After assisting more than 10, 000 small enterprises for five years, Notify Logistics, a prominent supporter of SMEs in Kenya’s retail sector, announced its closure. This comes after a statement that it failed to remain viable due to high operating costs.
When the business started in 2018, it had a pretty good business plan: it would rent shelves to merchants so they could run their businesses.
But one of the directors of the startup says that it became hard to keep going because even the businesses that their partners started didn’t work. Also, it was found that Notify was spending up to KES 800,000 per month on three flours for its mall, which was a huge amount of money.
As a result, it closed both of its branches in Nairobi and Mombasa. Notify Logistics also says it stopped taking on new suppliers because auctioneers were making threats against it.
And even though Notify raised KES 45 million a year ago, it doesn’t seem like the money helped the company turn things around.
Read: Sendy, Kenyan Logistics Company, Lays off 10% workforce
This is coming from the news that startup Kune Foods shut down a few weeks earlier. The company, which had initially raised millions of shillings, was criticized by its clients after its CEO said something controversial.
Additionally, it struggled to stand out from the city’s dozens of competing meal delivery applications. FoodsFoods’ Downfall?
“Since the beginning of the year, we have sold more than 55,000 meals and acquired more than 6,000 individual customers and 100 corporate customers. But at $3 per meal, it just wasn’t enough to sustain our growth… Coupled with rising food costs deteriorating our margins, we just couldn’t keep going.
This was a portion of the statement made by Robin Reecht, the founder and CEO of Kune Food, as he for $3.
Many in Kenya prefer to eat meals prepared at home and only buy food when out with friends or at work. On average, many Kenyans who work and purchase lunch each day spend at least $1 a day on food.
This was Kune Food’s target market when they first started, and they committed to providing Kenyans with cheap meals. It was fantastic news for Kune Food customers who couldn’t always make it to their physical locations that the company went ahead and launched an app through which people could purchase food.
More from Notify Logistics
In February 2022, Kune Food released its mobile app, and business was booming for the startup at the time. The new company even said that investing in its own production and mobile app could save money on infrastructure costs, which would be passed on to customers in the form of lower meal prices.
“Over the past few months, we’ve seen a huge rise in demand thanks to our changing menu and financing, and it was clear that Kune Food had nowhere to go but up. Launch Africa Ventures, a pan-African venture capital firm, helped the startup raise $1 million in June 2021 through a pre-seed investment round.
It is strange for a firm to shut down after a year with a capital of $1 million. Let’s examine this in more detail.
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At an average price of $3 per meal, Kune has sold 55,000 meals, implying they likely made $165,000 during their time in business.
They had acquired 100 corporate clients and 6,000 individual clients, which would have been a good clientele for the startup to continue operating, but not enough to gain profit for the business.
This could be one of the reasons why Kune Foods opted to shut down operations in Kenya.