After Kune Foods, Rent shelf startup Notify Logistics is closing down after nearly five years of operation in Kenya citing an inability to break even from high operation costs.
The company announced the closure of Nairobi’s Moi Avenue store through a notice that read ‘“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 is our last day. Sorry for any inconveniences caused,” the company said on its Instagram page. The Mombasa store has also been closed.
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 in charge of sales and deliveries of stock on behalf of the vendors where it charged a marketing fee of 6.5 per cent of the product value which stopped a few months after opening.
Its model was based 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. This means the vendors would cut on licences and other costs such as hiring salespeople.
In August last year, Notify Logistics raised Sh45 million in a seed round that was to promote their entrepreneurial ventures and their growth in the retail sector as reported by the Business Daily.
Speaking on the sudden closure, one of the Notify Logistics Directors Hellen Nyambura said, “It has become extremely hard to maintain and the thing is we were getting unstainable with the vendors. 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.”
Their closure comes a few months after Kune Foods closed shop amid operation issues.