Marketforce downsizes B2B e-commerce division

Image credits: MarketForce / Mesongo Sibuti and Tesh Mbaabu, MarketForce Co-Founders (LR)

Kenyan B2B e-commerce company Marketforce is closing its B2B e-commerce business serving informal retailers (mom and pop stores) after a turbulent two years that saw it significantly downsize its business.

The closure of the B2B e-commerce arm, called RejaReja, comes months after MarketForce withdrew its services from all markets, including Nigeria and Kenya, with the exception of Uganda.

RejaReja aims to enable informal retailers to order fast-moving consumer goods (FMCG) from distributors and manufacturers, and is designed to help informal retailers deal with issues faced by informal retailers, such as out-of-stocks and financing. Solve some challenges. Launched in 2020, the market hoped to tap into the continent's informal retail sector, which accounts for around 80% of household transactions in sub-Saharan Africa.

At its peak, it employed more than 800 people and served 270,000 informal traders. Marketforce had raised $42.5 million, including $40 million in debt capital, in a Series A round in 2022 at a valuation of more than $100 million to revitalize its business.

However, a combination of challenges, including aggressive expansion, a capital-intensive business model, razor-thin profit margins, and a lack of funding after investors reneged on their commitments, made it difficult to sustain the business and led to its closure. It's arrived. Several B2B e-commerce companies in Africa are also scaling back operations as funding continues to be scarce.

“The B2B distribution business, which used to be leisure, has become unsustainable due to several reasons. First, margins in the retail FMCG market are so thin that profitability is struggling at the unit level. This segment is also highly price elastic, meaning that price competition is consistent,” said Tesh Mbaabu, who co-founded MarketForce with Mesongo Sibuti in 2018.

“Following significant efforts to make our business model sustainable, including downsizing in order to extend the runway as long as possible, it is no longer possible to continue operating Leisure Leja. I have come to this conclusion.”

Investors include Y Combinator (YC S20), V8 Capital Partners (led Series A round), Ten13 VC, SOSV Select Fund, VU Venture Partners, Vastly Valuable Ventures, Uncovered Fund, Reflect Ventures, Greenhouse Capital, Century Oak Capital It is included. Ventures Remapped.

After shutting down RejaReja, MarketForce is launching Chpter. It's a social commerce spinout, which Mbaab describes as an AI-powered conversational commerce platform that allows retailers to sell on social platforms.