Cheki Africa Media runs cheki.co.ke, a Kenyan online car classifieds business. The company also has dedicated websites for Nigeria, Ghana, Tanzania and Uganda. How we made it in Africa’s Dinfin Mulupi speaks to Carey Eaton, founder of Cheki Africa Media.[hidepost=9][/hidepost]
Tell us more about how you started the business?
I am a Kenyan but I lived in Japan in the mid-1990s and witnessed the consumer internet revolution. I worked for a big, global recruitment company and ran their internet business for eight years. I got a lot of experience working in the large scale internet business in emerging markets. I started Cheki in 2010 and through partnerships I have made investments in other internet businesses like BrighterMonday.com and Jobberman.com, which are jobs classifieds sites in east and west Africa respectively.
Cheki is quite popular. Why cars?
I found it much easier to start compared to other classifieds businesses. I think the car market here was ready for disruption. Our research showed that before the internet came there were maybe five ways you could buy a car. Either through the newspaper or drive up and down [Nairobi’s] Ngong Road. You could also talk to friends but that limited the number of cars you could choose from; import from Japan which was very risky; or get an agent who would charge heavily. All the ways to buy a car were very bad user experiences and high risk activities. Car sellers also had a very limited exposure and paid high agency fees.
We started Cheki to create a marketplace for buyers and sellers. So far we have 350 dealers. To succeed in this business over the long term it takes an investment of millions of dollars. We are building a brand and that’s an expensive business. To actually deliver an active marketplace you have to invest in IT, sales, legal, accounting services and credit control and all the normal functions of business. Building websites and building a business are completely unrelated activities.
Describe your revenue models?
We have two streams. We charge private sellers Ksh. 500 ($6). We also have 98% of the car dealers in the Kenyan market. They each pay Ksh. 20,000 ($238) per month, which is a bargain. These dealers are selling large numbers of cars. Kenyans spent Ksh. 5 billion ($59 million) last month on cars. Surveyed buyers show that about 60% of these sales were connected via the Cheki service.
We have a very strong focus on the accuracy of listings. You cannot monetise false listings. The cars on our site are genuinely for sale, only 6% of them will have been sold the day before and 95% of them were photographed and physically verified by our own team. Many budding internet entrepreneurs underestimate the attention to detail that is needed to build a trusted market place.
What challenges do you face?
[We are] trying to grow the confidence of Kenyans in the internet as a trustworthy medium for commerce. Finding experienced talent to work with is also a challenge in a young industry. Negotiating prices and getting money out of car dealers is not for the faint hearted!
You also have a dedicated site for Nigeria. How does your business in Nigeria compare with Kenya?
Cheki is doing better in Nigeria than in Kenya yet it is a year younger. We think the Nigeria market could be six to eight times bigger. Of course it has its challenges like in payment because mobile money is not that big. The cost of data and data speeds is a challenge for our consumers.