Notify Logistics has closed its business.
This follows an announcement, first reported by BD, that it failed to stay afloat due to the high costs of operations.
The company’s business model was quite attractive when it started out back in 2018: it would basically rent shelves to vendors to run their operations.
However, according to one of the startup’s directors, it became extremely challenging to maintain the company because even the businesses run by their partners were unsustainable. Furthermore, it has been revealed that Notify was paying up to KES 800K per month for three flours it had acquired on its mall which proved to be a financial constraint.
To this end, both its Nairobi and Mombasa branches have since been closed.
Notify Logistics also says that it was facing threats from auctioneers, so halted taking in more vendors.
And while Notify raised KES 45 million one year ago, the funds appear to have not turned things around for the firm.
A few weeks ago, we also learned that Kune Foods had closed shop.
The startup, which had raised millions of shillings at its start, received criticism from customers after a controversial statement made by its CEO. It also failed to separate itself from tens of other food delivery apps in the city, which eventually saw it squeezed out of the market.
This week, we also learned that e-commerce firm Wasoko has exited the market and crossed the border to set up shop in Zanzibar. The reason for this departure has mainly been attributed to a harsh tax regime.
Kenya has been ramping up tax collection from online businesses. The past years have seen the state develop other channels for squeezing more money from internet businesses. There is the Digital Service Tax, which is part of the Financial Act Amendment for 2021. The law meant that the gross transaction value of digital services would be subject to a 1.5 percent digital tax. However, that value was doubled to 3 percent and went into effect in July 2022.
There is also the issue of annual corporate tax that is capped at 30 percent for established businesses. From 2023, capital gains tax rate will be bumped up from 5 percent to 15 percent.
These concerns have been unfavourable for some local startups, and have seen some of them leave the Kenya market.