotions, place orders, pay and receive deliveries. They then receive a commission on products sold.
The company claims to have fulfilled more than 2m orders and served over 300,000 customers. Once goods are purchased (pre-paid), Copia locates the recipient and delivers the order within 2-4 days.
Copia’s new retail service will focus less on FMCG and more on non-food. Categories covered include:
- Construction materials
- Electronics
- Energy (e.g. solar panels)
- Farming products and inputs
- Household goods
- School supplies
- Transport (e.g. motorbikes)
- Food and baby products
- Personal care, beauty and health products
Trendtype believes it is an interesting online model offering a strong use case for replacing existing informal distribution systems. In particular, the use of a Western Union-style agent system enables two key advantages that help it to scale sustainably:
- Rapid expansion of coverage
- Elimination of the costs and complexity of ‘final mile’ delivery
In terms of direct competition, Copia operates in a relatively empty field, for now. Online retailers such as Jumia and Kilimall do exist, of course. Similarly, supermarket retailers including Tuskys and Naivas are experimenting with click and collect in their stores, but fairly half heartedly.
Our main questions are around is the cost of the agent service and whether Copia is truly a consumer service. As for Western Union, the convenience of Copia’s agent network comes at a price because agents work on commission. This potentially leaves a vulnerability for Copia being targeted on price although we think this is minimal for now given Copia’s impressive coverage. We also question to what extent Copia is a pureplay consumer retail service, given that the chosen model competes directly with the distribution systems small informal traders also use.
Trendtype also believes that Copia could generate some of the most valuable information in Kenya on consumers and consumer spending for areas where data capture is typically poor quality, sporadic and expensive to undertake.
