Imagine discovering a terrible rash on your baby’s legs after applying what you thought was a reliable, high quality baby lotion. You would probably feel a mix of confusion, frustration, disappointment, and ultimately fear. You start wondering what other products might have harmful ingredients that could affect the health of your baby. You also realize there is little possibility of getting your money back from the store-owner you bought the product from just a few days ago. This was the reality for Alice*, a working professional in the banking industry and busy new mother of a 6-month old baby girl. A few months ago, she purchased baby lotion from a traditional local market and after the rash experience, she realized she could not trust every product available at her corner shop. Unfortunately, poor quality and counterfeit personal care products are all too common in many African markets.
Shortly after this experience, her friend recommended and convinced her to try ordering from Kasha, an e-commerce company focused on women’s health and personal care. Their online products were labeled as authentic from trusted manufacturers like Johnson & Johnson and they offered the convenience of home delivery. Given her hectic schedule and concern for her baby’s well-being, this seemed like a godsend. After seeing the wide variety of quality products offered and experiencing their attentive customer service, Alice was sold. She has since become one of Kasha’s most loyal customers, using the platform for 90% of her family’s personal care needs, and happily shared her story with us when we visited Rwanda.
The issues of building trust with customers and ensuring reliability of product quality and delivery are exactly the challenges faced by both traditional retail channels as well as existing e-commerce retailers like Jumia. Another common issue is the stock-outs of high priority items like infant formula. Although no one has fully cracked the code in a market where e-commerce and modern trade are relatively new, Kasha is aiming to tackle all these concerns with a customer-centric approach where they co-create the platform with their customers’ feedback in mind, walk them through the ordering and delivery process, and offer quality guarantees on all products.
We have now watched Kasha grow over the past two years and are proud to announce the closing of our recent investment in their Pre-Series A round as their lead investor. At VestedWorld, our investment thesis is to find promising young startups that will be commercially successful, develop the ecosystem in which they operate, and improve the lives of the communities they serve. With Kasha, we hit the trifecta. What follows are some of the reasons we are so excited about this investment.
What are the problems that need solving?
The International Conference on Family Planning took place in Rwanda in November 2018 and one of the key objectives was to identify the steps required to enable an additional 120 million women to access voluntary, quality contraception by 2020. Of course, Kasha, being founded in Rwanda, was at the center of all the action. In addition to providing access to contraceptives, Kasha also offers a variety of high-quality menstrual care, pharmaceutical (HIV and pregnancy tests), and personal care products (hygiene, skincare, beauty) which has historically been a challenge for low-income communities in emerging markets. The stigma is real, products are often low quality, and the prices for premium quality are unaffordable. This results in millions of women exhibiting unsafe or unhygienic practices as well as young girls missing school due to shame or discomfort.
Separately, for middle and high income women, current options to purchase personal care and health products include supermarkets, general e-commerce marketplaces, pharmacies, and small local markets. However, none of these currently serve as a trusted source for women to access products for themselves and their families in a convenient and confidential manner. Supermarkets and pharmacies require sitting in notoriously bad traffic and the risk of public exposure. Small markets and online marketplaces incur a higher risk of counterfeit or poor quality products and customer service is unheard of.
Why is Kasha’s approach the right one?
First of all, an e-commerce platform is direct to consumer, so all the unnecessary middlemen that make essential products more expensive are cut out. However, unlike traditional e-commerce platforms, Kasha is uniquely targeting women across income segments and reaching them where they are at. For low income communities, they are using a sales agent model along with USSD ordering, which doesn’t require smartphone access. These agents are trusted within their communities and are usually enterprising women themselves who are looking to improve their families’ lives. For middle and high income customers, in addition to standard e-commerce, Kasha holds pop-up shops and community events for customers to touch and feel the product in order to build trust. They also work directly with manufacturers, pharmacies, and verified distributors to ensure all products are authentic and of the highest quality. Ingrained in all these methods of distribution is an element of confidentiality and care that is often missing from other actors in the market. This is truly what differentiates Kasha in the eyes of customers as well as investors like us.
The beauty of Kasha’s platform is that it caters to a variety of customers, including students, young professionals, low-income women, and new mothers. That means there’s a possibility of retaining a customer for life, from adolescence through adulthood.
Echoing Alice’s story, one of the customer segments we’re most excited about is new mothers. Diapers and infant formula are a huge need and our research suggests that new mothers are spending $1,000 annually on just these two products. We believe Kasha is perfectly positioned to serve this growing segment.
Why is now the right time?
From a geographic standpoint, Kenya and East Africa more broadly are leading the way for mobile connectivity and payments, which allows a platform like Kasha’s to thrive. Technology weaves itself throughout Kasha’s business model from customer acquisition, order placements, and consumer data insights. As of December 2017, Kenya has reached 85% internet penetration¹, and 83% of internet traffic in Kenya is coming from mobile². Based on a recent survey we conducted of over 300 young women in Kenya, 70% are likely or somewhat likely to use e-commerce to buy personal care and health products.
Evidenced by the recent conference in Kigali, family planning is a high priority issue for several governments across Sub-Saharan Africa. Since their incentives are aligned, Kasha has built strong relationships with regulatory agencies in both Rwanda and Kenya. This is critical especially when touching the world of healthcare and development.
From a macroeconomic standpoint, rapid urbanization is occurring across Kenya and other East African countries. With that comes an increase in purchasing power as more people are entering the formal economy. Ultimately, this is leading to a greater emphasis by consumers on both self-care and care for their families. McKinsey says Africa’s beauty and personal care market is growing at a CAGR of 8.24%, driven by the rapidly expanding middle class. In Kenya, women are reportedly spending 12% of their income on beauty and personal care³. Even more astounding, African millennials are reportedly spending 56% their income on personal care⁴.
What does the future look like?
Kasha is already working as a distributor for CPG giants like Unilever and Johnson & Johnson (J&J), who are quickly realizing the massive market opportunity for their products in East Africa. This demonstrated interest from global players puts significant weight behind Kasha’s business model as they continue to expand. Unilever is particularly interested in serving low-income communities and have invested in sales agent models around the world. J&J on the other hand is focused on middle-income, urban dwellers. Because of Kasha’s expansive customer reach and access to granular consumer data, these partnerships are already proving fruitful. Given the high costs of gathering consumer insights in Africa, corporates are increasingly looking to local platforms like Kasha to both be a distribution partner as well as a market research tool.
Kasha is also one of the few companies we’ve seen at this stage to already be present in two markets. Since the need they’re addressing is prevalent across multiple countries, we are confident in their ability to first scale within East Africa, then across Africa, and further onward to other developing markets. It truly aspires to be a global force for high-quality, accessible, and affordable personal care for every woman.
Who’s the team behind it all?
In venture capital, we know how important the “jockey” is in the potential for success. Well, we found two great jockeys that we fully stand behind. Not only do Joanna Bichsel and Amanda Arch’s passion for addressing this need immediately shine through (and their customers and suppliers agree), but they’re bringing a unique background in technology, startups, and international development to build creative and impactful solutions that are also financially sustainable. And that’s just the founders. Kasha is supported by a strong, growing team in both Rwanda and Kenya; we’re convinced their Rwanda Country Director, Dianne Dusaidi, knows every single person in Kigali.
In summary, we are extremely excited to be joining Kasha’s team and congratulate them on all their hard work in reaching this stage and for putting up with our extensive due diligence requests. The fun is just beginning as this year will be spent scaling the business in Kenya. We are confident in this team to take advantage of all opportunities and tackle any obstacles that come their way.
*Name has been changed to protect the identity of Kasha’s customer