Zambian e-commerce startup Dot Com Zambia has seen its revenue increase 44-fold to US$750,000 per year since its launch in 2009, but continues to shun profitability in further of growth.
Dot Com Zambia runs two platforms: Import Zambia, which allows Zambian consumers to shop in international e-commerce stores and have their goods delivered to their homes, and Bus Tickets Zambia, which allows for the purchase of inter-city and inter-country bus tickets.
The platforms have proven popular, with the startup seeing revenue grow to US$750,000 in 2014 from US$75,000 in 2009. Having started with just two members of staff in the kitchen of founder Mawano Kambeu, it has seen “greater-than-anticipated growth”, and now employs 26 people.
This growth caught the eye of investors, with Disrupt Africa reporting in September Kukula Capital and eVA Fund had pumped US$500,000 investment into the company to enable the e-commerce store to expand its activities around Southern Africa.
This expansion is underway, with Kambeu telling Disrupt Africa the startup was at this point eschewing profits in favour of growth, with its vision being to become the leading African e-commerce company.
“The business has been unprofitable, but in favour of growth. The only allowable scenario for a business not making money is for that business to be growing. And that is a misconception many e-commerce entrepreneur have. It takes years to build a large, viable, profitable e-commerce company,” he said.
Though Dot Com Zambia’s core market is, of course, Zambia, the startup also fulfillment and customer service operations in the United States (US) and United Kingdom (UK). Its short-term focus is on growing its market share in Zambia, but it is also thinking further afield.
“Our expansion plans include to introduce new product lines, for example working with multiple small businesses in Zambia with exportable goods to increase their international sales by offering them global e-commerce platforms, and providing logistical support like access to our US warehouse as a potential fulfillment center for their goods,” Kambeu said.
This is in addition to plans for regional expansion to surrounding countries such as Malawi and Zimbabwe.
It wasn’t always like this. In 2009, the business was primarily funded from retained earnings from sales, and getting customers to pay in advance. Kambeu provided the financial cushion and security by keeping his full-time job. In 2012, he borrowed US$9,000 from a bank, and a further US$4000 from a friend. The same friend lent another US$10,000 the next year, while a Zambian angel investor put in US$30,000. Yet Kambeu never lost faith, believing Dot Com Zambia had found a gap in the e-commerce market.
“The gap we recognised was that consumers in Zambia wanted to shop online from international websites like Amazon or eBay for goods they could not find in Zambia, or goods that were too expensive in local stores,” he said.
“However, retailers like Amazon did not ship to Zambia, many consumers did not have credit cards at the time, the government post office was unreliable, courier shipping was too expensive and the customs procedures were a nightmare. So we identified that gap and provided a solution, and it grew from there.”
Customer adoption remains a challenge, however.
“I sometimes feel we spend much more time, money and other resources trying to get consumers to adopt new technology,” Kambeu said.
“In the early years, it was almost impossible to get a consumer to pay in advance for an order, because, quite simply, the Zambian public don’t trust e-commerce. They want to see the goods and who they are paying, so in the end, we run a hybrid e-commerce platform that blends virtual transactions with physical transactions.”