Household Appliances Repair Unique Opportunity?

 

The Present

 

If you live in Kerugoya and your fridge gets damaged, then you have to start asking your friends if they know any fridge repair technicians. It's likely they aren’t aware but will ask around. So you wait.

One friend remembers seeing a small signboard nailed to a tree that read "Fridge repair" along with a number. However, he didn't take notice of the number and can't remember where the tree was located.

So you might be tempted to go to the fundi wa radio. There is at least one of these along each street. Your technician claims he can repair your fridge and boasts of having repaired tens of them. "Fridges these days are causing a lot of trouble." Can he come to your house and check it out? "I can, but I don't have anyone to leave the shop with." So you have to figure out how to get the fridge to his shop.

You feel uncomfortable leaving the fridge, but the technician says, "I'll finish this TV first." If he is the reckless type, he will get to the fridge and, by trial and error, try to figure out what is wrong. This won’t end well.

If he is more decent but crafty, he will try to find a technician who is knowledgeable in fridges to come and look at it. Perhaps they can fix it, and the fundi wa radio can claim the bragging rights and a share of the fee you pay. But then, the hired technician might not be that good.

This is the situation in many growing towns in the counties (think peri-urban towns outside the major cities).

If you were in Nairobi and not Kerugoya you wouldn't go through the same experience. A simple Google search would reveal several household appliance repair businesses, and the signboards on trees would be numerous.

That said, the situation is gradually changing. Household appliance businesses are starting to appear in the bigger county towns, but the market is not fully served yet.

 Context

Interest in household items repair services

In January the following were the average monthly Google searches for phrases related to household appliances;

 

Phrase	Volumes
washing machine repair in Nairobi	1200
cooker repair in Nairobi	800
fridge repair near me	250
fridge not cooling but light is on	150
Fridge	4400
fridge repair in Nairobi	600
fridge repair near me	250
fridge repair	150
ac and heating repair services	300
washing machine repair near me	250
dishwasher repair in Nairobi	200
samsung repair shop Nairobi	200
washing machine repair	200
appliance repair	100
elba cooker repair in Nairobi	90

Source: Similar web

 

·         According to the World Bank, in 2018 Kenya imported 125, 429 fridges for household use. Anecdotal evidence shows the number has been growing.

·         Warranty-based repairs only last for a certain duration.

·         Additionally, the number of second-hand appliances, both imported and from local sources, has increased; these offer no warranties.

·         Many individual and small-scale sellers of equipment exist, offering no after-sales service.

·         The range of brands has also expanded, ranging from low to high quality. Lower-end brands break down more often, with limited support.

·         Repair services are location-based; consumers typically seek repairs from the nearest trustworthy shops.

·         Cookers and fridges are now standard in many urban mid-income households, with cookers also common in lower-income households.

·         Washing machines are increasingly common due to lower prices and lifestyle changes.

·         Cookers are also being adopted by many low-income consumers.

·         These appliances do not break down frequently, perhaps once every two years on average. However, due to their high numbers, there is a demand for repair and maintenance services.

·         Few established repair shops exist outside major towns, as breakdowns are infrequent.

·         Consumers often only consider fridge repair when a breakdown occurs and may have difficulty finding a suitable repair shop.

·         Google searches for repair services may yield results that are geographically distant.

·         Due to the bulkiness of the equipment, consumers prefer in-house repairs over transporting them to a repair shop.

·         Sometimes, consumers seek part replacements rather than full repair services, such as a knob or tray, to fix appliances themselves.

·         Due to infrequent purchases, there is a lack of knowledge about trustworthy repair services, leading to consumer suspicion.

·         Lack of proper repair shops in most locations, both within and outside Nairobi, is a significant issue.

·         There is minimal proactive marketing to create awareness, build trust, and establish brand authority.

·         Existing business models have room for improvement.

·         Monthly searches for repair services indicate a significant marketing opportunity.

 

The Opportunity

The opportunity lies in establishing a household appliances repair shop in the larger or emerging county towns or in new or expanding residential areas. These locations have a high density of equipment but lack a proper specialized repair center.

The shop could offer in-house calls, addressing a major barrier to using repair services—the need to transport the equipment to a repair shop.

The shop will distinguish itself through skilled technicians, adherence to service level agreements, adaptation to customer needs, and providing a professional experience that instills confidence.

The advantages the business will have over the existing competition include:

 

- Establishing presence in underserved areas.

- Implementing better marketing strategies.

- Exploring the possibility of a more effective business model.

- Utilizing content to build long-term trust and awareness.

How it Could Work

a). Obtain a premises and establish a shop.

Setting up a shop essentially involves acquiring a space, equipment, and branding as a shop specializing in appliances such as fridges, washing machines, microwaves, and other household appliances.

 

b). Acquire skilled manpower.

You can have one skilled repair person managing the shop and establish a network of others whom you can call in as needed.

 

c). Implement a system to prevent exploitation by technicians and to minimize revenue leaks.

 

Product Characteristics

-          Great service

-          Strict adherence to SLAs

-          Skilled professional technicians

-          Mobile services

-          Updated on household appliances.

 

 

 

What Exists

Players

-          Individual technicians.

-          Brand service centers.

-          Specialized repair services – E.g.  https://www.fridgerepair.co.ke/

-          General all rounded repair services

-          Lead generation services. These work to rank high on Google for relevant phrases. For instance, “Fridge repair in Kerugoya”. When you contact them they link you up with a local fundi or from a nearby town. The fundi pays them a commission. For instance, https://bestcare.co.ke

 

Market Characteristics

-          Fragmented.

-          No dominant players or proper market leaders.

-          Many underserved areas.

-          Increasing number of self-taught technicians.

-          Efforts towards formalization of repair services.

-          Many equipment sellers.

-          Influx of second hand ex uk , ex- other equipment.

-          Wide range of quality.

-          Mixed experiences with brand warranties.

-          Minimal marketing of repair services.

-          No price competition because consumer is not properly informed and infrequency of purchase.

The Consumer

-          Consumer often not aware of repair services until problem exists.

-           Consumer online actively searching for repair services a

-          High purchase intent.

-          Most likely to settle on service a little randomly, trial and error or minimal trust factors.

-          Consumers also seeking information from friends.

-          Consumer poorly informed on maintenance of equipment.

-          To most consumer equipment looks complex.

 

 

The Business

The Process

-          Identify possible area to set up.

-          Identify possible technicians to assist in market understanding.

-          Identify technicians to offer the actual services.

-          Identify the equipment required for minimal and effective set up.

-          Set up a website, a strong online presence.

-          Advertise both on and offline. 

Marketing

The most effective options for marketing would be:

-          Small signboards outside or next to residential estates.

-          Door to door giving of business cards or bronchures.

-          Street activation services. For instance, free information clinics where consumer can ask and get information on various aspects of household appliance

-          Google ad words.

-          Search engine optimization.

-          Video platforms.

-          Social media content.

 

Revenue Model

Fees charged go customers for repair and maintenance services.

Sale of spare parts and accessories

 

Back of The Envelope Calculations

Average service fee per customer – Kshshs.2000

Commission due to fundi – 30 %

No. of customers per month – 60

Total revenue – 60* Kshs.2000 = Kshs. 120,000

Fundi’s commission (30%) – Kshs. 36,000

Gross profit: Kshs. 120,000 – Kshs. 48,000 = Kshs. 84,000

Major Expenses: Rent, Marketing

 

Challenges

- Securing reliable technicians who possess the necessary skills and professionalism.

- Establishing trust with customers, particularly in a competitive market.

- Navigating the initial months before reaching the breakeven point.

- Managing marketing expenses effectively to ensure maximum impact and return on investment.

- Dealing with potential regulatory hurdles and compliance issues.

 

Haters

Objection: It’s rare for fridges and cookers to get damaged easily

Counter: Sue but there are big enough numbers so there is a fridge or cooker getting damaged every day.

Objection: People won’t take their appliance to a fundi they are not familiar with

Counter: We will set up in a way that instills confidence from the start.  And when we are the only option or better option in the market the consumer won’t have any option. We won’t take advantage of this.

Objection: Get fundis skilled in fridges huko mashinani will be difficult.

Counter: Well, there might be some challenges. But there is bound to be some within reasonable distance. Once we get one they can exercise their networks to get more.

 

 

Critical Success Factors

- Selecting the right location for the shop's establishment.

- Recruiting skilled technicians proficient in appliance repairs.

- Establishing trust with customers through reliable services and transparent communication.

- Implementing effective marketing strategies to attract and retain customers.

- Maintaining flexibility and speed in responding to customer needs and preferences.

Criteria

-          Kshs. 200,000 capitals - Yes

-          Economic resilience – Yes

-          Kshs. 12,000 gross profit – yes

-          Soft validation – No

-          Short go to market (2-4 weeks)- Yes

-          Short go to profit - (4 - 8 weeks)– Yes

-          Ability to scale – Yes

 

 What do you think ? Please leave a comment below