Mitumba business in Kenya deals with the trading of second-hand items such as clothes, bags, and shoes. These could either be local or imported.
Due to the amount of demand and acceptance, the business has become a multi-billion shillings industry employing thousands of Kenyans both directly and indirectly.
Some of these factors such as low startup capital and the ready market continue to attract investors in the industry. Hence, this article will focus on how to start and run a successful mitumba business in Kenya.
What are the advantages and challenges of a mitumba business?
Advantages of Starting a Mitumba Business in Kenya
1. Minimal skill requirement
The mitumba business does not require any major educational or technical skills, unlike other industries that need certain skill levels. The basic concept of the mitumba business is selling second-hand items.
This allows anyone to participate as long as you have the startup capital regardless of your educational background.
2. Low startup capital
This business requires minimal capital for stocking as the items are relatively cheap. There are success stories of business people who start with as little as 1,000 Kenyan shillings. However, you need to factor in other costs such as rent and permits.
3.Few legal requirements
For a mitumba business, you only need to pay for a single business permit. The mitumba business is considered part of the informal sector in Kenya, thus, little legal documentation is required.
Another benefit of the mitumba business is the provision of zero tax levies. Since it forms part of the informal sector, it is exempted from some taxation requirements.
4. Ready market
Kenyans love mitumba clothes. According to a survey done in 2013, 62% of middle and low-class Kenyans consume second-hand items.
Some of the reasons for the ready market are affordability and quality. As a developing nation, Most Kenyans can’t afford new items such as clothes and shoes resulting in relying on the second-hand market.
Challenges facing Mitumba Business
- Getting quality items
Dealing in the Mitumba business involves dealing with second-hand items. Although they are affordable, there could be challenges in form of quality. Some of these challenges include getting items in good order.
How Mitumba Business Model Works in Kenya
Most of the items sold in the mitumba business are usually imported. The main countries of origin are European countries, Canada, Asia, the USA. The quality and price of these items differ with the country of origin.
The items from the European region are considered to be of high quality compared to those imported from Asia. Hence, there are also more expensive.
The importation of mitumba items happens in form of 45 kg bales, and the consignment takes about 6-8 weeks to arrive in Kenya. Due to their bulkiness, the importation happens through water shipping. A normal 40-foot shipping container holds an average of 550 bales.
Mitumba Grading Categories in Kenya
The mitumba items grades are:
- Grade A/crème bale/Camera– The items are in new or near new condition. They have minimal usage and sell higher than the rest of the grades. Some boutiques even resell these items.
- Grade B– They have been slightly used but are still in good condition.
- Grade C– These items have minor defects like stains, which you can correct before reselling. They are sold at a lower price than Grade B items.
- Grade D– These items have major defects. Due to this, they are sold at a lower price than the rest.
It costs between 2,000 to 50,000 to purchase a bale of mitumba depending on the grade.
This mitumba industry in Kenya is usually segmented from the large importers to the small retailers. Importers are usually large traders due to the huge amount of capital requirements. After getting these items into the country, they engage the wholesalers who then sell to retailers all over the country.
The largest second-hand market in the country is the Gikomba market making it the center of the business. Every day, thousands of small-scale retailers and customers visit the market to buy these items.
After purchasing the items in bulk, the wholesale usually ‘break the bale’. This describes the process of opening and selling bale items to the retailers.
How to Start and Run a Successful Mitumba Business in Kenya
1. Market research
Adequate market research is the first step before getting into the business. In this business, you should research to identify the needs for the marker in your area. This gives you awareness of your potential market in areas such as demographics and social status.
This information will be useful in making business decisions such as the items to sell and the target group.
2. Identify your niche
Since there are different groups of mitumba items, you need to identify a niche. Specializing in a specific item gives you an edge over a competitor by ensuring customer needs are adequately met.
Some of the factors that affect the niche include your business location. As an example, if you are specializing in heavy jackets, you need to locate the business in a cold area. The same happens with light clothing.
In the Kenyan setup, heavy clothing will do better in cold regions such as Limuru and Kericho than in the Coast region.
Religion is also a key factor that could influence a niche. Some items would not sell well in a conservative area and vice versa. You may also choose to lonely target in specific areas such as children’s clothing or men’s clothing.
This could also be broken further into specific items such as women’s shoes. Getting the right niche needs a lot of research and market experience. You could also engage successful traders for advice before settling on a niche.
3. Getting a supplier
Supplier is key for your stock management. This applies to all levels of business. For retailers, you need to identify a reliable and affordable wholesaler for your stock supplies.
Some of the elements to evaluate before settling on a supplier include affordability, reliability, and quality.
It is also key to remember bulk buying is cheaper as it’s easier to negotiate for discounts. However, if you don’t have a huge capital outlay, you should not shy from starting small.
Reliable importers have constant consignments coming into the country. This is good for business since it provides you with a variety of options to choose from once you clear your stock.
4. Identifying an ideal business location
Just like most businesses, mitumba business thrives where there is high human traffic. Ideal places for the mitumba business are:
- Near colleges and universities
- The Central Business District
- Open-air markets
Due to the pricing of these items, you require to make a huge amount of sales to achieve breakeven. Hence, the need for heavy traffic.
Identify a place with high human traffic, especially those on foot, before setting up your business. Some of the common business structures you can use for your business are:
- Renting a business stall
- Building a stall
- Selling on the roadside
It is advisable to use the hawking technique if you have a few items to sell. By hawking your items, you have a higher chance of selling out your stock without any paid marketing techniques.
However, if you have a huge stock, consider renting a room. If you choose to rent a room, ensure you get a single business permit from your county council office. The permit will require an annual renewal.
If you decide to sell your items in an open-air market, you will often pay a daily entrance fee at the gate. The charges depend on the market
5. Start your business
If the above checklist is complete, you are now ready to start operation. This calls for hard work and persistence.
Breakeven in business takes time. It could take up to one year to establish a list of loyal and frequent customers before the business becomes profitable consistently.
Is the Mitumba Business Profitable in Kenya?
With the right strategies and business practices, the business is profitable and could be your full-time job. This is because there is a ready market with over 30 million Kenyans consuming the product regularly.
The profit margins in the business could average between 50% -100% depending on the market. Less the overheads, you could make a profit of 20% of your capital monthly.
As an example, a capital investment of 100,000 shillings could give you 20,000 shillings monthly profits on average.
Trends in the Mitumba Business
The traditional mitumba business involved selling the clothes in a stall, market, or hawking them. However, this is changing with technology changing the marketplace. Currently, it is possible to have an online shop where you can reach your customers through the use of the internet.
Due to the billions of people using social media platforms, these sites are exposing businesses to an even bigger market than would be possible physically.
Some of the common trends in the mitumba business are;
Social media advertising– A common practice in the mitumba business is the use of social media sites for advertisement. All you need to do is have good pictures of your items for the customers to review. The main social media sites used to advertise mitumba items are Facebook and Instagram.
Online shops– It is very easy to launch a business nowadays without having to rent out any office space. With businesses incorporating social media advertising, it is not mandatory to have a physical shop. However, you need to plan on the delivery process if you are using an online shop.
Home delivery– This strategy works for the customer who doesn’t have the time to make it to the shop. The delivery costs are calculated as an extra charge to the customer. This approach is getting a lot of customers as the delivery systems and processes become more inclusive.
Websites – This strategy best works for grade 1 mitumba items. Profitable mitumba businesses seek the services of a web developer who creates an online shop for them. In this business model, the customer orders the items on the website on a self-service basis. After making an order, you are then required to fulfill it per the terms.
How to Run a Profitable Mitumba Business
- Keep a record of your business finances
Similar to all other businesses, good financial management is a key step to business profitability Keeping a record of the business expenses and income helps keep up with the changing costs. This enables faster and more relevant decision-making. It also helps separate business capital from personal finances.
- Employ trustworthy and reliable business staff
Staffing is a critical element in the success of the business. Some of the elements such as integrity and the right skill level is key for business success.
The staff should also have good people’s skills, to ensure customer satisfaction. some of the skills necessary for this job are financial skills and sales and marketing skills. Other key necessary skills should be negotiation skills and customer service skills.
- Listen to your customers
Customers are the force behind business success. A good businessperson listens to the feedback given by the customers.
Listening and responding to the customers’ needs will keep your customers happy resulting in to increase in sales revenue.
- Selling quality products
Growth in this business requires offering high-quality products. This ensures customer satisfaction and loyalty. Through this, you will develop a regular customer portfolio that will be key for the business in the long term.
Conclusion on Mitumba Business in Kenya
The mitumba business in Kenya is a profitable venture as long as you follow the standard business practices. It is already offering thousands of jobs to Kenya and the market keeps expanding.
Don’t shy from venturing into the industry if you have the ambitions and will to go through the process. This could be your key opportunity for becoming a millionaire.
To recap, the process of starting a mitumba business in Kenya is:
- Market research
- Identify your niche
- Getting a supplier
- Identify an ideal business location
- Start Operations