Kenyan B2B e-commerce firm MarketForce has shut down operations in three of its 5 markets in Africa and is within the early phases of launching a social commerce spinout.
TechCrunch has realized that MarketForce’s tremendous app known as RejaReja, which permits casual retailers (mom-and-pop shops) to order fast-moving client merchandise (FMCGs) straight from distributors and producers and entry financing, will solely be accessible in Uganda after the corporate stopped providing in Kenya, Nigeria, Rwanda and Tanzania.
Nonetheless, Kenya will proceed to function the corporate’s headquarters and as a launch pad for Chpter, a social commerce spinout that MarketForce constructed to allow sellers to “flip conversations on their social media channels into extra gross sales,” Tesh Mbaabu , who will function MarketForce and co-founder and CEO of Chpter instructed TechCrunch whereas confirming the adjustments.
MarketForce’s slowdown started final 12 months when some enterprise capital funds defaulted on their Collection A funding commitments, forcing the corporate to cut back operations and implement a number of layoffs. The money crunch got here amid world enterprise capital downtime, making it troublesome to boost funding.
The money crunch and present market realities have compelled corporations like MarketForce to surrender on development in any respect prices and as a substitute pursue paths to profitability, push for bridge rounds or elevate financing at decrease valuations. MarketForce lately raised $1 million by way of crowdfunding.
Mbaabu stated in an earlier dialog with TechCrunch that his firm is refocusing its assets on constructing a worthwhile enterprise by delivering in areas with robust demand density and shutting routes that aren’t worthwhile. Nonetheless, as a result of their asset-intensive mannequin was capital intensive and confronted with mounting liabilities, the corporate ran out of choices and determined to shut its shops within the three markets.
“After we determined to embark on a path to profitability, Uganda was our greatest performing market. We now have unique distribution contracts with 4 main producers, and the margins are higher, permitting us to have a gross worthwhile operation there; that’s the reason we are going to preserve it lively,” Mbaabu stated.
Following the newest adjustments, Dennis Nyunyuzi, nation supervisor for Uganda, has been promoted to managing director and can be answerable for driving RejaReja’s operations, in keeping with an replace shared with buyers and seen by TechCrunch.
The RejaReja retail market was launched in 2020 because the brainchild of MarketForce and as a SaaS product for formal markets. It permits casual merchants or common shops to order items straight from producers and distributors for next-day supply. It additionally provides them entry to financing based mostly on the historical past of their transactions. The corporate sought to resolve the challenges these retailers face, equivalent to stock shortages, income instability and a scarcity of financing to scale up their enterprise.
Nonetheless, whereas MarketForce deliberate to faucet the continent’s casual retail sector, 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 equivalent to Kenya and Nigeria. which can be costly to function and the place competitors is fiercer.
“We’re exploring extra worthwhile segments with increased margins and that’s the reason we determined to maneuver into social commerce,” stated Mbaabu.