At the age of 28, Ben Maina sits at the helm of an e-commerce business that has been described as the Groupon of Kenya. In 2010, Maina quit his job at an internet service provider (ISP) to co-found online discount shopping website Rupu.
Rupu gives consumers discounts on goods and services in the form of deals on the premise of group buying, where a minimum number of people have to sign up for a deal. The business, which started with a team of six, today employs 40 people, has over 40,000 active users and has featured over 500 Kenyan businesses.
Maina told How we made it in Africa that the e-commerce business was inspired by the landing of a number of fibre optic cables in 2010, which led to reduced internet costs and an increase in the number of users.
“My background was in ISP. I had seen the number of internet subscriptions grow from about 400,000 to about three to five million in a couple of years. M-Pesa (a mobile money transfer platform) was a mature product with a lot of people using it. We felt that the time was right for e-commerce. The ecosystem was shaping up,” said Maina.
While hundreds of other entrepreneurs started technology businesses around this time, it is Rupu’s model, which Maina describes as “easy”, that has made the company one of Kenya’s tech success stories.
“We wanted a model that would allow us to make some sort of revenue from day one as opposed to other models that were based on traffic [first] and then trying to monetise the traffic later. We didn’t want to invest in logistics, we didn’t want to invest in products and stock and security… we just wanted something that was easy to start that we could do literally from our homes,” he said.
Maina and his partners set up a website, convinced businesses to give discounts, and marketed the website on Facebook and Twitter. “Deals were very easy to us,” he noted.
Having an easy model that generated revenue immediately worked to Rupu’s advantage. The business received investment from Switzerland-based media company, Ringier, in its early days.
Rupu has proved to be a success among female buyers who make up about 60% of the site’s clients. The items sold on Rupu include household appliances, health and beauty products, and fashion and lifestyle goods.
“Women tend to spend more in terms of impulse buying which is what deals are about. We tried a couple of products but the ones that really sold were skewed towards women, so we just concentrated on those areas,” said Maina.
Last month, the firm launched RupuShops and RupuTravel, an online travel portal that offers travel packages.
Although Rupu has achieved considerable success in less than three years, Maina described his early days in business, with a limited number of staff, as challenging.
“The late nights, doing multiple roles, being the guy that is tweeting and Facebooking and replying to every customer enquiry and at the same time trying to find a business to give us a deal. I was fire fighting; trying to fix problems and at the same time trying to grow by getting other business,” he recounted.
With a bigger team today, the business faces a different set of challenges, including lack of trust and knowledge about e-commerce among customers.
“The market is still in a growth phase. A lot of people still need to be educated on e-commerce and how it works. The majority of the queries we get are: where is your shop? Can I come pick up a product?”
The young CEO is, however, optimistic about the future. According to the Communication Commission of Kenya, the industry regulator, the country has over 16 million internet users today. This has opened up a big market for businesses like Rupu.
“We fundamentally believe the market is super huge,” Maina said. “They say 60% of Kenya’s population is between the age of 35 and 16. [The market] will just balloon. What is going to happen is that more of them are going to have access to credit, M-Pesa and bank accounts. They are also going to be entrepreneurs [and will need a platform to market and sell their products].”
So, what’s in the future for Rupu?
“We want to be the largest e-commerce player in this market. As the market continues to mature and people get more ingrained in using the internet for day to day life, we will be able to add more value. We are looking at continually modifying the product, addressing customer needs and extend the trust and training we have on our deals model.”
Although he describes Kenya’s technology industry as “interesting”, Maina would like to see more real businesses.
“There are lot of people working on stuff that are just sub-features of a bigger business. It is not a product in its real sense; it’s a website, it does one thing really well [but] it has no growth path. You can’t take it and scale it,” said Maina.
Maina advised other entrepreneurs who are interested in starting technology businesses to be realistic, know how valuations work and partner with people who have a background and deeper understanding of how to run a business.
“The technology is not the business. I think one thing that really differentiates Rupu from any other startup that I have seen around is that the founders were not techies. It is not necessarily [about] the coding.”
He added that investors play a critical role in the success or failure of a business and entrepreneurs should be careful when dealing with them.
“Your investor is pretty much tied to how successful you will be. If your investor is in it for the quick buck then that is how your business will be modelled,” said Maina. “A challenge I have seen with other startups here is investors insist on making decisions that are not necessarily beneficial for this market.”
Entrepreneurs should also invest in ideas that are easy to execute.
“You should always go for the lowest hanging fruit. It is easier to show proof of concept with something easy… sometimes going for the easier idea actually makes sense,” said Maina.
– HOW WE MADE IT IN AFRICA