By Kui Mbugua, General Manager, Uber Eats Kenya
There is no denying that the pandemic has provided businesses across the world with some valuable, albeit often hard to swallow, lessons. Perhaps the most worthwhile of these teachings is the importance of diversification – or at least an ability to diversify – as a way of securing business sustainability and success in an increasingly fast-changing global business environment.
Despite being little more than a year into its operations in Kenya when the virus first reached Africa’s shores, Uber Eats was fortunate to have forward-thinking leadership and a very agile business model, which allowed us to quickly pivot our offering to mitigate the potentially massive risks that Covid-19 would otherwise have presented had we refused (or been unable) to adapt.
The significant, positive performance we have achieved through this diversification strategy is testimony to the value that diversification can bring to any business. Arguably the most valuable lesson we have learnt over the past two years is that a willingness to ‘let go of rigid business beliefs and diversify the value propositions offered to customers is possibly the most effective growth strategy any business could adopt.
This strategic execution was driven by a recognition that we had to take decisive action to keep ourselves, our partners, and delivery people ‘in business’ when the world went into lockdown. We responded by pivoting our operating model to go far beyond app-based food deliveries to also provide a range of other household essentials. The success of this diversification has been seen in partnerships with retail chain Chandarana Foodplus and greengrocery chain, Zucchini, both based in Nairobi. We now have an increasing number of active grocery and convenience stores on the Uber Eats App, and the growth enjoyed by these partners is driving the steady addition of more partners.
The key to this successful diversification is a partnership. In addition to the array of outstanding restaurants in our food delivery network, over the past two years, Uber Eats Kenya has partnered with a number of the country’s leading providers of groceries and personal and household items. Our expansion into alcohol deliveries has seen exponential growth in the last year, as Kenyans have embraced the ease and convenience of having their drink of choice delivered to their door.
The growth that Uber Eats Kenya has unlocked through these partnerships has highlighted the many benefits of a related diversification strategy, which we believe apply to many businesses in almost all economic sectors and industries.
- Diversification allows for the sharing of resources and distribution channels. Despite having only been in operation in Kenya for a relatively short time, our business had built up a significant amount of assets, particularly our valuable restaurant partnerships, expansive courier network, world-class digital platform and experienced support functions. Pivoting and diversifying our business model allowed us to utilise these resources across a broader range of offerings, effectively expanding our marketplaces.
- Diversification enables growth through economies of scale. This benefit is closely linked to the first one but speaks directly to the financial advantages of diversification. A related diversification approach meant we could reach new customers without the need for significant investment into the structures we already had in place. The resulting economies of scale have provided and will continue to deliver sustainable business and profitability growth.
- Diversification creates customer demand. While any successful business knows that listening to your customers is key to growth, it’s also possible to grow your business by creating products, services and solutions that inspire demand. We have first-hand experience of the power of diversification to create demand and build entirely new markets, as demonstrated by the stellar growth in demand for delivery of groceries, cosmetics and other household items – such as French natural beauty brand, Yves Rocher, and Healthy U, a health food and supplement provider,none of which had even been considered necessary by customers until we presented the option to them.
As the growth in demand for the convenience of diverse, on-demand commerce continues to accelerate, with positive knock-on effects for all our partner restaurants, merchants and delivery people. We believe that this growth trend will continue unabated for some time to come, and Uber Eats Kenya is well-positioned and ready to diversify further, to leverage it for further growth.