E-commerce, the buying and selling of goods and services online, is evolving with the fourth industrial revolution (4IR), marked by technologies like the Internet of Things (IoT), Artificial Intelligence(AI), Virtual Reality(VR), machine learning, and big data. These technologies enable seamless integration between the digital and physical worlds, transforming business operations and making them more resilient. To remain competitive, e-commerce players must forecast mid- and long-term trends.

While e-commerce in Kenya is still in its early stages, the potential is immense. Mobile commerce, driven by the increasing internet access among Kenyans, is the primary force. The data from the Kenya population and housing census (2019) reveals that 40.6% of Kenyans had internet access, with the majority using their phones.

Over the past years, the value of mobile commerce transactions has seen a significant rise, growing from Kshs 1.7 trillion in 2016 to Kshs 9.3 trillion in 2020 (KIPPRA, 2021). According to Statista (2024), a German data and business intelligence organisation, Kenya ranks third in e-commerce market penetration in Africa at 46.7%. Egypt leads at 55.4%, followed by South Africa at 49.4%. This marks an improvement from Kenya’s previous fourth position as ranked by the United Nations Conference on Trade and Development in 2020.

In Kenya, electronics and media products hold the largest share of the e-commerce segment at 41%, followed closely by fashion at 31%. The largest group of online shoppers in Kenya consisted of individuals aged 25 to 34 years, comprising 43% of the total share. Following closely, e-commerce shoppers aged 35 to 44 years constituted the second largest group, accounting for 32% of the total share, while those aged 15 to 24 years ranked third. Statista projects that Kenya’s e-commerce revenue will reach approximately Kshs 5.2 trillion by 2027 from Kshs 615 billion in 2023.

E-commerce trends and skills development

Several skills are required in the e-commerce ecosystem, ranging from marketing, branding, photography, videography, editing, graphic design, data analytics, logistics and cybersecurity (UNCTAD, 2021). There is a shortage of skilled personnel for ecommerce due to skills mismatch in the market. Small-scale traders who require e-commerce to boost their sales lack the necessary skills required to trade online, thus locking them out from accessing wider markets for their products both locally and internationally. To address this, the government has implemented several programmes to improve digital skills in the country, such as Ajira Digital, Jitume in Konza Technopolis and the Presidential Digital Talent Programme, which are crucial in developing digital skills for e-commerce to thrive (Kenya Ministry of Information, Communications, and The Digital Economy, 2024).

The increasingly intense competition within the retail landscape of Kenya emerges as a prominent catalyst for the adoption of e-commerce. Heightened competitive pressures prompt small and medium enterprises (SMEs) entrenched in traditional retail formats, such as supermarkets and convenience stores, to adopt innovative e-commerce strategies to boost sales. A consumer survey conducted by KPMG (2020) noted convenience and time-saving as the primary motivators for online purchases. Furthermore, the survey findings explain the shift from conventional in-store shopping, which is currently perceived negatively by some consumers. Particularly, individuals constrained by time, such as working couples with children or those with physical disabilities, gravitate towards e-commerce for its time-saving. Concurrently, a study on factors affecting e-commerce adoption among SMEs in developing countries found that the younger demographic aged between 17 and 28 exhibits a pronounced preference for e-commerce, largely driven by its inherent convenience.

As consumers increasingly embrace digital platforms for their shopping needs, their expectations regarding product variety, price transparency, personalised recommendations, and seamless purchasing experiences will undergo a paradigm shift. In the future, the internet will continue to empower consumers with access to vast amounts of information as a result of the increased adoption of AI and the IoT, enabling them to make informed purchase decisions, compare prices across multiple retailers, and seek out products that align with their preferences and values. Consequently, businesses must adapt by leveraging technology to deliver tailored and engaging online shopping experiences that meet the evolving expectations of digitally savvy consumers.

Convenience is poised to be the key driver of future e-commerce success. In an increasingly fast-paced and interconnected world, consumers will prioritise convenience above all else when engaging in online shopping activities. This will include various aspects of the shopping process, including browsing, purchasing, payment, delivery, and returns. From streamlined mobile shopping experiences to one-click checkout options and same-day delivery services, convenience-enhancing features will play a pivotal role in attracting and retaining customers in the highly competitive e-commerce landscape. Businesses that will prioritise convenience and optimise their operations to remove friction points in the online shopping journey are poised to thrive in the future e-commerce marketplace.

Strategies to improve e-commerce adoption in Kenya

Internet infrastructure

The Kenyan government is implementing a digital superhighway project to improve internet infrastructure and digital inclusivity. The project aims to enhance the affordability and speed of internet services, boost Kenya’s competitive edge in the digital economy, and foster digital inclusivity. The government will collaborate with telecommunications companies like Safaricom, Kenya Power’s extensive electricity transmission network, and technology providers to extend the reach and reliability of internet services across Kenya.

Skills gap

Kenya’s education system needs to address infrastructural challenges to build a skilled workforce in the digital economy. Despite connecting 95% of primary schools to electricity, only 34% have access to computers or digital devices. Investing in internet access and equipping schools with digital tools can help develop e-commerce skills from an early age. Creating industry-specific e-commerce service stations and training programs on essential e-commerce skills can foster a vibrant e-commerce ecosystem.

Logistics

Hybrid e-commerce combines online and offline retail, creating a seamless shopping experience. The digital superhighway project will enhance internet access and connectivity in rural areas, promoting the agency model of e-commerce. Regulations should ensure local retail shops integrate with larger platforms, maintain service quality, and provide fair competition, data protection, and consumer rights. The National Addressing Bill (2021) is crucial for establishing a National Addressing System, enabling accurate GPS mapping and drone deliveries in rural areas.

Environmental sustainability

E-commerce companies should focus on sustainable practices, such as 3D printing and green last-mile delivery strategies. These strategies can reduce environmental footprints while meeting consumer demands. A circular economy framework promotes eco-friendly practices, focusing on reducing, reusing, and recycling resources throughout the product life cycle. This includes designing products and packaging with durability, facilitating repair and refurbishment, and promoting sharing and rental models. Fostering collaboration and innovation across the value chain can drive the transition towards a more sustainable and eco-friendly e-commerce ecosystem.