One of the biggest challenges facing SMEs, especially those operating online, is logistics. Most available courier services impose charges that are not feasible, as transportation costs can be as high as the cost of the product they are selling, if not higher. These businesses therefore lose out on many potential customers, as consumers are looking to acquire products at the least possible cost.
“If you tell a customer to pay a delivery fee of say Sh300 for a product worth Sh500, they will most likely just walk away, however, bearing that cost as the seller means you will not make any profit, and might end up selling at a loss, thus you are left with a stalemate,” says Robert Mwalugha.
He is the CEO and co-founder of Pickup Mtaani, a logistics company founded by him and a high school friend, Kennedy Okiya. The company, which partners with shop owners who act as their pick-up station agents, was inspired by M-Pesa, Robert says, the goal to bridge the gap between sellers and consumers in the most affordable and convenient manner.
A friendship and a partnership
“I was born and raised in Mombasa, and it is while in high school that I met Kennedy. We became friends. Coincidentally, we both went to Kenyatta University, where we were roommates for four years. It is during this time that we both realised we had a passion for tech and software development,” says Robert.
Robert, who has a bachelor’s degree in Community Development, explains that by the time he graduated in 2015, he and Kennedy had decided to become game developers. He would be the graphics designer while his friend would do the coding. Unfortunately, their idea never picked pace and therefore did not work out.
Photo credit: Courtesy
Shortly after graduation, Robert got a job with an NGO based in Mombasa and moved back home for a year before relocating back to Nairobi. He had not given up on his dream regarding software development, and once again, the two developed an e-commerce platform that did not work out. Robert also lost his job towards the end of 2017, as he was working remotely from Nairobi, and the NGO wanted a more hands-on person.
“While working on the e-commerce platform, we noticed that a lot of people and small businesses were trading online especially using social media, which is vibrant in the country. We also noticed that most of these businesses faced a common problem, logistics. They could not afford expensive courier services, neither could they afford to have their own delivery services.”
So, in August 2018, and having sought employment unsuccessfully for more than eight months, Robert bought a motorbike from a friend for Sh80,000 and decided to start doing deliveries. He contacted businesses selling on social media via his accounts and told them he could make deliveries at affordable rates. The idea being profitable, his business partner, Kennedy, also got a motorbike and joined in the business.
“To remain competitive and stand apart from our competitors, we knew we had to be more than your average logistics company, therefore, in 2019, we started rent-a-shelf, where we rented storage space to sellers who did not have storage space of their own, or just a place to store their products for a short while before dispatch.”
Robert adds that this attracted more sellers to partner with them as they had considerably eased transactions for them, and added to their revenue. Due to the high number of clients coming in looking to rent a shelf, they acquired a second office space at Philadelphia House along Tom Mboya Street, which now serves as their headquarters, and moved a bulk of their operations from Star Mall.
Kennedy Okiya, the co-founder of Pickup Mtaani.
Photo credit: Courtesy
“As is with any good business, you must keep evolving, so in 2020, we decided to start Pickup Mtaani to make our delivery service more convenient. Inspired by M-pesa shops and the convenience they offer people in terms of proximity, we decided to approach shops in various neighbourhoods and requested them to become our agents. Customers in those areas would then be picking their orders from there, but we still retained the option of home deliveries at a slightly higher cost.”
At the same time, both Robert and Kennedy took a step back from doing deliveries to focus more on managing the company and working on other ideas they had. This created employment opportunity for others to become their riders. Currently, they have nine operational motorbikes that carry out their deliveries within Nairobi and its environs.
The total number of Pickup Mtaani employees stand at 23 at the moment, excluding their agents.
“Due to the sometimes distrustful nature of online transactions, we noted that a lot of customers were uneasy, constantly calling to check where their goods were. We therefore made an app for our agents to help manage orders, as well as developed a website to help customers track their order’s progress.”
He also adds that currently they are in the process of adding some more features to the website to enable customers do live tracking of their orders, in the same way companies such as Bolt and Uber eats, for instance, operate.
Investor friendly environment
Asked whether they intend to expand their logistics business to accommodate delivery of bulky goods, Robert said: “Our focus is not on this, but on developing solutions for logistics companies. We will still retain our small packages deliveries, but we want to develop software that can be used by other companies, such as the live tracking one, that is going to be the next phase of our business hopefully.”
Robert notes that the biggest challenge they have faced was setting up while their company was at the blooming stages, as they did not have any records with creditors to enable them take loans to start their business. They therefore had to rely on their savings as well as family and friends.
“The other issue for us was recruiting employees due to performance issues. This line of work requires robust individuals, you are dealing with a constant of orders and you have to ensure everything runs smoothly and simultaneously.”
Robert however notes that despite lack of funding locally, when the government creates an investor friendly environment, it benefits small and medium scale enterprises such as Pickup Mtaani. There was spurt in foreign investment in tech start-ups, and they were lucky enough to be beneficiaries. He concludes by pointing out that anyone can run a successful enterprise and stand apart from competition as long as one takes time to understand the market and client needs, and remain innovative in the way he or she conducts their business.
