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How Covid-19 disrupted commerce – Business Daily

Coronavirus economic impact concept image. FILE PHOTO | NMG
The Covid-19 pandemic significantly altered certain human social behaviors. For instance, it is now seen to be perfectly ok to ignore someone. You would be pushing it if you ask for a handshake. Essentially, the less contact the better.
Which is why physical paper money was also a point of concern for health authorities as it was perceived to be one of the many super-spreaders. For instance, in March 2020, the Central Bank of Kenya announced that all currencies evacuated by commercial banks to its vaults would be quarantined for a week before being released back into circulation.
But even more important, there has been rising demand for cashless transactions in areas of commerce where cash is predominant, such as public transport.
And the cashless momentum appears irreversible. Statistics from CBK show that the ratio of currency outside banks to total money supply averaged at six percent since the first lockdown in Kenya in March 2020 up-to-date, compared to seven percent in 2019 (and eight percent in 2018).
The ratio is usually not a precise measure of cashlessness but is a window to its soul. Nonetheless, from it, we get an idea that population has been transacting cashless. But that’s not enough.
Courtesy of the internet, commerce has also began going contactless by way of electronic means (e-Commerce), albeit gradual.
Payments firm Visa’s Covid-19 tracker survey released in June 2020 showed that as consumers and merchants focused on safety and hygiene, contactless payments increased with enabled merchants seeing an 88 percent growth in contactless usage.
There is also another evidence in the form of a joint 2016 National ICT Survey between the Communications Authority of Kenya and the Kenya National Bureau of Statistics (KNBS) which, inter alia, established that 39 percent of private enterprises were engaged in e-commerce.
Consequently, the pandemic seems to have accelerated contactless commerce, especially by medium and large enterprises.
For instance, in the wake of the lockdown measures imposed by Kenyan health authorities, a number of the big retailers embraced online shopping (and delivery). When you think about the internet, which has this unlimited capacity as a free platform, then the opportunity is colossal (especially for small businesses).
Even educational content delivery has now moved online with the likes of Kidato and Roodito setting the pace.
Even the traditional side is getting more interesting with traditional players now reaching their customers directly through door-step deliveries (DSDs) and in the process creating direct channels (away from channel intermediation).
Players who have ventured into this space include the likes of Farmers’ Choice (you just place the order and they will deliver!).
For online retail, the pandemic has also injected some disruption to last-mile delivery. A number of smaller e-commerce companies have opted for disruptive delivery firms which have offered much more through aggregation and collection propositions.
This has allowed them to connect to customers who cannot access lifestyle goods that Nakumatt and Tuskys used to provide, all across the country, and they are building a fantastic execution network.
Another added advantage is the fact that suppliers get to enjoy quick payment turn-around, improved margins and reduced concentration risks.
My point is that at a time when business survival depends on keeping costs low, a strong e-commerce proposition can enable retailers lower delivery costs and stay competitive and also build scale in the process.



Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.