Kenyan B2B e-commerce firm MarketForce has shut down operations in three of its 5 markets in Africa and is within the early levels of launching a social commerce spinout.
TechCrunch has realized that MarketForce’s super-app dubbed RejaReja, which allows casual retailers (mom-and-pop shops) to order fast paced shopper items (FMCGs) instantly from distributors and producers and entry financing, will solely be accessible in Uganda after the corporate discontinued the providing in Kenya, Nigeria, Rwanda and Tanzania.
Nevertheless, Kenya will proceed to function the corporate’s headquarters and a launchpad for Chpter, a social commerce spinout that MarketForce has been constructing to allow retailers “flip conversations on their social media channels into extra gross sales,” Tesh Mbaabu, who will double up as MarketForce and Chpter co-founder and CEO, instructed TechCrunch whereas confirming the adjustments.
MarketForce’s deceleration began final yr when some VCs reneged on their Collection A funding commitments, forcing the corporate to scale down operations and conduct a number of rounds of layoffs. The money crunch got here amidst the worldwide enterprise capital downtime that has made elevating funding exhausting.
The money crunch and present market realities have compelled corporations like MarketForce to desert growth-at-all-costs and as an alternative pursue paths to profitability, push for bridge rounds or increase funding at decrease valuations. MarketForce lately raised $1 million by way of crowdfunding.
Mbaabu mentioned in an earlier dialog with TechCrunch that his firm is refocusing its sources to constructing a worthwhile enterprise by delivering in areas with a powerful demand density, and shutting down routes that aren’t worthwhile. Nevertheless, with their asset-heavy mannequin being capital intensive and having to deal with mounting liabilities, the corporate ran out of choices and determined to shut store within the three markets.
“After we determined to maneuver in direction of a path to profitability, Uganda has been our greatest performing market. We now have unique distributor contracts with 4 main producers, and margins are higher, enabling us to run a gross worthwhile operation there; that’s the reason we are going to hold it lively,” mentioned Mbaabu.
Following the most recent adjustments, Uganda nation supervisor Dennis Nyunyuzi has been promoted to the place of managing director and shall be chargeable for steering RejaReja’s operations, in keeping with an replace shared with traders, and seen by TechCrunch.
The RejaReja retail market was launched in 2020 as a brainchild of MarketForce, and as a SaaS product for formal markets. It allows casual merchants or mom-and-pop retailers to order items instantly from producers and distributors for next-day supply. It additionally offers them entry to financing based mostly on the historical past of their transactions. The corporate was making an attempt to unravel challenges that these retailers face like stockouts, earnings instability and lack of financing to scale their commerce.
Nevertheless, whereas MarketForce deliberate to faucet the casual retail sector within the continent, which accounts for about 80% of family commerce in sub-Saharan Africa, Mbaabu says they’ve been compelled to scale down as margins are low in markets like Kenya and Nigeria, that are costly to serve, and the place competitors is stiffer.
“We’re determining extra worthwhile and excessive margin segments and that’s the reason we determined to make a transfer into social commerce,” mentioned Mbaabu.