Kenyan B2B e-commerce company MarketForce is winding down its B2B e-commerce business that served informal traders (mom stores) after a turbulent two-year period that saw it significantly scale back its operations.
The closure of the B2B e-commerce arm dubbed RejaReja comes months after MarketForce pulled the service from all its markets, including Nigeria and Kenya, except Uganda.
RejaReja aimed to enable informal retailers to order fast-moving consumer goods (FMCG) from distributors and manufacturers, thereby solving several challenges faced by informal retailers such as stock-outs and financing. The marketplace, launched in 2020, hoped to tap the continent’s informal retail sector, which accounts for around 80% of household commerce 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 equity in a Series A round in 2022 at a valuation of more than $100 million, to fuel the company.
However, a combination of challenges – including aggressive expansion, a capital-intensive business model, razor-thin profit margins, and a funding crisis after an investor reneged on his promise – made the company difficult to sustain , which led to the closure. Several B2B e-commerce companies in Africa have also scaled back operations as the lack of funding persists.
“The B2B distribution business that was RejaReja has become unsustainable for several reasons. Firstly, the retail FMCG market has extremely thin margins, meaning that at a unit level we have struggled to achieve profitability. The segment is also very price elastic, meaning price wars are consistent,” said Tesh Mbaabu, co-founder of MarketForce in 2018 with Mesongo Sibuti.
“After immense efforts to make our business model sustainable, including reducing headcount to extend the runway as long as possible, we have concluded that it is no longer possible to keep RejaReja operational.”
Its investors include Y Combinator (YC S20), V8 Capital Partners (which led the Series A round), Ten13 VC, SOSV Select Fund, VU Venture Partners, Vastly Valuable Ventures, Uncovered Fund, Reflect Ventures, Greenhouse Capital, Century Oak Capital and Businesses Remapped.
After closing RejaReja, MarketForce is launching Chpter, a social commerce spinoff that Mbaabu describes as an AI-powered conversational commerce platform that allows merchants to sell on social platforms.
techcrunch
