Hello followers. Welcome to another day of our CEREALS BUSINESS TRAINING.
A LOOK AT GROUNDNUTS PRICES IN KENYA
Farmers are reaping big on groundnut farming and it is estimated that a 100-kilogram bag is at an average of 15,500 shillings.
Kenyan farmers have shown great interest in high-value crops like groundnuts thus embracing them more as compared to maize, beans, and other crops that were considered profitable.
Households in Busia are paying more for red groundnuts as a 100-kilogram bag of Groundnuts at 16,388 shillings compared to those in Nairobi who are buying the same quantity at 12,600 shillings.
Traders in Mombasa are buying the same red groundnuts at a price of 14,100 shillings, while in Kisii, 100 kilograms of groundnuts are being sold at 10,400 shillings which is the lowest compared to other towns like Busia.
The price for the same commodity is 14,000 shillings in Nakuru, while in Eldoret, the price is 9,900 shillings. In Kakamega, the price is at 10,000 shillings while in Kitale at 15,500 shillings.
Those in Kajiado are buying the groundnuts at 11,000 shillings, 12,433 shillings in Embu, 16,388 shillings in Busia, and 12,600 shillings in Nairobi.
White big groundnuts are being sold at an average price of 180 shillings as a 100-kilogram bag being sold at 17,000 shillings wholesale.
White medium groundnuts are the most expensive as the 100-kilogram bags being at 17,500 in a wholesale while at retails it is being sold at 185 shillings.
A LOOK AT CASSAVA PRICES IN KENYA
Cassava is grown widely in sub-Saharan Africa and it is the cheapest source of energy known. It provides 300 calories a day to 200 million people in Africa. It can be eaten as fresh roots or processed into products such as flour, crisps, starch and the leaves eaten as green vegetables.
In Kenya, cassava is grown in the Coastal, Central and Western regions of Kenya. The Coastal region is characterized by lowland ecology, low altitude, high rainfall, warm and humid temperatures; Central is characterized by low to high altitude areas mainly semi-arid areas, cool and warm temperatures; and Western Kenya is characterized by mid altitude, medium to high rainfall areas, warm and humid temperatures.
90 percent of cassava produced in Kenya is consumed as food, hence the need to expand the value chain and increase production to meet the industrial requirements for cassava. The tuber is the cheapest source of energy and has the potential for providing the country with the needed Food, animal Feed and Fuel.
Fresh cassava is retailing highest in Isiolo town compared to other towns across the country.
This follows a market survey On different market commodities that showed A 90-Kilogram bag of fresh cassava was being sold at 3,500 Shillings in Isiolo while Mombasa had the lowest price 2,200 Shillings.
Cassava is excellent for food security because of its high yielding ability, it is easy to cultivate and is relatively tolerant to low soil fertility and drought. It is flexible in farming and food systems.
It can do well in marginal and stressed environments and still give satisfactory yields where most other crops like maize fail. It also has low labor requirements and can remain in the ground for over two years without spoilage. This makes it very valuable as a famine reserve crop.
Despite this potential, cassava’s product development is highly unexploited in Kenya. Its production is characterized by low use of inputs, use of rudimentary technology, large post-harvest losses, minimal processing, unreliable supply, inconsistency in quality of products, low producer prices, costly marketing structure and low utilization of cassava in the industrial sector
Key challenges facing the cassava subsector include Poor infrastructure leading to high transportation costs, quality deterioration of chips/flour during storage and transportation
caused by lack of quality storage material, lack or shortage of enough cassava processing facilities, unreliable demand, Minimal production by local farmers thus discouraging investment in the higher levels of the value chain.
Cassava farmers also lack information regarding supply, demand, recommended cassava varieties and where they can be found. This leaves them in the dark as they are not able to establish the best variety of the tuber that can lead to high yields. Lack of capital and credit to facilitate production and milling is also a great challenge to those who are passionate in venturing into this sector of investment.
Expanding the cassava value chain is the best way of meeting the country’s food demand and is the surest way of increasing cassava production to sustain the evident demand for cassava. This is one area that has a number of advantages and investment opportunities that include export in the regional market, making of dried chips, use in the fuel and bio fuels industries and animal food manufactures.
Cassava is also a food that is much sought currently due its nutritional values especially by people living in cities like Nairobi, Mombasa and Kisumu.
A LOOK AT NDENGU PRICES IN KENYA
In Nairobi, the 90 Kilogram bag is currently being sold at 11,100 shillings, 12,000 shillings in Kajiado, 13,500 shillings in Kitale, 6,000 shillings in Isiolo
A 90-kilogram bag of ndengu (green grams) is at the highest price in Kitale, at 13,500 shillings and lowest in Isiolo at 6000 shillings.
In Nairobi, the 90 Kilogram bag is currently being sold at 11,100 shillings, 12,000 shillings in Kajiado, 13,500 shillings in Kitale, 6,000 shillings in Isiolo, and 6,500 shillings in Nakuru.
Another variety of Ndengu, like Polish/Nylon, varies from the ordinary because of their polished look, hence the name Polish or Nylongreen grams is also retailing at an average of 143 shillings per kilogram.
The same polish/nylon variety is retailing at 122 shillings in Nairobi and 71 shillings in Kitale, 85 shillings in Rwanda; Gicumbi, 86 shillings, Uganda; Lira, 49 shillings, Tanzania, Kigoma, 56 shillings, Iringa, 104 shillings.
Kenya Dengu, Makueni/Uncle variety of green grams, is being sold at a retail price of 130 shillings and 125 shillings wholesale price. A 90-kilogram bag of the same is going for 11,250 shillings.
The Ndengu special is preferred over the ordinary Ndengu due to its filling and does not cause heartburn or digestive gas. It is being sold at a retail price of 80 shillings wholesale Price 65 shillings and 100-kilogram bag retails at 6,500 shillings
A LOOK AT PRICES OF DIFFERENT PORRIDGE FLOURS ACROSS KENYA
Porridge, commonly known as Uji, is a common breakfast delicacy in most Kenyan schools, both secondary and primary. It is also used in weaning babies and is a source of important nutrients for small children.
The price of a kilogram of Pure Wimbi (Millet) flour is being sold at an average retail price of 123 shillings across most towns in Kenya.
This pure millet flour is mostly used in Kenyan households for breakfast porridge and highly recommended as a maize substitute for ugali for diabetic customers.
A 90 Kg bag of this millet flour is currently being sold at an average wholesale price of 8,820 shillings.
In Nairobi, the wholesale price of a 90 Kg bag of millet flour is being sold at 8,000 shillings while in Nakuru and Mombasa, the same amount of millet flour is going for 7,000 and 7,500 shillings respectively.
Meanwhile, Mtama (Sorghum) Flour which is also used for breakfast porridge is being sold at a uniform retail price of 5,000 shillings per 90 Kgs across Nairobi, Kisumu and Mombasa markets.
Wholesale prices for Sorghum flour in major towns across the country are as follows; 4,500 shillings in Nairobi and Kisumu and 4,000 shillings in Mombasa.
Sour Flour, a mixture of lemon, millet, cassava, and acetic acid is being sold at an average retail price of 57 shillings per kilogram, and a wholesale price of 51 shillings while a 90 Kg bag is being sold at 4,950 shillings.
The sour flour is mostly popular with primary and secondary schools as it provides a healthier and cheaper porridge. Other names for the sour flour include fermented flour, unga imechacha, Kuchacha, kuganda etc.
Omena (Sardine fish milled with Red Sorghum Grain) flour, Unga Wasamaki is being sold at a retail price of 101 shillings and a wholesale price of 88 shillings per kilogram.
The Omena flour is mostly popular in porridge especially as a rich source of calcium for children, and an excellent traditional Africa way of ensuring small children sufficient Omega 3 intake.
Njugu Mtama (Groundnut Milled with Sorghum) flour, which is also used for making porridge for children, and is rich in Magnesium is selling at retail prices of 113 shillings and wholesale prices of 88 shillings per kilogram.
Have a firm wholesale business plan
Business planning is a cornerstone of wholesale business management. A good business plan is a roadmap to the future of your business, telling the story of what the business will achieve, how it will achieve this and when.
The three main reasons why your wholesale business should have a business plan is that it’s a smart tool for developing effective growth strategies, helps you determine future financial needs, and attracts investors and lenders.
The wholesale business plan should include:
A mission statement. This is a summary of the company’s purpose, values, and goals. It answers the question of who you are as an organisation and what you stand for.
Business objectives, including strategic, financial, operational, and marketing goals.
An executive summary that provides an overview of the business, and a snapshot of the entire business plan.
Products and services the business provides, and the perceived problems they solve.
Analysis of your industry and your competition, including the business structure and details of your customers, suppliers, and partners.
A market analysis and customer segmentation to determine who is your target audience – along with marketing and operational plans that outline tactics necessary to reach this audience.
Your unique selling point; or the ‘why’. This is your value proposition that tells consumers what makes your products and services better than those of the competition.
Making a business plan sounds obvious – but ensuring you have a robust plan that includes points like market analysis takes time and effort, including thorough market research
Establish your wholesale business pricing strategy
A robust pricing strategy is crucial to creating a profitable wholesale business and should factor in cost, wholesale price, and recommended retail.
Selecting the right price in wholesale business management is about maintaining a balance between sales volumes and profitability. The goal is to cover costs and create a sense of value for customers – and for you to stay competitive and ultimately profitable.
Wholesale pricing is based on the principle of selling bigger volumes at a lower markup. Typically, a wholesale business will offer retail customers a 50% discount off their regular retail price, allowing them to offer competitive prices to their customers, while also maintaining a healthy profit margin.
Because a wholesale business has less need for expensive marketing or maintaining physical stores, their operating costs are generally lower than those of retail. Wholesale businesses can therefore still make significant profits with lower margins.
Promote your wholesale brand
Wholesalers – just as much as retailers and B2C – need to create brand awareness, because how else will your customers find you or know your brand?
Three key areas to focus on when promoting your wholesale business are:
- Attracting new wholesale customers
- Obtaining more orders from existing customers
- Increasing order size
Automated ordering and shipping encourage more and larger orders from existing customers because it streamlines processes and makes it easier for retailers to place and receive their wholesale orders.
It also provides you with the data to cross-sell and upsell to your customers – since you can make suggestions to your customers based on previous sales.
Hire the right staff for your wholesaling business – and invest in them
Hiring the right staff is important in any business, and this is certainly no different for wholesale businesses.
To ensure you are recruiting the right people you should first identify your business goals and build your team around these.
Consider your long-term business objectives and plan onboarding, skills training, and succession planning in advance.
Evaluate the current situation with regards to existing staffing levels, skills, and performance. How are staff performing and where can improvements be made? What skills are important for necessary tasks to be performed? Are your current employees being offered opportunities to upskill or provide input into ways to optimise tasks and processes?
Answering these questions allows wholesale business managers to not only assess how well staff are performing, but also to determine any skills shortages – or even if staff feel adequately compensated or valued for their contribution.
Foster long-term relationships with stakeholders in your wholesale business
Stakeholders are those people that have a stake in your wholesale business. They can be customers, clients, staff, suppliers, or investors – all of which are important to you wholesale business.
This means stakeholder relationship management is all about creating and maintaining mutually beneficial long-term relationships with all stakeholders – but particularly with your customers, suppliers, and employees.
Communication is key to the success of this relationship. Internal stakeholders are – as the name suggests – stakeholders within the business. For instance, employees are directly affected by business operations and should be treated as such. Companies need to ensure that all their teams are trained and aware of their part in the success of the organisation.
External stakeholders are those people or groups that have an interest in the success of the business but don’t have a direct affiliation with the products or internal operations of the wholesale business.
A supplier is an example of an external stakeholder. Building strong relationships with suppliers puts your wholesale business in a better position to react quickly to external challenges.
Working closely with suppliers can help wholesale businesses manage inventory and implement improvements across the supply chain – for instance, you might implement a vendor managed inventory system to streamline your supply chain, or even cooperate to bring new products to market.
Invest in people. Not just your own staff, who are important to your wholesale business, but also your suppliers, whose input can be vital to your success
Maintain a healthy cashflow for your wholesale business
With inventory stock taking up a large percentage of a wholesaler’s capital, managing cashflow is crucial for a wholesale business. Positive cashflow is necessary for the business to run smoothly, pay its bills, meet customer demand, and make informed decisions about business operations.
The following activities will help ensure your wholesale business has optimal cashflow to maintain operations and to take advantage of future growth opportunities.
Cashflow forecasting. This is a process where wholesalers predict sales volumes and expenditure for the financial year to determine the amount of cash the business will have on hand at any given time within that 12-month period.
Cash reserves. Maintaining enough cash in reserve provides a wholesale business with the money needed to cover employee salaries and business expenses when customers fail to pay on time. This cash reserve will also help keep the business afloat if sales are low. By allocating a portion of monthly profits to a cash reserve a wholesale business can build up a reserve that covers three to six months of expenses.
Demand planning. Effective demand planning enables wholesalers to meet customer demand while avoiding holding high levels of inventory stock. Inventory software solutions are a great tool to help establish accurate demand forecasting. Inventory software helps track stock in real time and provides detailed reports to enhance inventory management.
Invoice processing. Prompt delivery and accurate invoicing is essential for managing cashflow, and also for maintaining a positive customer experience. Wholesale inventory management software can automate invoicing, eliminate human error, save time and reduce costs – all of which will improve cashflow.
Manage your wholesale business warehouse efficiently
Efficient management of your warehouses improves workflow in your wholesale business by providing easy access to products and improving packing and order fulfilment rates – which makes for quicker shipping and better overall productivity.
Automated inventory management technology along with RFID readers and barcode systems help to eliminate mistakes and will help to expedite the time it takes for products to get from your warehouse to your customers.
Wholesale business warehouses must have effective inventory software solutions because supplying to your customers on time via multiple channels can be challenging. An efficient system records all product data and its location in the warehouse, and improves pick-and-pack routes – reducing the time spent searching for items.
When dealing with large quantities of stock, managing your warehouses efficiently can save your staff hours of work and speed up order fulfilment significantly
Set up B2B eCommerce for your wholesale business
Wholesaling businesses need to understand how eCommerce is creating new demands on their business, and how they can adapt to these.
B2B eCommerce offers plenty of wholesale business advantages in terms of time- and money-saving potential.
Automating as many processes, workflows, and tools as possible reduces the need for manual labour and minimises costly errors.
Setting up a B2B eCommerce channel for your wholesale business makes sense because bulk discounts are part-and-parcel in the wholesale industry.
A recent report by Aberdeen found that the top-performing B2B eCommerce businesses were 70% likelier to use automation for invoicing, payments, customer service (chatbots), and contract management than less profitable wholesale businesses.
You can lay the foundation for eCommerce growth by choosing the right tools to automate and streamline processes.
It’a also a good idea these days to offer a variety of ways for your customers to pay.
Inventory management is central to wholesaling, and the best option to manage this is purpose-built inventory software.
Use inventory management software’s for wholesale
Fundamental to any wholesaling business is effective inventory control. Wholesalers generally hold significantly more stock than their retail customers and a large amount of investment and cashflow is tied up in that inventory stock.
That means managing inventory well is crucial to the overall success of a wholesale business – from storage to shipping to customer service and stakeholder management.
Automating inventory management in your wholesale business will improve its competitiveness, which is crucial to wholesalers that deal with large quantities of inventory stock.
Software helps to manage wholesale purchases, sales, shipping, and tracking. Using purpose-built inventory software will increase inventory accuracy, speed up order fulfilment and enable faster responses to changing customer needs.
Automated inventory solutions will also help with meeting demand – with features like automatic stock alerts when SKUs drops below predetermined thresholds and takes into account factors like lead times.
Be ready to adapt your wholesale business when needed
OK, this last point’s not really a ‘step’, but we thought we would include it here anyway, since it’s such a crucial factor for any business that has to manage inventory.
The supply chain disruptions of the last two years have taught every business the need to be flexible. The ability to respond, adapt and reposition against external challenges has never been more important.
One of the biggest challenges wholesale businesses will start experiencing is the growing demands of B2B customers, who increasingly expect to be treated like B2C buyers – especially when it comes to expedited shipping and fast turnaround times.
B2B customers no longer want to wait for goods and services, and this demand for expedited delivery can filter up the supply chain from retailers and distributors back to wholesalers and manufacturers.
People want things fast. The opportunity wholesalers have is that with a wholesale business there are generally fewer customers, meaning there is an advantage to be gained through shipping in bulk, which can reduce fulfilment and shipping costs.
There are many ways for wholesalers to cut costs and implement effective processes, but a single key practice that covers many of the points we’ve made above is using a cloud-based inventory management system.
Unleashed includes its own dedicated B2B module so that you can manage your online B2B sales with ease.
END OF DAY 11 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.
