Importing and Selling Second-Hand Clothes in Kenya (Mitumba Business)

Business Overview:
The second-hand clothes market, known as “Mitumba”, is one of Kenya’s largest and most vibrant business sectors, particularly in Nairobi’s Gikomba market. The business revolves around importing used clothes from Europe, the U.S., and other parts of the world.

These clothes, often discarded as thrift shop leftovers or charitable donations, are sold in Kenya for a fraction of their original prices, making them accessible to many Kenyans. This business model is scalable and provides opportunities for entrepreneurs at every stage from small hawkers to major importers.

Revenue Model:
Sales of Clothing: The primary revenue source is selling second-hand clothes at a markup based on the cost of purchasing and importing them.
Fees for Value Addition: Some sellers clean, repair, or customize clothes, which allows them to charge a higher price.
Stall Rentals: Larger traders who own stalls in markets like Gikomba often rent out space to smaller sellers.

Costing Breakdown:

1. Initial Setup Costs:
   o Bale of Second-Hand Clothes: Clothes can be sourced from the U.S., Europe, or Asia, with different suppliers selling the clothes in 45-kg bales.

The cost of one bale depends on the grade of the clothes and the source market:
 Grade A Bale (top-quality brands like Tommy Hilfiger, Burberry, Ralph Lauren): KES 8,000 15,000.
 Grade B Bale: KES 4,000 7,000 (lower quality, often sold to hawkers).
 Cost Per Item: Typically ranges from KES 50 to 250 depending on the grade and brand.

o Customs and Import Duties:
 Kenya imports approximately 100,000 tonnes of second-hand clothes per year. At Mombasa Port, customs duties on each container can range between KES 1.2 million and KES 4.8 million depending on the volume and weight.

 A 40-foot container can hold about 550 bales, equivalent to 25 tonnes of clothes.

o Shipping Costs: Importing a standard 40-foot container from Europe or the U.S. incurs additional shipping costs:
 Shipping from Europe: Estimated at KES 400,000 600,000 per container.
 Shipping from the U.S.: Estimated at KES 600,000 800,000 per container.

o Warehouse/Storage Costs: Traders typically require warehouse space to store their bales before distribution or resale:
 Small warehouse rental in Nairobi: KES 20,000 50,000 per month, depending on the location.

2. Ongoing Operating Costs:
   o Inventory Replenishment: Regular bale purchases from international suppliers, depending on sales volume.
    For a small-scale trader: KES 40,000 100,000 per month for ongoing inventory.
    For a large-scale trader/importer: KES 400,000 1 million or more, depending on market size.

o Transportation Costs:
 Local transport from Mombasa to Nairobi (Gikomba): Can cost about KES 40,000 60,000 per truckload.
 Distribution within Nairobi: Using small trucks or boda-boda riders to deliver bales to smaller retailers may cost KES 3,000 5,000 per trip.

o Market Stall Rent:
 Hawkers in markets like Gikomba pay KES 100 per day to the city council.
 Larger shop owners in Gikomba pay annual rents of KES 5,000 20,000.
o Marketing: Traders often rely on word-of-mouth, but some larger operations may run ads or work with influencers to showcase their stock.
 Estimated monthly marketing cost: KES 5,000 10,000.

Sources of Clothing:

1. Overseas Suppliers:
   o Charity Shops in Europe and the U.S.: Many of the second-hand clothes sold in Kenya originate from these shops. They sort through donations, sell the best items locally, and export the rest to countries like Kenya.
   o International Wholesalers: These companies specialize in selling second-hand clothes in bulk to African markets. The clothes are usually purchased at prices as low as USD 0.90 per kg before being shipped in 45-kg bales.
2. Local Markets (Gikomba, Toi Market):
   o Gikomba Market is the largest second-hand clothes market in Kenya, where both small and large traders source their stock. Other notable markets include Toi Market and Muthurwa in Nairobi.
3. Direct Imports:
   o Some traders prefer to bypass local middlemen and import directly from suppliers abroad. Importing directly provides more control over the quality and price of the clothes.

Revenue Potential:

1. Retail Prices:
   o Grade A Items (High-End Brands): Items such as Tommy Hilfiger jeans or Ralph Lauren shirts can sell for KES 800 2,000 depending on the brand and condition.
   o Grade B Items: These clothes sell for KES 300 700.
2. Profit Margins:
   o Grade A: Buy at approximately KES 200 per item and sell at KES 1,200 on average. The profit margin is about 500%.
   o Grade B: Buy at around KES 100 per item and sell at KES 500. Profit margin is about 400%.
3. Annual Revenue:
   o For a small-scale trader selling 300 items a month (10 items daily):
    Monthly revenue = (300 items average price KES 600) = KES 180,000.
    Yearly revenue = KES 2,160,000.

o For a large-scale importer selling 5,000 items monthly:
 Monthly revenue = (5,000 items average price KES 1,000) = KES 5,000,000.
 Yearly revenue = KES 60,000,000.

Key Features:

1. Scalable Business: The mitumba business is flexible and can start small (with as little as KES 1,000 for a few items) or scale to a large enterprise importing containers of clothes.
2. Wide Market Appeal: The business serves diverse income groups, from low-income buyers looking for affordable clothing to middle-income fashion-conscious individuals hunting for branded items.
3. Creating Employment: The mitumba industry is a major source of employment in Kenya. Gikomba alone employs around 65,000 people, including wholesalers, retailers, and hawkers.

Challenges & Solutions:

1. Challenge: Competition from other sellers and fast fashion.
   o Solution: Focus on curating high-quality, fashionable items. Differentiation can come from targeting specific niches (e.g., vintage clothing, branded items).
2. Challenge: Import Costs (Shipping, Duties).
   o Solution: Build relationships with reliable overseas suppliers to negotiate better prices. Partnering with other importers to share shipping and customs costs can also reduce expenses.
3. Challenge: Irregular Supply.
   o Solution: Establish multiple sourcing channels to ensure a steady supply of bales. Regularly visit markets like Gikomba and Toi to handpick high-quality items.

Conclusion:
The Mitumba business in Kenya offers a lucrative opportunity for entrepreneurs, especially in markets like Gikomba. With proper sourcing, inventory management, and effective sales strategies (including online and physical market presence), this business can yield high profits while also creating employment opportunities and offering affordable fashion to Kenyan consumers.