E-commerce offers courier firms new revenue stream

Courier business has experienced a significant growth on expansion in the e-commerce sector, which has become a key enabler in the parcels sector. In the fourth quarter of the 2023-2024 Financial Year (FY), the Communications Authority of Kenya (CA) reported a surge in domestic and international courier traffic which has been attributed mainly to the increasing expansion of online shopping.’

This is as more people shifted from traditional preferences to use their smartphones to tap, swipe, and shop all in the comfort of their homes. The goods are then delivered at home. According to the report, the volume of outgoing local letters and parcels grew from 373,293 and 1.8 million in the previous quarter to 415,818 and 1.9 million respectively in the period under review.

The volume of outgoing local letters also recorded a 60.4 per cent increase, with the letters growing from 1.1 million in the previous financial year to 1.8 million in the 2023-2024 financial year. “Additionally, the number of international outgoing and incoming letters increased from 263,522 and 86,227 to 392,931 and 102,494, respectively during the quarter under review,” the report read in part.

The courier services sector has been experiencing significant increase as more people leverage online shopping, a move that gained traction during the Covid-19 pandemic. The lockdown and subsequent closures of shops led to the rise in demand for courier services as people now exploited the use of internet to buy and sell products online.

Mail volumes

According to an African Advanced Level Telecommunications Institute (AFRALTI) mail volumes had been declining in the five years before 2020. However, the volumes of parcels started increasing countrywide as the uptake of e-commerce grew, especially after the Covid-19 pandemic. Beauty and personal care, electronics, fashion are among the top product categories that Kenyans have been buying online, this is according to DHL.

“Beauty products are flying off virtual shelves, with influencers and tutorials fuelling demand. According to Jumia, beauty and perfume products accounted for 16 per cent of rural sales, making online beauty shopping a go-to for Kenyan consumers,” DHL stated.

It also noted that as the largest e-commerce segment, electronics offer immense potential, adding that from student laptops to home appliances, online retailers cater to diverse needs, offering convenience, competitive pricing, and doorstep delivery. With a growing fashion-conscious population, online platforms have become virtual style destinations. Clothing and shoes are the most popular categories, offering everything from trendy apparel to accessories.

This rise in demand has had a significant impact on the industry, as increase in traffic has led to the subsequent growth in revenue. The private courier operators through national and international courier services during this period grew by 12.1 per cent in 2023 to Sh6.22 billion.