Image credits: Co-founders Mesongo Sibuti and Tesh Mbaabu MarketForce (LR) / MarketForce
Kenyan B2B e-commerce company MarketForce has closed operations in three of its five markets in Africa and is in the early stages of launching a social commerce spin-out.
TechCrunch has learned that MarketForces’ super app called RejaReja, which enables informal retailers (mom and pop stores) to order fast-moving consumer goods (FMCG) directly from distributors and manufacturers and access financing, will only be available in Uganda after the company TechCrunch has stopped offering in Kenya, Nigeria, Rwanda and Tanzania.
However, Kenya will continue to serve as the company’s headquarters and launch point for Chpter, the social commerce spin-out that MarketForce is building to enable sellers to turn conversations on their social media channels into more sales, Tesh Mbaabu, which will double as MarketForce and Chpter co-founder and CEO told TechCrunch, confirming the changes.
MarketForces’ slowdown began last year when some VCs walked away from Series A funding commitments, forcing the company to scale back its operations and carry out multiple layoffs. The liquidity crunch occurred during a global shutdown in venture capital financing that made it more difficult to obtain financing.
The liquidity crunch and current market realities have forced companies like MarketForce to abandon growth at all costs and instead pursue profitability paths, push for bridge rounds or raise financing at lower valuations. MarketForce recently raised $1 million through crowdfunding.
Mbaabu said in an earlier interview with TechCrunch that his company is refocusing its resources on building a profitable business by delivering to areas with high demand density and closing routes that are not profitable. However, because the asset-heavy model was capital-intensive and had to contend with mounting liabilities, the company ran out of options and decided to close operations in three markets.
Once we decided to move towards profitability, Uganda emerged as our best performing market. We have exclusive distributor agreements with four major manufacturers and the margins are better, allowing us to operate there grossly at a profit; that’s why we will continue to activate it, Mbaabu said.
Following the recent changes, Ugandan country manager Dennis Nyunyuzi has been promoted to managing director and will be responsible for leading RejaRejas’ operations, according to an update shared with investors and viewed by TechCrunch.
RejaReja retail marketplace launched in 2020 as an idea from MarketForce and as a SaaS product for formal markets. It enables informal traders or mom-and-pop shops to order goods directly from manufacturers and distributors for next-day delivery. It also gives them access to financing based on their transaction history. The company tried to solve the challenges these retailers face, such as out-of-stocks, earnings volatility, and lack of financing to scale the trade.
However, while MarketForce planned to tap into the continent’s informal retail sector, which accounts for about 80% of household trade in sub-Saharan Africa, Mbaabu says it has been forced to scale back due to low margins in markets such as Kenya and Nigeria. which are expensive to operate and where competition is fiercer.
We are looking for more profitable and higher margin segments, which is why we decided to move towards social commerce, said Mbaabu.
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