MarketForce, a Kenyan B2B e-commerce company, has shut down operations in three of its five African markets and is just starting to build a social commerce business.
MarketForce’s “super-app” called “RejaReja,” which lets small stores (mom-and-pop shops) order fast-moving consumer goods (FMCGs) directly from manufacturers and distributors and get loans, will only be available in Uganda after the company stopped offering it in Kenya, Nigeria, Rwanda, and Tanzania, according to reports.
Nairobi will still be the company’s home base and the launchpad for Chpter, a social commerce spinoff that MarketForce has been working on to help merchants “turn conversations on their social media channels into more sales,” Tesh Mbaabu, who will be co-founder and CEO of both MarketForce and Chpter, told reporters when he confirmed the changes.
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Late last year, some venture capitalists broke their promises to give MarketForce Series A funding, which forced the company to cut back on operations and lay off workers in multiple rounds. This cash shortage happened during a global downturn in venture capital, which has made it hard to raise money.
Companies like MarketForce have had to give up on growth at all costs because of a lack of cash and the current market. Instead, they seek ways to make money, push for bridge rounds, or raise money at lower prices. MarketForce just got $1 million through crowdfunding.
In an earlier chat with Repo, Mbaabu said his company is restructuring to develop a viable business by delivering in high-demand locations and closing unprofitable routes. As liabilities mounted and their asset-heavy approach was capital intensive, the company had no choice but to close in the three markets.
Uganda has been our finest market since we started moving toward profitability. Mbaabu stated he would keep it alive since we have exclusive distribution relationships with four big manufacturers and superior margins, allowing us to run a gross profitable company there.
According to an investor update and reports, Uganda country manager Dennis Nyunyuzi has been appointed managing director and will oversee RejaReja’s operations.
What’s next for MarketForce
MarketForce released RejaReja, a SaaS retail marketplace for formal markets, in 2020. Informal traders and mom-and-pop shops can order goods directly from manufacturers and distributors for next-day delivery. It also provides financing based on transaction history. The company addressed stockouts, earnings instability, and lack of capital to develop this retail sector.
MarketForce planned to tap the informal retail sector, which accounts for about 80% of household trade in sub-Saharan Africa, but Mbaabu says margins are low in expensive markets like Kenya and Nigeria, where competition is intense.
“We are finding more profitable and high-margin segments, so we decided to enter social commerce,” said Mbaabu.
The Bottom Line
MarketForce’s strategy shift emphasizes realistic market responses and sustainable development and profitability. Exiting markets to focus on high-margin areas and social commerce shows their versatility and commitment to succeed in changing business environments. This change coincides with industry trends where corporations are reconsidering growth-at-all-costs tactics for sustainability.