Notify Logistics, a start-up company running a rent-a-shelf model is closing down after nearly five years citing an inability to break even from high operating costs.
The company that started in 2018 has announced the closure of its Notify Mall along Nairobi’s Moi Avenue. It also operated a shop in Mombasa which it has since closed.
The company’s model was built on leasing space and then renting it out to many small enterprises that were unable to afford a physical outlet on their own or hire someone else besides the founder/owner of the business.
The businesses would pay an annual fee of Sh20,000 or about Sh1,700 per month for the shelf space that came with shop attendants. The model also meant that the enterprises did not need to get licenses.
“It has become extremely hard to maintain and the thing is we were getting unstainable with the vendors,” said Helen Nyambura, one of the directors of Notify Logistics.
“We were paying Sh800,000 per month for the three floors and we were just facing auctioneers. We stopped taking vendors and we also had issues with management. It has been a salad of many issues.”
In August last year, Notify Logistics announced that it had raised Sh45 million in a seed round to promote entrepreneurial ventures and their growth in the retail sector.
Notify Logistics is the latest startup to close shop after Kune Foods which folded up after failing to raise Sh30 million from a French investor for operations amid rising costs which the company said made operations unsustainable.
Kenya has become a hotbed of innovations, witnessing the launch of many businesses by local and global entrepreneurs seeking opportunities in solving problems for consumers and enterprises.
Notify Logistics had sent a notice communicating the closure of the Moi Avenue premises.
“Dear vendors, we regret the closure of Notify Mall in Moi Avenue, Nairobi. We request all vendors to stock out their operations on Monday and Tuesday August 30 being our last day. Sorry for any inconveniences caused,” the company said on its Instagram page.
The company pioneered the rent-a-shelf model in the country in 2018 by offering shelf space to businesses at lower rates compared to normal retail space.
The move targeted merchandise and e-commerce businesses and was expected to reduce the cost of doing business for small enterprises.
The firm was also undertaking sales and deliveries of stock on behalf of the vendors. It charged a marketing fee of 6.5 percent of the product value but stopped after two months.
The model was supposed to cut rental costs charged between Sh12,000 to Sh40,000 by landlords on smaller subdivided retail shops around the city.
The business has attributed the closure to the inability to keep up with the high costs of operations.