Koko networks, a Kenya-based biofuel technology company, has expanded its business to other fast-moving consumer products through a new technology platform that takes advantage of its established distribution networks in low-income neighborhoods.
Koko Club, its new division, sells the products directly to consumers through the dukas (small shops) who currently act as the company’s agents for its bio-ethanol cooking fuels and stoves.
Koko Club products on display in designated locations in Agents’ small shops are only sold to registered Koko Club members.
The shopkeepers (agents) use Koko’s PoS system to sign in customers, collect their bio-data and issue them an electronic card which they use when purchasing products in any Koko Club shop.
The loyalty cards are linked to an e-wallet, similar to the one currently used to purchase Koko’s biofuel, which can be topped up using mobile money and other technologies.
Koko Club sources products directly from manufacturers and manages inventory using a real-time management system that prevents out-of-stocks and provides accurate market analysis.
With 35 SKUs in its portfolio, Koko Club initially keeps the prices of its products competitive by shortening the supply chain from manufacturer to consumer.
“We target low-income households by giving them the benefits of better products, lower prices and convenience. This also ensures that we always have the right product range, ”said Koko Networks Co-Founder and Chief Innovation Officer Sagun Saxena said TechCrunch. Greg Murray is the other co-founder and CEO of the startup.
Koko Club is a technology-enabled retail platform aimed at consumers in low-income neighborhoods. Credit: Koko networks
Micro-retail stores that sell for 80% of household retailing in Sub-Saharan Africa, are important in supplying consumers with food and other household items.
These informal retailers are usually within walking distance, making them convenient for shoppers, with the added benefit of providing lines of credit to loyal shoppers.
the Contributions of these informal merchants to the economy, therefore cannot be ignored as they make up most of the retail trade across the continent.
However, these businesses are constantly faced with challenges such as stock shortages, fluctuating earnings, and insufficient funding that make them difficult to grow.
These are some of the gaps Koko Club plans to fill, especially with regards to inventory – as the agents don’t need capital to replenish their inventory.
Modernizing informal trade is believed to be one of the strategies to unlock credit and the potential of these small micro-retail stores and improve the lives of small business owners. Saxena said the Koko Club business model gives manufacturers direct access to this market segment.
“A lot of these manufacturers have armies of people going into the neighborhood to make sure their products are properly positioned and these stores are styled. You even need to have people out there figuring out what prices the retailers are selling at, ”he said.
“So we take care of so much for them; We can now tell you exactly how many of their products are there, what price tags they have and all this information. “
The Koko Club idea was developed in mid-2020, but it wasn’t until early this year that the startup continued its rollout, building on the success of its bioethanol fuel business, unveiled in 2019 as a cleaner, cheaper, and safer alternative to charcoal and firewood.
There are currently over 300,000 households using Koko’s bioethanol fuel and stove (manufactured at Koko’s facility in India), up from around 100,000 as of March this year. These households are looked after by the more than 1,000 agents who now also act as Koko Club agents.
Koko’s fuel business has grown beyond the Kenyan capital, Nairobi, in just over two years, having recently launched in the coastal city of Mombasa, with plans to enter Nakuru and Kisumu in the first half of 2022.
