MarketForce, a Kenyan B2B e-commerce company, is in the process of winding down its business that catered to informal merchants (mom-and-pop stores) following a challenging two-year period where it significantly reduced its operations.
The closure of the B2B e-commerce arm known as RejaReja is a recent development, following MarketForce’s decision to withdraw the service from all of its markets except for Uganda, Nigeria, and Kenya.
RejaReja provides a platform for informal retailers to easily order fast-moving consumer goods (FMCGs) from distributors and manufacturers, addressing their needs. This solution helps solve common challenges faced by informal retailers, including stockouts and financing issues. The marketplace, launched in 2020, aimed to target the informal retail sector on the continent, which represents approximately 80% of household trade in sub-Saharan Africa.
During its prime, it had a workforce of over 800 individuals and catered to the needs of 270,000 informal merchants. MarketForce secured a substantial amount of funding, totaling $42.5 million, with a significant portion coming from a $40 million debt-equity investment in a Series A round in 2022. This injection of capital will greatly support the growth and expansion of the business.
Nevertheless, a combination of obstacles, such as ambitious expansion, a capital-intensive business model, narrow profit margins, and a funding shortage due to an investor breaking their commitment, posed significant difficulties for the business, ultimately resulting in its closure. Several B2B e-commerce companies in Africa have also reduced their operations due to ongoing funding challenges.
The B2B distribution business that was RejaReja became unsustainable for a few reasons. First and foremost, the retail FMCG market has extremely narrow profit margins, resulting in challenges to achieving profitability at the unit level. The segment is known for its high price elasticity, resulting in ongoing price wars,” noted Tesh Mbaabu, co-founder of MarketForce in 2018, alongside Mesongo Sibuti.
After extensive efforts to ensure the long-term viability of our business model, including implementing cost-cutting measures to maximize our available resources, we have determined that it is no longer feasible to continue operating RejaReja.
The company has secured investments from a range of notable firms, including Y Combinator (YC S20), V8 Capital Partners (the lead investor in 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 Remapped Ventures.
Following the conclusion of RejaReja, MarketForce is introducing Chpter, a social commerce spinout. Mbaabu describes it as an AI-driven conversational commerce platform that empowers merchants to sell on social platforms.
