Hello followers, Welcome to another day of our *CEREALS BUSINESS TRAINING*.
Starting a wholesale business in Kenya should not sound intimidating. With the right tools, mindset, and business strategies, you can create a thriving wholesale business in Kenya.
Starting a business venture is not easy, especially when you have little to no experience running a business.
There are so many risks involved, and raising the needed business capital may too be a problem. The best thing is that determined entrepreneurs don’t give up quickly, therefore in today and tomorrow`s training, you will learn on how to start a wholesale business in Kenya and reap big.
In order to succeed, it’s important that you know how much inventory you are going to need and how much money you’ll need for startup costs. You should also make sure that the
products are something people want and that there’s enough competition in your area so that it won’t be hard to sell.
What exactly is a wholesale business?
A wholesale business sells items in big numbers to resellers, businesses, or individuals that buy in bulk. As a wholesaler, you will distribute products or services to retail establishments, then sell them to consumers.
Why should you establish a wholesale business in Kenya?
There are several advantages to working in the wholesale industry. You will be able to sell in quantity.
Operating a wholesaling business entails doing business with other businesses (Business to Business). It is also more profitable than B2C. (Business to Consumers). When you sell in volume, your items move faster than when you sell to individuals.
Furthermore, increased volume equals more significant revenues in a shorter period. Business-to-consumer sellers will need to sell more single items to achieve consistent earnings.
Unlike the business-to-consumer sellers, you get consistent bulk sales because you deal with retailers and not consumers as a wholesaler. On the other hand, a retailer may have a good number of customers today and none the next day. It is because customer purchasing habits alter from time to time.
Once you have continuous sales, your revenue is similarly consistent. Anyone looking for a stable and reliable source of income may consider starting a wholesale business.
Below are important things you need to know when starting a wholesale business in Kenya.
1. Do thorough market research.
Market research is a very crucial step when starting any business. It is even more critical if you want to focus on wholesale business. As a wholesaler, you need to understand your target market. Ask yourself, who is your target market? What is your product?
Remember that choosing a product that sells fast is crucial; otherwise, it will be hard to continue with the business if you have slow-moving merchandise. Not only will slow-moving products affect your income, but it is also expensive to operate in the end.
Another thing you need to consider when doing your research is your competitors in the market. Capitalize on their weak points and learn from their strong points of selling. This will help you stand out from the competitor.
Also, identify places/markets with less competition.
2. Learn how to price your products for wholesale.
Setting up an effective pricing strategy is the most challenging and critical part of the wholesale business. You don’t want to price your product too low or too high to scare your customers.
You need to make a profit, and your retailers need to make a profit. The best way to come up with the best price is to factor the cost of buying your products from the farmers, transportation costs, labor, and overhead costs.
The majority of your customers being retailers doesn’t mean that you won’t have the end consumer as your buyer. You should have enticing pricing tailored for retailers/customers buying in bulk and also different prices for final consumers.
3. Understand the buying behavior of your retailers.
The customer’s buying behavior differs from one industry to another. Some of your customers might be business owners, while others might be dedicated buyers meaning they are buying on behalf of a company/school/organization.
Also, as a wholesale business owner, you need to know whether your customers make frequent purchases or buy in seasons.
4. Have an eCommerce strategy.
The world of business is rapidly shifting, and buyers want to place orders with their feet up on the table in their living room. That begs you to have an eCommerce strategy for your wholesale business in Kenya.
It doesn’t matter what kind of goods you are selling, you need to have an eCommerce strategy to help you sell faster. And give your customers an excellent purchasing experience.
You should note that with an eCommerce store, it is crucial to have a swift delivery system so that customers can get their goods on time.
5. Learn how to market your business.
Unless you let people know that you own a wholesale business, you will never sell. Marketing is the backbone of any business.
You need to have an effective marketing strategy that not only generates a good return on investment but also increases your brand awareness. You can utilize all the marketing channels, both online and offline, to promote your wholesale business.
Social media makes marketing more accessible than ever. You can create a Facebook page, for example, for your business and advertise your business to potential customers.
With creativity, you can double your sales through organic traffic to your eCommerce store.
Google also provides Google my Business, which helps business owners create profiles for their business online so that people searching online can easily find your wholesale business.
6. The strategic delivery process is vital.
Selling products in bulk requires a good delivery process. If you plan on delivering the goods to your retailers, then it is best to invest in good vehicles that will make the whole process seamless.
When buying the vehicle, put into consideration the type and nature of your products.
Also, to minimize delivery costs, you can find a market where many of your buyers are close to each other.
A LOOK AT THE PRICES OF BEANS AND LEGUMES ACROSS KENYA
In Kenya, beans are not just beans. Consumers know their beans’ variety and preference. If you have beans in your store, especially Rosecoco, this is the perfect time to make millions because the highest price of a 90-kg bag is averagely at 11,600 shillings.
In Kakamega, a 90-kilogram bag of wairumu beans is at 10,000 shillings which are the highest compared to Nairobi where it is going at 7,000 shillings.
Bungoma has a relatively high price of Wairimu beans which is at the price of 11,200 shillings per every 90-kilogram with some places like Eldoret and Kisumu selling at 8,000 shillings.
In Karatina and Eldoret, a 90-kg bag of Wairimu beans is going for 6,500 shillings which is much cheaper compared to other parts of the country like Bungoma which has the most expensive prices in the market at the moment.
In Nairobi, a 90-kilogram bag of Rosecoco is at 10,600 shillings. Currently, Rosecoco is the most expensive in the market.
In Kakamega and Bungoma, the price of a 90-kilogram bag of Rosecoco is going for 10,200 and 10,000 shillings respectively.
In Nairobi, the price of Yellow beans and Nyayo is at 11,000 and 8,000 respectively which is more expensive compared to other parts of the country like Kisumu and Mombasa selling at 9000 and 7,000 shillings respectively
The ordinary “ndengu” is the least popular variety, the reason being the small grain makes sorting of the product challenge.
A 90-kilogram of legumes is at 6,000 shillings in Nairobi, 7500 shillings in Kitale, 6000 shillings in Isiolo, and 6,500 shillings in Nakuru.
The market for beans is overwhelming, both locally and internationally. They particularly fetch better prices when it is not harvesting period and currently, the prices per 90-kilogram bag range between 6,000 shillings and 12,000 shillings depending on its quality and type.
However, some varieties of beans are more expensive than others. The rosecoco and kidney beans, for instance, are a bit pricey compared to the other varieties which are available in large quantities. Beans with a high supply across the country will fetch a lower price compared to those that thrive in specific areas.
Irrespective of the type of these legumes, there is always a market. Also, since it is a grain, you can store and sell it when the prices are high.
A LOOK AT PRICES OF MAIZE, MILLET AND RED SORGHUM IN NAIROBI AND KITALE
The wholesale price of a 90 Kg bag of maize is going for 3,330 shillings in Nairobi and 2,970 shillings in Kitale.
Market Vendors are then selling the 90 Kg bags of maize at retail prices of 3,600 shillings in Nairobi and 3,300 shillings in Kitale, each.
For every 90 kg bag of maize, market vendors are making a profit of 270 shillings in Nairobi and 330 shillings in Kitale.
The prices of both millet and sorghum have continued to go down, good news for most parents and schools which provide porridge for breakfast.
In December the price of a 90 Kg bag of millet was 9,900 shillings. As of January, the price of millet was at 9,180 shillings.
Likewise, the price of red sorghum in Nairobi had gone down by 22.85 percent from 7,700 shillings in December to 5,400 shillings in January.
Market vendors in Nairobi are making a profit of 630 shillings for every 90 kg bag of millet they sell, after having bought the bag at 8,550 shillings.
In Kitale, market vendors are making a profit of only 90 shillings for every 90 kgs of millet they sell, from a wholesale price of 4,950 shillings.
Here is a summary of the prices in the image below:
KITALE HOLDS THE LOWEST DRY MAIZE PRICE ACROSS THE COUNTRY
Maize has been harvested in most parts of the country and the prices for a 90-kilogram bag range between 2,500 shillings and 3,600 shillings.
Kitale, being in Trans-Nzoia County where large-scale farming of the cereal is done has the lowest market price of 2,500 shillings whereas Kisumu and Kitui have the highest price for the same quantity of 3,600 shillings.
A 90-kilogram bag of Finger Millet is being sold as follows in selected towns across the country: 9,600 shillings in Kisumu, 9,000 shillings in Mombasa, 8,100 shillings in Nairobi, Eldoret and Kitui respectively and 6,300 shillings in Kitale.
The table below gives a summary of market prices on different cereals:
A 110-kilogram bag of Groundnuts was averagely being sold at an average market price of 13,001 shillings across the country. The highest price stood at 17,600 shillings in Kitui while the lowest was 11,250 shillings in Eldoret.
A 90-kilogram bag of Rosecoco Beans, on the other hand, was being sold as follows: 9,000 shillings in Eldoret and Kitui respectively, 8,000 shillings in Kisumu, 7,650 shillings in Nairobi, 6,800 shillings in Mombasa, 6,000 shillings in Kitale and 5,500 shillings in Nakuru.
Check out the table below for a summary of the commodities in the market:
THE STATUS OF WHEAT INDUSTRY IN KENYA
Wheat is the second most important cereal grain in Kenya after maize. Wheat farming in Kenya is largely done for commercial purposes on a large-scale. Kenya is self-sufficient in the hard variety of wheat, but is a net importer of the softer variety.
Wheat growing areas in Kenya include the scenic Rift Valley regions of Uasin Gishu, Narok, Marakwet, Elgeyo, Londiani, Molo, Nakuru and Timau areas. These areas have altitudes ranging between 1200m and 1,500m above sea level, with annual rainfall varying between 800 mm and 2,000 mm, with up to 2,500 mm on higher grounds.
Wheat varieties grown in Kenya include the high-yielding and drought-resistant Njoro BW1 and Njoro BW2. Njoro BW1 is grown in dry parts such as Lower Narok, Machakos and Laikipia. Njoro BW2 performs well in acidic soils, like parts of Uasin Gishu and Nakuru districts. Njoro BW2 produces 35 bags of wheat per acre. Other varieties are the duma and chozi, mainly grown in dry areas, and Kenya heroe and Kenya yombi.
Wheat consumption in Kenya is expected to continue increasing due to changing dietary patterns and a robust food service sector. A growing preference for wheat products is evident across the income groups in both rural and urban areas, with both commercial and home-baking becoming common.
Demand for wheat products is also evident in the growth of pasta, confectionery and breakfast cereals sectors, while a limited amount of wheat is also used in the manufacture of animal feeds.
Wheat requires a number of measures to be taken by a farmer for it to give good yields. For a one acre of wheat to do well, one will need at least 5,000 shillings for leasing land, 1,800 shillings for ploughing and 3,000 shillings for two sets of harrowing. More to these, the farmer will need 1,800 shillings for planting, 3,000 shillings for the fertilizer and 3,500 shillings for seed. Herbicides could take up to 10,000 shillings depending on the weather.
After harvesting, the buying price for wheat has to be at least 3,600 shillings for a 90-kilogram bag of wheat for the farmer to get good profits, but most times, millers tend to take advantage of farmers and end up offering them 3,000 shillings making it hard for most of them sustain themselves in the wheat business the following year.
Kenya’s wheat production is less than one quarter of its annual demand, and the deficit is offset by imports. The bulk of the wheat imports are from Russia, Ukraine, Lithuania, Estonia, Germany, Poland, and Australia.
Wheat imports from the U.S. are primarily for Food Aid programs. Imports into Kenya by registered regional millers are assessed a 10 percent ad-valorem tariff; otherwise the EAC external tariff of 35 percent applies.
Wheat exports from Kenya are minimal, and attributable to limited cross-border trade with the neighboring countries.
FINGER MILLET PRICES HIGHEST IN ISIOLO AND LOWEST IN KITALE
A 90 kilogram bag of finger millet is highest at 9,000 shillings in Isiolo with the lowest price for the same being 4,500 shillings in Kitale. This makes the difference between the the highest and the lowest market price be 4,500 shillings.
The same was being sold as follows: 6,800 shillings in Kisumu, 6,500 shillings in Nairobi, 6,300 shillings in Mombasa and Eldoret, 6,000 shillings in Embu and 5,000 shillings in Nakuru.
GREEN MAIZE PRICES HIGHEST IN MOMBASA AND LOWEST IN NAKURU AND ELDORET
Green maize is in plenty as it is in season in the large scale producing regions across the country.
These regions include Rift-valley, Trans-Nzoia, and parts of Kakamega Counties where green maize is all over the markets and farms. Due to these, a 115-kilogram bag was being sold at 5,200 shillings in Mombasa and 1,200 shillings in Karatina.
Currently green maize is highest in Mombasa and lowest in Nakuru and Eldoret. This is because in Mombasa, a 115-kilogram bag of green maize is being sold at 4,900 shillings while in Kisumu and Eldoret the same quantity is going at 1,600 shillings.
GREEN GRAMS PRICES ARE LOWEST IN NAKURU
Price for a 90 Kg bag of green grams in Nairobi is higher than in Nakuru by over 4,000 shillings.
In Nairobi, the price of a 90 Kg bag of green grams currently stands at 11,340 shillings while the wholesale price is 11,070 shillings. Therefore, for every 90 Kg bag of green grams, market vendors are making a profit of 270 shillings.
156 kilometers away from Nairobi in Nakuru, the price of green grams is a mere 7,200 shillings against a wholesale price of 6,480 shillings.
A kilogram of green grams in Nakuru is 80 shillings while in Nairobi it is 126 shillings.
Green peas, commonly known as Minji is at 5,760 shillings in Nairobi and 5,040 shillings in Nakuru for every 90 Kgs.
Market vendors in Nairobi are making a kill for every 90 Kg bag of green peas because after buying the green peas for 5,220 shillings on wholesale, they make a whopping 540 shillings from retail.
Meanwhile, in Nakuru, market vendors are making a profit of only 180 shillings from a 90Kg bag on retail from 4,860 shillings on wholesale.
Retailers in Eldoret and Kitale are reaping big from green grams which are going at a market price of 12,600 shillings and 11,700 shillings respectively for a 90-kilogram bag.
The table below shows a summary of the market prices:
END OF DAY 10 CEREALS BUSINESS TEACHING SESSION
In tomorrow`s training we shall cover more on Cereals wholesale Business in Kenya.
We now come to the end of today`s teaching session, The PDF of this teaching is available here. Please comment your thoughts and questions below.
