Koko Networks, a Kenya-based biofuel technology company has expanded its operations to cover other rapidly evolving consumer goods, through a new technology platform that will capitalize on its established distribution networks in low-income neighborhoods.
Koko Club, its new line of business, will sell the products directly to consumers through the dukas (small stores) that currently serve as the company’s agents for its bioethanol cooking fuel and stoves.
Koko Club products, which will be displayed in designated areas within small agent stores, will only be sold to registered Koko Club members.
Store owners (agents) will use Koko’s PoS system to register customers, capture their biodata and issue them an electronic card that they will use when purchasing products at any Koko Club store.
The cards will be linked to an electronic wallet, similar to the one currently used to purchase Koko’s biofuel, and which can be topped up via mobile money and other technologies.
Koko Club will source products directly from manufacturers and manage inventory through a real-time management system that will prevent stockouts, in addition to providing accurate market analysis.
With 35 SKUs in its portfolio, as a first step, Koko Club will keep its product prices competitive by shortening supply chains from manufacturer to consumers.
âWe are targeting low-income households by providing them with the benefits of better products, lower prices and convenience. This is in addition to making sure we have the right product mix at all times, âKoko Networks Co-Founder and Chief Innovation Officer. Sagun saxena says TechCrunch. Murray gray is the other co-founder and CEO of the startup.
Micro-points of sale, which represent 80% household retail trade in sub-Saharan Africa, are important for supplying consumers with groceries and other household items.
These informal retailers are usually located within walking distance, making them convenient for buyers, with the added benefit of extending lines of credit to loyal buyers.
The contributions of these informal traders to economies therefore cannot be ignored as they represent the vast majority of trade in the retail sector across the continent.
However, these stores continually face issues such as stockouts, income variability, and inadequate funding, which makes it difficult for them to grow.
These are some of the gaps that Koko Club plans to fill, especially on the issue of stockouts, as agents don’t need capital to restock.
Modernizing informal commerce is seen as one of the strategies for unlocking the credit and potential of these small retail outlets as well as improving the lives of small business owners. Saxena said Koko Club’s business model gives manufacturers direct access to this market segment.
âA lot of these manufacturers have armies of people going into neighborhoods to make sure their products are positioned correctly and that these stores look stylish. They even need people to figure out what prices retailers are selling at, âhe said.
âSo we take care of a lot of that for them; we can tell them right away, exactly how many of their products are there and their price tags, and all that kind of information.
The idea for the Koko Club was conceived in mid-2020, but it wasn’t until early this year that the startup moved forward with its launch, building on the success of its bioethanol fuel business, which was unveiled in 2019 as a cleaner, cheaper and safer product. alternative to charcoal and fuelwood.
Currently, over 300,000 households use Koko’s bioethanol and stove (made at the Koko plant in India), up from around 100,000 in March this year. These households are served by more than 1,000 agents, who will now be Koko Club agents.
The Koko fuel business has grown in just over two years beyond Nairobi, the capital of Kenya, following a recent launch in the coastal city of Mombasa, with plans to enter Nakuru and Kisumu in the first half of 2022.