April 10, 2021

Online But Not So-Online Sales

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In February 2021, Rwanda Utilities Regulatory Authority (RURA) stepped back on a decision to start taxing e-commerce service providers after it was evident that they had made lots of money during the COVID-19 lockdown.

The decision was reversed after a public social media outcry in which many Kigali based online business complained they were struggling like any start up despite making money during COVID-19.

The business owners said the boost in sales was only due to the COVID-19 restrictions to unnecessary movement, transportation thus clients naturally shifted to online shopping for convenience purposes.

An advertising for Catchyz Rwanda found on Facebook

For instance, the 2020 Central Bank Financial Stability Committee (FSC) report shows active mobile subscribers increased 13% from 4,139,075 to 4,688,124 while mobile payment transactions increased 85% from 378.8million (worth Rwf2, 349billion) in 2019 to 701million (worth Rwf7177billion) in 2020.

Also, Mobile Points of Sale (PoS) increasing significantly at 511% to 39,743 from 13,675 points (excluding moto taxis services)- to net 45million from 7million transaction worth Rwf846billion from Rwf52billion- representing a 1,514% increase in value.

This enticed young entrepreneurs like Seleman Nshizirungu, 30, to shift from selling in a physical shop to an online one after seeing a gap online business three years ago.

He says it did not require too much investment to start up his online shop based in Nyamirambo, Kigali city.

The same case was for Catchyz- an online market place which links Rwandan buyers and sellers with no ‘commission’ charged.

By its model, the startup also helps businesses to advertise goods, products and services on their website.

According to Catchyz statistics during the national lockdown, clients increased to an estimated trend of about 20 -25%.

“A lot people were ordering from their home and this increased our traffic since there was no movement of people.

We got a very big number of people who had never used our platform before,” said Agatako Happy Mignonein, an in-charge of communication at Catchyz

As they wait for RURA to decide the next move, online start up business that mainly sprouted in deliveries under COVID-19 lockdown, have now started seeing a slump in sales as a result of government continued ease on most COVID-19 restrictions on human mobility since February 2021,

For example, at Catchyz, their clientele has deceased at an estimation of 5% after the recent district to district and Kigali city lockdowns in January.

“Most people choose to go shopping directly rather than ordering online”, a business owner in Kigali City told The Chronicles.

Nshizurungu claims that the shift back has been cause lack of knowledge on how to use available technology for rural buyers despite government strategy to promote using cashless payments during COVID-19.

He says that about 80 % who consume his products are educated, mostly expats living in Rwanda between 30-45 years of age while the rest prefer shopping manually.

“There has never heard any government policy or campaigns of mobilization so that people get aware of e-commerce,” Nshizurungu said.

For example, he says he once received an order from a resident in Gicumbi district, but the person failed to use mobile wallet payment (MOMO pay).

Nshizurungu said he was forced travel to meet the client with the products on grounds that he would extra travel charges.

Nshizurungu says his clients have decreased by 5% from an estimated 120% increase during the lockdown periods.

The same challenge or problem is shared by other online business firms like Catchyz who say that most Rwandans do not understand the way online platform work and have less trust in them.

“Maybe it is because the concept [online platform] is new here and new in citizen’s mind.” Agatako said.

At Catchyz people do trust them because they are encouraged to talk to a seller in person, after they have checked products on its website. ‘No commission is asked, remember,’ says the company.

In article published by The Chronicles of a study carried out by a local consumer rights campaign group showed that about 65 of Rwanda don’t trust mobile money transfer, Mobile banking, ATM cards, Irembo services, E-Payment, E-banking and EBM.

While mobile money payments and digital transactions increased by 400% in 2020 the lack of trust in online payments is associated to the choice of preferring cash payments rather than digital or e-payment or mobile money.

“People do trust us because they don’t have see how it is possible to pay online without knowing the person you are paying. Sometimes they need to talk to seller in person and pay when the product is delivered” said one dealer in Kigali.

It is the same situation happening to Iduka Online, facing the same major challenge with other companies where people do not trust, understand the sector.

“They are afraid of payment to the people they don’t really know [want to see them face to face] live.”

“I can’t say that it’s only our company that facing this challenge it’s in all E-commerce here in Rwanda. but if we do that that’s not e-commerce.” Said

Mireile Uwase, a customer support manager at Iduka, an online shop, says that client experience shows most like to buy products or services after checking them by touching.

Jean Premier Bienvenu Rukundo, E-commerce Specialist at Ministry of Trade and Industry said e-commerce businesses receive less than 10000 visitors monthly to their websites/online platforms with only 5 businesses receiving above 20,000 visitors.

RUKUNDO says “The numbers indicate the low demand of online goods and services and subsequently, the lack of consumer awareness, experience and trust explain low demand levels for online products and services,”.

Public thoughts to this:

Agnes Uwimana, 33 says she started using e-commerce model for the first time in the course of lockdown, when travelling was prohibited but:  “When the product is delivered you find it’s not real, not the same quality appears on the advertised pictures online. I once received a bunch of jeans but some were torn and fake,”

LilianeTuyizere, 21, shop attendant for 3 years in Rubavu district said she heard about online business from workmates but not bothered to check on internet.  “I see people’ statuses on WhatsApp, we do the same while advertising our products. For me, I don’t mind much about online business despite having little knowledge on it,” she said.

Elijah Manzi, 37, a businessman says he doesn’t trust the internet because of fraudsters hunting their next prey of which he was one- losing more than Rfw1.1million ($1,132).

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