OLX digs in for business in potato fields

BY LUKE MULUNDA

In the world of online retail, the possibilities are clearly unlimited. After disrupting households by providing a forum for easily disposing of used items by simply uploading the photos with a price tag, OLX is digging in for business from the farms.

The online classifieds company is betting big on tapping trade in potatoes, a popular staple among urban Kenyans, through a new SMS service that’s attracting farmers in rural Kenya. Under this service, potato farmers are able to sell their produce on their phones by use of a short code, which ensures that even those without smartphones are able to access the service.

And OLX country manager Peter Ndiang’ui is bullish about this new venture, which turns out to be the anchor for its agriculture unit it launched a few months ago. He says 45% of Kenyans spend their income on food, which makes consumables some of the most traded commodities in Kenya.  Being a staple for most urban population, potatoes are fast-moving goods and thus offer a good entry point into the agriculture business for OLX.

Mr Ndiang’ui says the service will give access to farmers wishing to sell their potatoes on OLX to cut out middlemen who often prey on them by offering very low prices.

“Potatoes form the bulk of food consumed in most urban areas,” he said in an interview.

“Our venture in potato farming is aimed at adding value to farmers by eliminating middle men who have fragmented the supply demand chain. Most of these farmers do not own smart phones.”

Online retail is growing in Kenya, picking after the global trends in developed markets in the US, Europe and Asia. Already, shopping is moving online with players like Jumia and Kilimall using the internet to bring various products to Kenyans via smartphones and desktops. A good percentage of Kenyas shop online these days and OLX hopes to tap this growing culture into business by convincing farmers to trust the short code with the promise of higher incomes.

The service is initially available to potato farmers in Nyandarua and Nakuru counties, the highest producing areas, and will be gradually rolled out in the other regions. Market analysts say long value chain does not give value to potato farmers who have to sell their produce mostly through agents who have for a long time exploited farmers by dictating prices. By trading on OLX, farmers will have a direct link to their buyers and hopeful this will translate to increased profits.

“Potato farming generates Sh5 billion at farm gate prices yet farmers profit margins are still negligible. By working directly with OLX, farmers will now increase profits through a shortened value chain. Our aim is to ensure farmers get value for their produce and buyers receive quality straight from the farm through OLX.” Mr Ndiang’ui added.

Potato bags and buckets are a common feature on the highways and open markets, where traders use physical means to get buyers. Some have hired numerous sales people to increase their sales, but that increases expenses for them. OLX says its service will help farmers deliver potatoes directly from the farm to customers and retailers in markets, restaurants and French fries companies.

In return and to grow the business further, OLX will assist farmers to get fertilisers, agrochemical and seeds delivered to their doorstep at a subsidized rate. This shows how serious this segment of the market has become for OLX.

Already the company has signed a deal with Mavuno Fertilisers that will see farmers buy the input at a 15% discount in what is seen as a soft way of buying their loyalty and attract more farmers into its stable. Mr Ndiang’ui says the new deal will enable potato farmers who sell their products via the platform to order for fertiliser directly from Mavuno’s national depot.

“Farmers have a challenge accessing fertiliser at an affordable price because the distribution infrastructure is not only inefficient but also fragmented and to some extent non-existent. Farmers now have a one-stop facility where they will order directly from the manufacturer and have the same delivered to them on the same day,” he said.

The same lorries that collect potatoes for sale on the platform will deliver fertiliser at no extra cost, thereby helping farmers cut on their expenses. “OLX will continue registering more farmers onto the platform where Mavuno-farmer deals will be struck online,” Mr Ndiang’ui said.

OLX sells a wide range of goods including electronics, furniture and vehicles. It ventured into fresh farm produce sales on a new platform intended to unlock a new revenue line by linking farmers to institutions, individual traders as well as to fresh farm produce processors.

The two-month old platform has since registered 9,000 farmers currently selling from the comfort of their farms. Delivery lorries move round collecting the produce, while payments are made on mobile money platforms.

Farmers can sell potatoes on OLX by dialing *887# and selecting region from which their potatoes come from. A notification is then sent to OLX, who in turn contact and link the farmer to potential buyers.