Below is a long excerpt of the Motorcycle Spare Parts Retail business guide. This is a 2020 / 2021 edition. It contains:
- Overview
- The Bigger Picture
- Number of Motorcycles Registered
- Value of the Boda Boda Industry: Income and Support
- Market Observations: Negative& Positive
- The Boda Boda Parts Chain
- The Importers
- Classification of Importers
- Importers as Wholesalers
- Tier Two Wholesalers
- Retailers
- Stocking
- Types of Parts
- The Various Spare Parts
- Fast moving parts
- Where do you get the parts?
- The Uganda Option
- Key Operations
- Premises
- Revenue
- Pricing
- Wholesale & Retail Prices: Sample
- Margins
- Revenue: Case Study One
- Revenue: Case Study Two
- Financial projections
- Factors Affecting Sales & Revenue
- Pull factor
- Customer Service
- Mechanics, Marketing & Revenue
- Pricing
- Competition
- Sales Skills
- Loyalty
- A note on Return Policy
- Competition
- Opportunities & Survival
- Critical Success Factors
- What Is Competition Based On?
- Consumer Behaviour
- Licenses
- Capital Breakdown
- Starting: Main Steps
Bodaboda (Motorcycle) Spare Parts Retail Business Guide
Overview
This guide focuses on the retail of motorcycle spare parts to those in
the boda boda business. The basic premise is that boda bodas wear and tear, in
addition to getting into accidents. Hence there is demand for replacement
parts.
Interest in the boda boda parts business
is often based on anecdotal evidence in growth in their numbers; just looking
around there are more boda bodas than say two years ago. More so they have
filtered to all areas of the country. They can’t be cornered into usual
groupings of rural or urban, low or middle class; they are the real mass market
means of transport.
Policies affecting the boda boda sector, its growth and decline will
also affect the motorcycle spare parts retail business.
On the face of it things look rosy for the boda boda sectors, which includes not just the riders but the supporting industry as well; both on the upper and lower sides of the chain. Their embedding into the economy and politics of the country has ensured so. This to an extent that their nuisance value is conveniently ignored or tolerated; as if it’s part of life. Perhaps it is.
The Bigger Picture
The number of motorcycles on Kenyan roads directly impacts the boda boda
spare parts business.
The number of motorcycles in Kenya was growing in a linear lazy manner
until 2008, when the government zero rate motorcycles below 250cc. From then on
growth in numbers became geometrical.
Let us look at the motorcycle registration figures since 2005.
Year |
No. of Motorcycles Registered |
2005 |
3,759 |
2006 |
6,250 |
2007 |
16,923 |
2008 |
51,412 |
2009 |
91,151 |
2010 |
117,266 |
2011 |
140,215 |
2012 |
93,970 |
2013 |
125,018 |
2014 |
111,124 |
2015 |
134,645 |
2016 |
119,724 |
2017 |
186,434 |
2018 |
188,994 |
2019 |
210,103 |
Total |
1,596,358 |
Value of the Boda Boda Industry: Income and Support
So if all motorcycles registered between 2005 and 2019 are on the road
then it means there are at least 1,596,358 motorcycles on the roads. However,
not all are active. Some have been retired by the owners for various reasons
while others have been involved in accidents. We estimate, based on number of accidents,
this to be about 16% of the total, on the higher side, which translates to
255,417 motorcycles. This means there could at least active1,149,378 motorcycles.
Not all motorcycles are used as boda bodas, however a majority (88 % by
our estimate) are. This equals to 1,011,453 motorcycles. Going by a combined rural and urban daily average
revenue of Kshs.700 (This is an average based on our sampling. There are those
who make more or less. We are also conscious of the boda boda officials who
throw around Kshs. 1000 as the national daily boda revenue average; from our
research that’s abit colorful, so we’ll stick to the duller figure of
Kshs.700), then the total revenue from the sector is Kshs.708,016,848 per day.
Quite high, right…
With such a value then repair and maintenance of motorcycles becomes a
key sub sector.
Further, conversations with riders showed the average spend on
maintenance is Kshs.1200 per month. If we consider the number of active boda
bodas, and the average spend on the same
then repair and maintenance alone worth at least Kshs. 1,213,743,600. Mouth watering
indeed.......
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Market Observations: Negative& Positive
Positive |
Negative |
Honda Motor Company set up a local assembly line
with a capacity of 25,000 units per year, and which started operating in
December 2013. Car and General distributors of TVS motorcycles
from India, and Suzuki parts from Japan set up an assembly factory in Nakuru
with a capacity of 70,000 units. Toyota Kenya once introduced a scheme called Crux
Finance which enables more motorcycle riders to own motorcycles by pooling in
resources. At least 31 schemes providing credit facilities
for purchase of motorcycles through daily or weekly remittances over periods
some long as 12 months. |
County government Efforts to regulate the boda boda
business by increased taxes, zoning which restricts operators to certain
areas, limiting the hours of operation and such other. National Transport and
Safety Authority (NTSA) efforts
to implement regulations governing the operations of bodaboda. This in terms
of skills of riders, amount of cargo they can carry, registration and
conditions of the motorcycles. |
Nothing much has come out of the regulation efforts because of the political and economic reasons we mentioned previously. However, an arrogance, holier than though attitude, a love for risk, a happy go lucky stance, my way or nothing else road manners and crime acts of some riders maybe their undoing. As much as their negative is tolerated this could encourage them to go beyond the tolerance level, do something extreme , and all the positive they bring to the table will pale to their negative actions resulting into some drastic regulatory actions.
Meanwhile
the situations favour them, and as the next election nears in 2022, nothing
drastic if implemented will last. Who dare upset all those votes?
At the boda
boda parts entrepreneur has little to worry about the banning of her customers.
You know unless they push it to the very extreme.
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The Boda Boda Parts Chain
Broadly the supply chain of boda
boda parts in Kenya takes the form below
Much more in the complete guide.....
Almost, 94% if all motorcycle spare parts sold in Kenya are imported. The main sources
are India and China in line with the origin of most of the motorcyles on Kenyan
roads.
Unlike say pre 2016 importation of motorcycles has
attracted tens and tens entrepreneurs seeking to play higher in the value
chain, where there are volumes and possibly better margins.
The result is that competition even among
importers has increasingly become intense, well to the advantage of the retailer.
The offhand manner in which some importers and wholesalers used to treat retailers
has been replaced by sweet talking salesmanship.
The entry
into the market of well capitalized Chinese investors with networks in their
mother country have further heightened competition.
Importers
can be classified in various ways.
By Setup - On one hand we have the
formal corporate organizations with some sort of exclusive distribution
agreements of parts or parts and cycles. For instance Car and General with
respect to original Bajaj and TVS.
On the other are the independents, individual businesses importing a
variety of parts of various brands.
By Size - This as measured by their
capacity. There are large importers, who can bring in parts worth tens of
millions, the medium and the small. Size isn't just about capital but also
ability to move the products in the market.
By Business Model - On one end we
have importers bringing in generic parts branded by the manufacturers. While on
the other are those who custom brand...... Much more in the complete guide.....
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Importers as
Wholesalers
All importers are wholesalers but not all wholesalers are importers.
For importers retailers are the main sales channels. There is minimum barriers
to the retailer accessing the importer and vice versa. Increasing competition
among the importers cum large wholesalers has minimized any friction.
The expected friction are first minimum quantities
Much more in the complete guide..... Get it @ Kshs.599 or 66 guides @ Kshs.999
Tier Two Wholesalers
Away from the importers are also what we could refer as tier two wholesalers.
These are not importers. They buy from importers then sell to retailers. There are several types of these. The terms
offered by importers also vary.
There are wholesalers who just walk to importers...Much much more in the complete guide
Blue label importers ....... Much more in the complete guide.....
Stocking
Types of Parts
Let’s understand the various types
of parts before we get deeper into stocking:
Motorcycle parts can be broadly grouped in several ways:
Brand specific parts - These are
parts particularly made for specific kind of cycle brands. They can't be used
on other brands. For instance Skygo specific parts which can't be used on
Boxer. A Boxer block is a Boxer block and can't be used on Skygo.
Universal parts - These are parts
that can be used on any motorcycle irrespective of brand. For example brake
fluids.
Original parts ..Much more in the complete guide.....
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Deciding What To Stock: Key Steps
How then do you decide what to stock?
1. Identify the make or brand of motorcycles available in your ...Much much more in the complete guide.....
There are
tens of motorcycle parts. To get you started, below is a list of common items.
Note this is not a list of fast moving items but the common
We will
include prices in the revenue section of the guide:
·
ACC
CABLE
·
ACC
PIPE
·
AIR
CLEANER
·
BALL
RACE
·
BATTERY
·
BLOCK
GASKET
·
BRAKE
ARM
·
BRAKE
CABLE
·
BRAKE
PEDAL
·
BRAKE
ROD
·
BRAKE
SHOE
·
BRAKE
SPRING
· BULB HOLDER
MMany more in the complete guide.....including fast moving items ....
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Where do you get the parts?
We covered part of it in previous sections. However to get into a few specifics
here are some contacts. Usually many are able to send parts to various parts of
the country. But it also helps to make the initial visit.
Supplier |
Notes |
Contacts |
Mamba
Motorcycle Spare Parts |
Wide
range of parts. Great customer service. |
|
Janluck
Boda Parts |
|
|
Ammark
Brand |
|
|
Many more suppliers in the guide | Many more suppliers in the guide | Many more suppliers in the guide |
|
|
|
|
|
|
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The Uganda Option
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Key Operations
A cycle spare parts shop is a pretty straight forward operation. The main activities are;
Activity |
Details |
Requirements
|
Sourcing |
|
|
Stock
tracking |
|
|
More activities in the guide |
More activities in the guide |
More activities in the guide
|
|
|
|
|
|
|
|
|
|
|
|
|
Much more in the complete guide.....
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Most spare parts are not bulky, although there are those like tyres which occupy space. This means that a spare parts shop can operate from a relatively small space. But you need to have enough space to work, and cater for growth. You don't want to start moving when you have built a consumer base because of size of premises.
Ideally the premises should be located in a strategic...Much more in the complete guide.....
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Revenue
Pricing
Motorcycle
shops rarely advertise their prices. A customer walks in and a price given. So
winning customers by direct price announcement is rare. In some locations there
tends to be subtle pricing agreements among retailers, but these don't hold
because there is no proper way of enforcement, and then the shop owner will
make decisions based on his business. If say there are dominant players and you
the new comer has agreed to some pricing methodology but you are still
struggling to find customers, and then you are not even sure the competition is
following the same, and it's the fourth month and you can't meet the rent,
can't you price in a way that ensures sales and at the very least survival?
This is not to say you should compete on prices but the importance of being
real to your own business circumstances.
There is no exact pricing formula. And two retail shops within the same
location could have widely varying prices. Still every item has what is
considered the market price; a sort of maximum acceptable price. Well these are
market driven, and settled on over time by the rules of demand and supply. And
there is the comfortable range beyond which the rider will not buy and below
which the business suffers.
This means
that at every one time there is a range of prices more so at the retail level.
As expected there is a level and room for negotiation. If a product has a
possible margin of Kshs.200, a retailer could sell it to one
customer at price that gives her a margin of Kshs.100, another Kshs.150 and still another Kshs. 200...
Notable is that riders often stay in pools as they wait for their customers,
and hence they share information on repair and maintenance. It's easy to build
a reputation, as expensive, cheap or fairly priced. The expensive reputation
could be fatal especially in a market with several options.
It follows then it's important to know the prevailing retail prices. This will
not only help you price appropriately but also in sourcing.
Mechanics are a good source of this information. Approach one with a list as
above, provide some motivation and ask them for prices. Friendly shop
attendants could also provide you with the information. Some could need a
motivation, and then outside the shop away from their bosses....
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Wholesale & Retail Prices: Sample
To give you
a feel of what margins to expect below are wholesale and retail prices of over
50 items. Please note these prices are for November – December 2020 from a
sample of wholesalers and retailers.
Although these are actuals the specifics could vary from one wholesaler
and retailer to another. Where retail price is lower than the wholesale then
the retail price is for the lower priced items.
ITEM NAME |
BM150 – Wholesale
(Kshs.) |
BJ100 – Wholesale
(Kshs.) |
TVS100 –
Wholesale (Kshs.) |
TVS HLX –
Wholesale (Kshs.) |
RETAIL Price (Kshs.)
|
|
ACC CABLE |
80 |
80 |
80 |
100 |
150 |
|
ACC PIPE |
120 |
|
100 |
150 |
200 |
|
AIR CLEANER |
120 |
|
|
200 |
||
BALL RACE |
160/200/220 |
160/220 |
160 |
160 |
250 |
|
BATTERY |
1100 |
700 |
1100 |
1200 |
1600 – 1800 |
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Margins as we see from above could be as low as 20. % to as high as 200 %.A rule of the thumb is that the higher an item is priced the higher the margins, after all the return should be equivalent to the capital invested in the item. Low priced items also have relatively higher margins. A Kshs.50 part going for Kshs.100 at retail...Much more in the complete guide.....
How much
you will make say in a month will depend on the sales. Before we look at what
affects sales let us look at some scenarios. .
Revenue:
Case Study One
Assuming that you are selling only one kind of item. Let's take bearings...
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Let us look at a more moderate case.
In this scenario the shop sells a variety of items.
Much more in the complete guide....
Factors Affecting Sales & Revenue
Foot traffic
In addition to what we mentioned in the premises section.
The average spending on parts by a bodaboda rider is more or less the same within the same location. This means that this is a business which thrives on high foot traffic. Anything that leads to an increase in the foot traffic will lead to more sales all other factors like price and quality being kept constant. A convenient and easily accessible location thus will increase revenue. Much more in the complete guide.....
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The market is expanding fast but is yet to get saturated. Opportunities
thus exist in the business.
Though opportunities are present survival in this market depends on the
particular local conditions.
In most markets there are no retailers with roots deep enough to an extent that there is no room for one more.
Much more in the complete guide....
Critical Success Factors
Assuming that all the retailers in a location understand the market
proper and have stocked the products in demand in the particular locality, and
then the Critical Success Factors in the business are:
Much more in the complete guide.....
What Is Competition Based On?
Competition in the business
is based on price, quality, variety, location, marketing and customer service.
Much more in the complete guide.....
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Consumer Behaviour
At least 36% of the boda boda on the road are not owned by the people
riding them; rather the riders are employees who have gotten into some sort of
contract with the owner. The contracts often are of the nature that the rider
remits a certain fixed amount every day to the owner. The rider takes care of
minor everyday maintenance, and if it’s something major then the owner has to
come in. This means there is a strong incentive to keep costs as low as
possible so as to meet targets and maximize returns.
Much more in the complete guide.....
Licenses
The licenses required to run a motorcycle spare parts shop are the basic , to run any business. Below are the licenses , issuing authority and cost ...Much more in the complete guide.....
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Capital Breakdown
Below is a capital breakdown of a mid sized boda boda spare parts business...Much more in the complete guide.....
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